4 hidden costs of stockout for your business

Stockouts can be defined as the unavailability of specific items or products at the point of purchase when the customer is ready to buy. 

Many retailers underestimate the cost of stockout by as much as 300%.

Focusing on increasing availability of your merchandise can be the single biggest leverage for a retailer.

As per latest research, Stockouts cost retailers an estimated $1.5 – $2 trillion every year; in some verticals, shoppers experience stockouts as frequently as every third shopping trip!

Research finds that 51% of retail and ecommerce executives cited out of stocks as the biggest challenge driven by the pandemic.

But what are the hidden costs of having products out of stock?

– 𝐋𝐨𝐬𝐭 𝐫𝐞𝐯𝐞𝐧𝐮𝐞
The most obvious consequence of stockouts is lost revenue. If a customer goes to place an order and the item is out of stock, you lose the profit of that sale. Shoppers may opt for cheaper products. Or even worse, you may lose a customer forever, which means less recurring sales in the future.

– 𝐏𝐨𝐨𝐫 𝐜𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐞𝐱𝐩𝐞𝐫𝐢𝐞𝐧𝐜𝐞
One survey found that 30% of consumers feel stockouts hurt their shopping experience. Some 69% will choose a substitute item after a first stockout occurrence, but after experiencing three of them, 70% of shoppers will go to another brand entirely. 

– 𝐃𝐚𝐦𝐚𝐠𝐞 𝐭𝐨 𝐛𝐫𝐚𝐧𝐝 𝐫𝐞𝐩𝐮𝐭𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐥𝐨𝐲𝐚𝐥𝐭𝐲
37% of consumers who experience a stockout will shop with another brand, and 9% will buy nothing at all. Disappointed customers can also post negative reviews online about your brand and hurt your reputation. 

– 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐝 𝐨𝐩𝐞𝐫𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐜𝐨𝐬𝐭𝐬
If you need inventory fast and it’s not available in-store, you’ll need to purchase inventory on short notice. This usually results in paying a rush fee for fast delivery.
Employees may have to stay late and scramble to deal with backorders or rush shipments. Or they spend time in the stockroom looking for products that aren’t there–this can increase delays for customers and impact their experience.