How can out-of-stock items hurt your e-commerce business? | Inquirer

How can out-of-stock items hurt your e-commerce business?

/ 06:05 PM January 30, 2023

An out-of-stock product costs nearly $1 trillion in lost revenue, according to a study. Out-of-stock products can harm your e-commerce business and reputation. 

Lost customers and sales are critical expenses associated with out-of-stock products in e-commerce stores. You are also creating a negative impression that will ruin your reputation as a trustworthy company.

Before you move on to how to recover from an out of stock in ecommerce, let us find out how out-of-stock products can impact your business.

1. Customer loss due to a competitor

Statistics indicate that stockouts negatively affect customer satisfaction. Therefore, a stockout experience may cause customers to switch to a competitor’s store. Furthermore, 91% of customers are unlikely to return to the same store following a negative experience.

Stockouts are more than just a financial loss. Several other major issues will affect your business, including:

  • Having a hard time retaining customers
  • Stockouts ruin well-planned promotions
  • Recovering items requires additional time and resources

Thus, vendors are also likely to experience several unpleasant scenarios because of out-of-stock products due to the high risk involved. Stockouts are the most detrimental outcome for a retailer since they may result in customers switching to a competitor, and vendors usually pay a high price.

The customer rarely returns to a competitor after purchasing from them. Furthermore, losing customers leads to financial difficulties for the retailer and additional expenses for finding replacement customers.

The implementation of inventory optimization software helps reduce stockouts in e-commerce. Businesses are increasingly using demand forecasting tools to ensure that they have accurate data without exceeding their budgets.

2. Reputational damage

US Small Business Administration statistics indicate that poorly managed inventory systems are the leading cause of small business failure. Furthermore, 46% of them do not have a tracking system for their products. Business strategies of this type result in product shortages and adversely affect customer satisfaction.

Vendors and manufacturers experience enormous yearly losses due to disappointed customers and empty shelves. The retailer suffers reputational damage, loss of customer loyalty, useless promotions, and higher reordering costs.

Brands work diligently to build their reputations, but a lack of accurate demand forecasting can ruin that reputation within a matter of moments.

Several forward-thinking companies have realized the importance of an effective inventory management system. They have, therefore, significantly reduced the risk of e-commerce issues and challenges. Thus, the company can prevent human errors that would otherwise cause substantial expenses.

Suppliers and retailers must coordinate information sharing and other procedures to address the stockout issue reasonably. Many tools are available to facilitate these processes and ensure that the data is as accurate as possible.

The use of demand forecasting software already has the benefit of maximizing sales and minimizing costs, which in turn results in higher profits for businesses. Recently, they have made it easier for retailers to avoid or manage stockouts.

3. Quickly restock items

An excellent way to prevent stockouts is by avoiding them altogether. However, what if the retailer already has out-of-stock items? What should I do at this point?

Here’s what customers do when they can’t find what they want:

  • Find a replacement for your out-of-stock products
  • Replace it with a competitor’s product
  • Avoid buying it at all costs
  • Shop elsewhere for the product
  • If the product is out of stock, cancel the purchase until it is back in stock.

As can be seen, most of the points mentioned above are not advantageous to vendors. However, there is some hope that the purchase will be completed after all if the customer delays the purchase in hopes of finding it again in stock.

In this case, the retailer should use all available channels to ensure that the product is in stock as soon as possible. It’s his job to keep customers from switching to his competitor.

A survey conducted by Emory University professors indicates that abandoned purchases cause retailers to lose 4% of their sales. Incomplete purchases cause a seller with a billion-dollar profit to lose $40 million in revenue each year. According to the same survey, stockouts are often due to inaccurate demand forecasts or mismanaged inventories.


There are no avoiding stockouts, but you can minimize their risks and even prevent them. Today, retailers use demand forecasting software because they know every minute counts in e-commerce. Due to this, preventing stockouts requires real-time data and accurate forecasting, which are only possible with an inventory management system.


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TAGS: business, E-Commerce
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