What does “out of stock’ mean?
Out of stock (or stockout) refers to the products being unavailable, which can happen in the supply chain process and most visibly at the point of sale. This means that customers cannot buy the product immediately due to the unavailability of it. Out of stock can happen in both physical stores and online platforms.
What causes out of stock?
There are several reasons leading to stockout, including both technical and human factors:
- Disrupted supply chain: Delivery of goods can be delayed due to unexpected weather conditions or technical problems of the delivery vehicles. Goods may also be delivered to the wrong locations or misplaced by the warehouse staff, which can ultimately lead to delays in delivery.
- Inaccurate reporting and ordering: Stockout may happen due to disparities between ordering, reporting, and the real number of in-stock items. Sometimes, employees have mistakes in counting the particular items that they have in store, which leads to inadequate restock numbers requested.
- Poor forecasting: A sudden increase in demands may cause a wrong forecast of the to-be-restocked items. The unexpected surge leads to out-of-stock situations and also makes it harder for retailers to make informed inventory decisions.
What are the consequences of out-of-stock?
- Loss of potential sales: Because shoppers cannot find what they need immediately, they can leave or opt for other stores. This can lead to the loss of potential sales and negatively affect business growth in general.
- Decreased customer satisfaction and loyalty: Frequent out-of-stock situations can lead to bad customer experiences, as the service is not up to their expectations. This can decrease customer loyalty and create a bad reputation for your company.
- Less competitiveness: Due to stockout your customers may come to your competitors to find an alternative. In the competitive retail industry, this problem should be minimized as much as possible.