Approaching Stock-Out: 5 ways to Prevent the Out-of-Stock Problem and Boost Sales 

Managing inventory and predicting sales is a difficult process for every retailer. Customers hate it when an item isn't in stock and they are quick to take their business to another retailer who has the item in stock. A stock-out or an out-of-stock situation can have devastating effects for a retailer. A stock-out can be defined as a situation in which the demand or requirement for an item cannot be fulfilled from the current inventory. They are also known as oversells and out-of-stocks. A stock-out leads to a loss of sale due to not having a product any longer. Too many out-of-stocks can ruin brand trust, decrease customer loyalty and result in increased customer care costs. Therefore, preventing stock-outs ought to be at the top of your list of priorities.

Understanding the causes of stock-outs will put you on the right path, but you’ll need actionable solutions if you want to keep your warehouse well-stocked.

Here are 5 solutions to help decrease and prevent stock-outs:

Forecast Demand

Stock-outs are caused by inaccurate demand forecasting. AI and machine learning enabled demand forecasting is one of the most promising applications of AI for the supply chain. Apart from AI based inventory management, here is what you can do:

1. Determine what to measure and how often, for example, the frequency of stock-outs, competitors sales data, POS data, etc.
2. Integrate data from all of your sales channels, especially if you’re running an omnichannel e-commerce strategy.
3. Create a regular monthly process that analyzes previous forecasts and compares them to actual market results.

Refer a Reliable Order Point Formula

A reorder point for​​​​mula can tell you approximately when you should reorder stock to minimize stock-outs and maximize inventory turns. Ideally, this occurs when you’ve reached the lowest amount of inventory that you can sustain before you need to order more stock. Instead of falling victim to erratic spikes and slumps in the market, you can plan ahead by using a proven, mathematical equation that helps you consistently order the right amount of stock each month.

For example, you could use the following formula to help you beat stock-outs:

(Average Daily Unit Sales x Average Lead Time in Days) + Safety Stock = Reorder Point

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Implement RFID Tags

Radio Frequency Identification (RFID) tags can allow you to track every product you store quite easily.

It can make your inventory more efficient and allow for faster stocktaking processes. You can swiftly search for and find the products you need to ship. RFID tags can also allow you to scan any product and, find out in real-time how many of those products you still have in stock.

Researchers at the University of Arkansas found that RFID technology can reduce stock-outs by 16%. If you experience regular stock-outs too, then implementing RFID tags can be beneficial for your business.

Maintain Safety Stock Inventory

Safety stock inventory is a small, surplus amount of inventory you maintain on hand, to guard against lead times and variability in market demand.

It can help you to add a buffer for longer-than-expected order lead times, compensate for inaccurate market forecasts, protect against unexpected spikes in demand, and ultimately prevent stock-outs.

Here’s a formula to help you calculate safety stock:

(Max Daily Sales x Max Lead Time in Days) – (Average Daily Sales x Average Lead Time in Days) = Safety Stock Inventory

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Prepare a Hierarchy of Recommended Substitutes

For some classes of e-commerce, customers will accept an alternative or equivalent product when one item is out of stock. In grocery, this can be in the form of suggesting an alternate brand of the product, or an alternate form of the product. For example, suggesting a frozen or canned form when the fresh item is out of stock. This enables a customer to prepare a planned meal without wasting time going to another store or having multiple delivery charges. Likewise, in fashion, a popular or necessary item might be back ordered or sold out, and a competing brand or color might be able for immediate shipment. For example, if it’s the rainy season and the customer needs a new pair of rain boots, they may be satisfied with a different design that is available for immediate shipment. In this situation, a machine learning based recommendation engine can be leveraged to help determine the correct recommendation from the real-time inventory of available options.

Preventing stock-outs won’t be an easy task and neither will it happen overnight. But keeping these pointers in mind and implementing them as part of your inventory management will go a long way in safeguarding against stock-outs. You could always continue to test solutions while paying attention to the market. To do so, we recommend using an AI-based tool that can collect, measure, analyze, discover patterns in and provide accurate forecasts.

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Impact of Great Product Content in Fashion Retail

 When it comes to e-commerce, merely displaying a robust collection of products on your website will no longer do. Customers today want to do their due diligence before committing to any purchases. This initial evaluation of product content is considered one of the most essential parts of a customer shopping journey. It is also a crucial prerequisite for you to make sure of sales. Incomplete, missing, error-riddled and misspelled product information causes customers to lose faith in your e-commerce website.

In a physical store, consumers are used to touching, feeling and trying on clothing before buying. However, in the case of online shopping, you need to provide rich descriptions along with complete details about the product for a customer to make up their mind about buying a fashion item.

Engaging imagery is key for selling a fashion garment, however, accurate descriptions help educate the consumer and help search engines present accurate results. However, adding a title, description, facets, proper categories and relevant attributes to your product are essential to guide your customers from Google search results or your website’s search bar to the product description page.  Textual content actually makes your products easier to discover.

Here is how great product content can impact fashion retail:

Effect on Customer Experience

Product descriptions answer questions that your potential customers have as they are shopping. Customers comparison shop on multiple websites to find what they are looking for, hence providing all the relevant information is important. A majority of customers will abandon a site or even a partially filled cart if they are not able to find what they are looking for.

Inadequate product content will fail to convert the shopper if it doesn't do a convincing job of communicating the features and capabilities of a product. Fashion Retail is now competitive online. You need to create an engaging experience for your customer that communicates your brand, both visually and with rich information about the product.

Drive Conversions

In the world of e-commerce, enriched product content is the difference between making a sale or losing customers to your competitors, which makes it a top priority for any online retailer. Merely offering content that shows price, short description, sizing and color, doesn’t provide anything for your customers to get excited about. 

We have explored how your product description page is the key for a customer to make a purchase. It is a virtual salesperson who is present at all times to pitch to your customers. Any missing or misleading information will have a negative impact on sales as customers will abandon a purchase . Having rich content will help your customers to understand your products, building trust to find what they’re seeking. This will, in turn, increase sales for you.

Build Credibility

Inconsistent or misspelled product content adversely affect your credibility. The language you use on your website reinforces your identity. Incorporating a specific style and tone-of-voice that is unique to you will help you differentiate your website from competitors, strengthening your brand image in the process.

It is important to be consistent in the ontology and terms you use for categories and items, and avoid misspellings, typos and grammar mistakes. Auto-generated product attributes and categories could help avoid these issues and help build better credibility.

Displaying vibrant, engaging product content on your website ensures that your product listings rank higher in search engines. When your website is the first one that customers find, it leads them to believe your site is more popular and reliable. It also lets you outrank your competitors, getting your site more clicks as a result.

When you take the time to produce great online content for your products, your customers take notice and reward you with their purchase. In the same way that a smart and personable retail clerk can convince a customer to buy in the store, your web store content must be convincing for an online customer. Your products need complete and well-crafted content if they are going to sell.

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One of the worst nightmares for a retailer is to have a stock out or out-of-stock situation when it comes to selling products. This is a very serious issue and can be detrimental to the bottom line of any business. Aside from lost sales, stock-outs also lead to reduced customer satisfaction and lowered loyalty levels. When a customer requests to buy a product that is out of stock, they are going to end up unhappy with the inventory issue and you most certainly don’t want to disappoint your customers. Many cases of stockouts may be easily prevented by taking steps to better understand your business and products, and by refining your e-commerce processes.

Common Reasons for Stock-Outs:

Let us start by taking a look at some of the most common reasons for stock-outs: 

1. Inaccurate data: It can be hard to maintain accurate inventory counts. This may be due to several reasons such as misplaced products, product returns, shipment variances, and even stolen goods. As a result, the data in your inventory management system may not reflect what's in the warehouse.

2. Failure to reorder on time: This especially happens with your best sellers. Items with high-turnover, such as consumer products and grocery items are the most commonly affected. Due to either a poor forecast or a missed signal on a hot seller, you may run out of products before you’ve had a chance to reorder and restock your inventory.

3. Unclear communications with suppliers: Another cause of stock-outs is when you don’t have clarity in your communications with your supply chain. Failure in effective communication with suppliers may lead to missed or delayed orders, resulting in stock-outs.

Effects of Stock-outs on Business:

If a product is not available for delivery to a customer who has placed an order, there are four possible outcomes:

• Customer agrees to wait for the item: For important items, a customer may be willing to wait for it. However, the customer is likely to still harbor some disappoint in the interaction. 

• Customer back orders the item: While not the ideal solution, the order still gets fulfilled. Again, customer satisfaction declines and most customers won’t repeat this process with you unless you are the sole provider of the item.

• Customer cancels the order: Customers today are savvy. They are shopping the competition. If the customer knows that the item is available from another retailer, they may simply cancel the order and ask for a refund. The customer may be unhappy, but they may still order from you again in the future.

• Customer cancels the order, and never returns: This is the worst case scenario as a result of a stock-out situation. An angry customer here may be so disappointed in your fulfillment process that they never order from you again.

Implementing demand forecasting is one of the most important steps to avoiding stock-outs. You can try to forecast demand on your own by factoring in stock turnover, sell-through, historical sales data, and other factors such as promotions, economic state, seasonality and using your judgment. Analysis of these data points could give you insights into how products will perform. Stock-outs also tend to form patterns such as recurring on a particular day, at a particular time. Through analysis of stock-out patterns, you can better predict potential inventory and consumption problems and build a better forecast.

 In the next article in this series, we'll look at how artificial intelligence can be leveraged to help you see patterns in your data, and make suggestions to a more accurate forecast.

Content is an extremely crucial part of any e-commerce business as it has the ability to drive a large amount of organic traffic onto a website. Businesses must be sensitive to providing the right content which provides the brand a wider range of audiences across the web for minimal cost.

One challenge that e-commerce brands face is the ability to create engaging content across all platforms. Moreover, the true challenge lies in creating engaging content as well as producing enough content.

Producing being the operative word, e-commerce brands have a distinct advantage wherein they don’t necessarily have to create or produce new content when sourcing user-generated content. They can leverage the content sourced from user-generated content (UGC) via various channels such as social media in many forms, such as messages, posts, videos, pictures, etc.

The rise of User Generated Content

Over the past decade, there has been an exponential rise in the amount of user-generated content on the internet and with the popularity of the various social media platforms out there, the growth comes as no surprise.

Customers have been talking about different products and brands for a long time now. With the ability to capture those conversations and interactions across the various social media and other marketing channels, e-commerce brands can avail the benefits without spending too much time attempting to produce newer content.

Why is UGC so effective?

One reason why UGC continues to have increased conversions is:  trust.

Multiple surveys showed that UGC plays an important role in a customer’s shopping journey. Some important findings being - 84% of people trusted online reviews as much as they trusted recommendations from their friends, and 74% of people said that positive reviews dramatically improved trust in a business.

Furthermore, almost 82% of consumers said that user-generated content (like reviews, for example) was extremely valuable in helping them make a purchase decision.

Sourcing UGC is not difficult, yet, deciding what needs to be done after, is important.

Incorporating Customer images in Product pages

Product pages benefit greatly from high-quality images. That being said, every brand going online is upgrading their images to better quality images. E-commerce brands can make their products stand out by skipping the usual images provided by the suppliers and manufacturers and instead, are turning towards customers.

Ex: Popular video streaming service Netflix utilizes UGC to promote fans’ posts about specific shows or movies on Instagram. UGC shows that other people are also getting excited about new shows and movies.

This can be done if e-commerce brands do away with models, and start looking at their customers as models. Seeing real customers using and wearing products builds significant trust and generates interest in the product. Furthermore, it can also help deliver powerful messages during campaigns using the target audience as representatives for the brand.

Showcasing product benefits

Some brands have to come up with innovative ideas to use user-generated content. While brands selling tangible products such as fashion accessories, or home care products can easily benefit from using UGC easily, brands selling either a service or a software have to get creative.

When there are no tangible products that can be showcased, e-commerce brands can focus on the benefits to the customer and what they may experience using the service or product.

Example: Social media scheduling tool Buffer created #BufferCommunity to showcase photographs and personalities of its many users from all around the world. The aim for this campaign was to source UGC featuring exotic spaces to promote the freedom that Buffer provides.

​Brands have to focus on how customers use their products and find ways to source UGC, and then insert that into various marketing campaigns - or reshare onto social media to boost engagement and brand awareness.

Including photos with product reviews

Reviews are the easiest UGC on the internet. E-commerce brands generate reviews without doing anything other than providing tremendous customer service and quality products.

To create a more lasting impact with reviews, e-commerce brands can opt for a review platform that enables users to add images as well as videos alongside their written reviews. E-commerce giants such as Amazon leverage this facility for their users.

Customers are more than happy to share their experiences, and that matters tremendously for brands. Many customers prefer to view the product reviews before choosing a particular product as it gives an authentic sense of how the product would appear on them.

The more customers share images alongside their reviews, the more value it brings to the e-commerce store.

Featured photo credit: Photo by rawpixel.com from Pexels

The retail shopping experience is constantly evolving. The stores of the future may look completely different than the ones that customers visit these days. A large contribution to what would make them different would be the integration of AI and automation. Almost every retailer in the world is competing against e-commerce giants like Amazon, and with the introduction of its physical store, Amazon Go, which uses cameras and sensors to charge customers, there is more competition. Tech companies are seeking to roll out powerful automation tools for retailers, but will these tools be able to entice customers?

Automation is a preferred choice

The benefits of automation have already been experienced on a smaller scale with supermarkets offering self-checkout kiosks. While retailers invest considerably in these innovations, some of the benefits can be decreased reliance on the staff, and ensuring that the customers complete their shopping journey seamlessly. Furthermore, a study also concluded that a majority of US consumers believe that self-checkout kiosks enhance the store experience.

The checkout process can be made faster and simpler using a smartphone, and customers may no longer need to stand in long queues. They can use apps that are designed to read barcodes of  products and automatically generate the bill for the customer within the app itself.

It is important to note, however, that these innovations do not replace the human effort and it simply supports the staff and makes the logistics process more efficient.

Going beyond checkout

Automating the checkout is only one application of automation. Some other applications can be bots that can automatically stock shelves or smart devices that can provide signals for products going out of stock or nearing expiration dates. These applications can help store managers to efficiently manage the inventory with the right data. 

Automation as Customer Service

Retailers are increasingly using Robotic Process Automation to make transactions and providing answers for simple customer queries faster. This ensures that the customers are provided with the help that they need, without the need for engaging the store staff. The US retailer Lowe, as an excellent example of application of this idea, introduced the LoweBot - an in-store robot that converses with customers and helps them locate items in the store using real time inventory tracking. Furthermore, it acts as an alternative source of information for customers who have simple questions, freeing up employees to attend to customers who need more guidance with their queries.

Automation and Pick-Up Trends Merge

Many retailers, such as Target, provide customers with the option of placing an order online and having it picked up at a nearby store without having to get out of the car, much like Drive-Thru at fast food chains.

This facility in its current model, however, requires human involvement. . As soon as the store receives an order, a staff member is required to bag the order, while another may be required to take them to the customer’s vehicle. While this is a convenient option for the customer, it creates  labor inefficiency for the store. Automating these processes would free up the staff allowing them to help the customers in-store and streamline the pickup routine for customers.

Despite the stiff competition online, in-store shopping will survive, however, it needs to change to meet changing customer needs and preferences. Retailers must realize the importance of AI and automation and capitalize on it to stay ahead. The goal should be not to out-do e-commerce giants like Amazon but to provide an involved face-to-face customer service in a welcoming environment.