Out-of-stock: our tips for avoiding it

Out-of-stock: just three words that can make companies - and their customers - tremble. An out-of-stock condition is the temporary unavailability of a product. This situation is damaging: 7 out of 10 consumers become less loyal when products are out of stock too frequently (source: OpinionWay study, 2024) .

In e-commerce or marketplace, the stakes are high. Inventory management must be an absolute priority, to maintain growth, win new customers and retain old ones. So how do you manage your product stocks and avoid stock-outs? Discover all our advice, as well as a case study at the end of the article. We're off!

I/ A key calculation to know: the out-of-stock rate

An out-of-stock situation is an event suffered by a company. It is neither planned nor deliberate, unlike stock clearance (which corresponds to a deliberate strategy, for example linked to the liquidation of an old collection).

In theevent of an out-of-stock situation, the risks are numerous: customer dissatisfaction, loss of sales, damage to brand image... To avoid repeated out-of-stock situations, here's our advice: know your out-of-stock rate .

The out-of-stock rate is an important KPI in e-commerce, for measuring the efficiency of your logistics. It measures the frequency with which a product is out of stock. The higher the rate, the more frequent your stock-outs... And the more they will impact your growth, while increasing your costs.

The out-of-stock rate is calculated as follows: (number of orders not filled due to out-of-stock situations / total number of orders) x 100

You can also use the following formula:

(Sales shortfall / Total sales) x 100

Your mission: to keep stock-outs as low as possible, and ensure that your product references are always available in the warehouse! Optimizing inventory management is no longer an option... At the risk of facing a number of impacts.

 

II/ E-commerce stock-outs: the main causes

But why can an e-commerce site run out of products? Here are the main reasons for this phenomenon:

• Transport and logistics difficulties

Transport delays can occur due to logistical problems, weather conditions or customs regulations. These situations affect the supply chain, and the timely arrival of goods. Often, it's just a matter of time: knowing the exact cause helps reassure customers!

• Discrepancies between theoretical and physical inventories

The error is human... Or computerized. It often manifests itself in the form of inventory errors. Discrepancies between the data recorded by the computer and the actual inventory on hand can lead to inaccuracies in the number and availability of products.

To avoid these errors, did you know that Rakuten Fulfillment Network takes care of every stage of your e-commerce logistics? On our marketplace, sellers are supported by our after-sales service, to avoid the unexpected.

• A sudden increase in demand

Stock-outs can be triggered by strong customer demand. This situation is beyond your control: a buzz thanks to an influencer? A special event? When demand rapidly exceeds supply, stock-outs are commonplace.

This was the case for Stan Smiths when they were reissued, for certain Apple products... Or even for packets of pasta during the Covid-19 health crisis!

• Supply chain problems

The supply chain relies on a number of different players and stages. The most frequent failures are production interruptions or shortages of raw materials. Wood, paper, aluminum, rubber... Certain materials are becoming scarce. It's time to innovate, to limit these problems!

• A slowdown in supply processes

Stock replenishment can be affected by abnormally slow order processing. This may be due to inefficient internal processes, or to slowness on the part of suppliers. The result? Product inventories shrink, to the point of running out.

• Incorrect order estimates

Another common cause is poor analysis of sales trends, or miscalculations that distort order forecasts. Incorrect order estimates can also be linked to a lack of internal communication. In this case, product stocks can quickly run out, or be underestimated.

Conversely, an overestimation of stock requirements can always result in a flash sale. It's one of the best ways to clear product stocks in e-commerce!

• Lack of supplier flexibility or reliability

The supply chain involves many players, including suppliers. If the latter are not reactive, or unable to meet your demand, stock-outs occur as a result.

Before calling on a supplier, here are a few key indicators to measure its reliability: the company's financial health, any certifications and industry standards, its online reputation, its value for money..

• Poor just-in-time inventory management

If your company operates on a just-in-time basis, it will prefer to keep stock levels to a minimum, in order to reduce costs. This logistics strategy involves sourcing goods only when they need to be dispatched.

But beware! When demand peaks, and sales seasonality is at its peak, this kind of inventory management can lead to stock-outs. To avoid this, Rakuten Fulfillment Network takes care of your logistics.

 

III/ E-commerce: what are the impacts of an out-of-stock situation?

Today ,better inventory management is essential to avoid stock-outs. The impacts of stock-outs are numerous. Faced with increasingly intransigent and demanding customers ,lack of availability is considered the second major irritant when purchasing a non-food product, just after lack of price! (Source: Opinionway survey, 2024).

According to the same study, consumers even consider stock-outs to be unacceptable. In the electronics sector, nearly one customer in two (44%) denounces this situation as unacceptable. What are the consequences? Stock-outs undermine customer satisfaction, customer recommendation and loyalty. The company's reputation can also be tarnished by bad customer reviews. This negative impact on brand image can be limited, however, if the unavailable product is listed in another store, according to 7 out of 10 customers.

On the brand side, inventory management problems are detrimental to sales and profitability. It's a drag on growth, but also a major logistical cost. In a hurry and in a hurry, some brands resort to accelerated transport solutions for supplies, to a new supplier, to ordering substitute products... All these emergency solutions have a cost. Or even a surcharge!

Faced with these logistics costs, new solutions are emerging. Like cross-docking. Cross-docking enables supply flows from suppliers and delivery flows to customers to be "crossed" at a single location (called a distribution center). This method makes it possible to combine several goods in a single mode of transport. The result? Savings in time, money and storage problems!

IV/ 5 tips to avoid stock-outs

1- Improve sales forecasts

Rely on the figures: what were last year's sales trends? And what is the life cycle of your products? What are the sales peaks in your market? You can also define your merchandise turnover rate or stock coverage (number of consumption days the company can cope with).

All these short- and medium-term forecasts enable you to optimize the quantity of merchandise you need, so that you always have stock on hand.

2- Optimize inventory management

Poor inventory visibility is often the cause of stock-outs. To avoid this, your inventory of available products must be carried out regularly and meticulously. Various methods exist, such as the perpetual inventory strategy (achievable thanks to inventory control automation software).

For even greater simplicity in controlling and managing your inventory, you can also place your trust in the Rakuten Fulfillment Network. We manage your stock and inventory. And with Rakuten Fulfillment Network, 99.8% of orders placed before 2pm are delivered within 24 hours... without the hassle of stock-outs!

3- Keep a safety stock

If your cash flow allows it, a safety stock is an interesting option: it allows you to take into account the margin of error, and always have availability to respond to unforeseen surges in demand. Without cluttering up your storage space, this limited stock enables you to limit undesirable situations.

As soon as you are forced to "dip into" this safety stock, the alarm is sounded: it's time to restock!

4- Strengthen supplier relations

Reliable, responsive partners are essential to efficient logistics. Before choosing a supplier, evaluate all the potential risks, depending on the supplier's location, the country's economic and political context, transport conditions, the various stakeholders, the supplier's reputation... All these elements need to be taken into account, before choosing the right logistics provider .

Then, as with your customers, focus on building loyalty to maintain a long-term relationship!

5- Diversify sources of supply

Having a plan B is an excellent idea, to limit dependencies and logistical risks. So, have you thought about diversifying your sources of supply for your online store? For each product, identify potential suppliers and start discussions with them.

You know the saying: prevention is better than cure... And in e-commerce, it's better to anticipate than to suffer!

V/ Inventory management: how to adopt a proactive approach?

Despite your best efforts, sometimes it's impossible to avoid running out of available products. Fortunately, this situation is temporary. But how do you deal with it? How do you react? At Rakuten France, here's our recommendation: be proactive! This proactivity translates into :

• Transparent communication with customers: there's no point in hiding out-of-stock situations, or products that are "victims of their own success". Be honest. According to a UPS study, 41% of French consumers return later to see if the product is back in stock.
  
• Suggest alternatives: to limit frustration, suggest other products in stock and keep customers on your website. according to UPS,17% of loyal customers buy a similar or different product on the website. Even if you can't fully satisfy the initial demand, don't let the buyer leave empty-handed!
  
• Set upa waiting list: if the consumer really wants to buy an unavailable product, offer to join a waiting list. As soon as new supplies arrive, they'll be alerted first. A good way to win them back.
  
• Update your marketing campaigns: do you have advertising campaigns underway on Google, or on social networks? Watch out for ads promoting products that are no longer available! Be proactive and attentive to ongoing marketing actions, to limit customer dissatisfaction.

VI/ Technologies and tools: how to equip yourself to manage product inventories?

An IT system is essential for organizing and optimizing your supply chain. Especially if your e-commerce site is expanding! Without tools, it's difficult to control logistics flows and inventory. So, when it comes to equipping yourself, have you considered..

• A warehouse management system (WMS): to monitor and control your stock levels in real time.
• Forecasting and data analysis software : providesyou with information on past sales, as well as detailed forecasts to optimize your inventories.
• An integrated inventory management platform : over 12,000 professional sellers have chosen our Rakuten marketplace to sell their products online. By becoming sellers on our platform, they benefit from a fast, reliable and cost-effective logistics solution, including inventory management.

VII/ Inventory management: the case of Dreame

Let's take the example of Dreame, a Chinese company specializing in high-end household appliances. Its challenge? To adapt its e-commerce logistics to direct-to-consumer (D2C) sales on the French market!

In France, customers are demanding, particularly when it comes to delivery times. 44% of shoppers say they don't want to wait more than two days to receive their order (McKinsey). Whereas for Dreame, delivery times to French customers tend to range from 7 to 10 days... The solution? Adapt the company's e-commerce logistics, thanks to Rakuten Fulfillment Network!

By joining Rakuten Fulfillment Network, Dreame was able to simplify its entire logistics process, considerably reducing delivery times.

Results:

• 5x faster delivery: from 10 to 2 days, from China to France! With Rakuten Fulfillment Network, orders confirmed before 2 p.m. can be dispatched the same day, enabling delivery within 48 hours.
• Sales multiplied by 10 : French customers are won over by more attractive delivery times .
• 200-fold increase in visibility: by selling on our marketplace, Dreame has access to over 13 million connected customers! All the more reason to increase your visibility in the eyes of French buyers.

Would you like to take advantage of a turnkey logistics service to satisfy your customers and avoid stock-outs? Our Rakuten marketplace helps you focus on what you do best: selling. And we'll take care of the rest. Click here to discover Rakuten France: