As a seller, you depend on your inventory to make sales. Consequently, one of the worst possible scenarios for your business is when your stuff is out of stock. You’ve got no inventory to sell, meaning you will miss out on making sales and generating money.
Not only that but being out of stock can have additional negative consequences for your business. Put yourself in the shoes of a consumer; what would you do if you visited a website and the product you’re looking for is out of stock? You may be eager to get this product, so you instantly look elsewhere. From a consumer standpoint, the beauty of online shopping is that there are plenty of businesses selling the same or similar things.
So, you don’t just lose out on sales, but you give them to rival companies. After buying from a rival once, why would a consumer revert back to you? They may become comfortable with the other website, the rival could provide a discount on their next order to retain loyalty; all of this comes from you being out of stock!
You may be wondering, why does it matter so much if you’re out of stock? Surely, in some ways, it’s a good thing, right? It means that you are generating enough sales to be out of stock of an item. Yes and no. Yes, it’s good that you’re selling enough to be out of stock. No, it’s never good to have no inventory to sell your customers. Ideally, you want to prevent this from happening wherever possible. Realistically, it should only ever happen once; when you have a new product that sells beyond your expectations. Here, it’s acceptable to go out of stock as you weren’t expecting it. But, for everyday purchases, you should always keep your inventory well-stocked.
How can you prevent your site from displaying the terrible ‘out of stock’ sign next to products? Let’s go through some of the most common tactics:
Accommodate more inventory to sell
Often, small businesses struggle because they don’t have the capacity to hold as much inventory as they’d like. You know that your products sell very well, but you haven’t got enough room or space to hold the stock. This limits the number of items you can list for sale, meaning you always run the risk of running low.
To counter this, you can do a couple of things. Firstly, get smart with your inventory storage. Use industrial shelving systems to increase the number of items you can hold in a warehouse space. You’re taking advantage of the high ceiling to accommodate more inventory in the same place. Alternatively, invest in a larger warehouse or inventory building. These simple solutions mean you might be able to hold 700 items instead of just 500. That’s an extra 200 items you can sell before you get close to being out of stock.
Track your data
Perhaps the easiest way to avoid running out of stock is by tracking your sales data. Every online business will have access to sales figures and metrics that let you see what’s selling out and what’s not. You can very easily see if stock levels are getting low, prompting you to place a reorder before things sell out. In theory, this means that you never run out of stock. You track your data and realize that you’re getting down to your last few items, so you place an order before everything sells out.
Furthermore, tracking your data helps you understand sales trends and when things tend to sell out quickly. For example, if you sell clothing items in your store, you will know that certain pieces sell faster in summer than winter – and vice versa. With the winter months approaching, you know to order more warm clothing stock to prepare for the influx of sales you typically get.
Find reliable suppliers
The above two points are invalid if your suppliers aren’t reliable. You have more space to accommodate larger quantities of stock, and you’ve tracked your data to understand when a re-order is necessary. The problem is, you still don’t get your new inventory until after your initial stock has sold out. Why? Because your suppliers are unreliable and have very slow delivery times.
Every online business needs to develop a strong relationship with suppliers. You must find ones you can trust, and preferably ones with speedy delivery options. For this reason, local suppliers are usually the best choice. Not only do you support a fellow local business, but you also don’t have to worry about your stock traveling from overseas. Of course, this isn’t always possible, so take delivery times into account when you re-order stock. With a reliable supplier, you’ll know exactly how long it takes for orders to reach your warehouse, letting you understand the best time to make a stock order.
Improve cash flow
We’ve already identified a few reasons your inventory can be out of stock. There’s the issue of not stocking enough items to match up with the popularity, and there’s the problem of not having good suppliers. Another reason for stock-outs is when you simply don’t have enough money to make re-orders.
Again, this typically happens to small businesses, and it doesn’t necessarily mean your company is failing. The problem can stem from a lack of cash flow in your company. You might make sales, but you don’t have enough cash circulating to put orders through. As such, you have to work on improving cash flow throughout your business. This could include selling surplus stock items that have been in your warehouse forever or collecting unpaid invoices.
Find ways of improving cash flow, and you suddenly have more money to re-order the inventory that’s selling fast and nearly out of stock.
Prevent human error
Lastly, stock levels can be impacted by human error, and this is possibly the worst reason to run out of stock. When someone places an order through your website, your team gets notified of the products that need to be picked for shipping. The problem is when the wrong items then get picked and sent out. This means that you might be out of stock of a particular item without really knowing it.
For example, imagine you have only 10 of X items left, but 50 of Y items. Someone places an order for 10 Y items, but one of your team accidentally picks 10 of X items and ships them out. Here, you are out of stock of X items, but you might be unaware of it. Two things tend to happen; your employee says you’ve run out of stock of Y items, so you list them as out of stock – when really you should still have 40 units. At the same time, X items are still shown as being in stock, so people might try to order them.
You end up in a situation where you miss out on sales of Y items, and you get unhappy customers that order X items but don’t get them as you realize they are now out of stock. It’s all confusing and messy, but you can solve it by implementing quality control before products are shipped. Someone double checks every item that’s picked, ensuring the right ones are there. In this scenario, quality control notices the error and rectifies it before anything gets sent to the customer. You avoid sending the wrong items and can prevent stock-outs.
Start using these ideas to prevent inventory from constantly going out of stock in your business. This will help you generate more sales while keeping your customers as happy as can be.