Making These Mistakes? Learn to Prevent Lost Sales Due to Stockouts

CEO & Co-Founder at Flieber

In a perfect world, you’d always have enough inventory to fulfill all your sales.

But this is the real world. And here, you have to be extremely good at projecting future sales if you want to make sure you don’t run out of stock.

Unfortunately, most retailers keep right on building promotions and ad campaigns even when a stockout is imminent.

With a firm focus on topline growth and a lack of systems that give them full visibility of their sales and inventory data, they become blind to the fact that those campaigns are going to result in an extremely costly stockout down the road.

So, how can you beat the masses and prevent stockouts from impacting your sales? Let’s find out.

The real reasons for lost sales due to inventory issues

For a profitable business, you know you need to buy only what you can sell. But rarely does that message get communicated to the sales team.

They’re still there, behind closed doors, doing what they do best: Creating promotions. Launching advertising campaigns.

And spending money on future sales that you might not even have the inventory to close.

It’s kind of like pouring water into a bucket with a hole in the bottom. Disconnected inventory information, means disconnected teams, and lots of lost sales, profits and working capital due to preventable inefficiencies in your retail operations.

What you need is better visibility into your future inventory.

You need the confidence in knowing that, anytime you or your team plans a promotion, you’ll be able to immediately see that the impact on that sales peak on your future inventory – if you still have inventory available to fulfill those orders, go ahead with the promotion; if not, stop right there. will result in a stockout in X number of days so you can plan to leave customers happy, not disappointed.

Why keep sales and inventory in sync

So let me get this straight. You want me to reduce sales in order to avoid lost sales?

At face value, it might sound a little crazy. But the reality is, you were only going to sell the same amount of units anyway. Only this time, you don’t risk your rankings, ROAS, and future sales. And more: with a higher price or lower ad spend, your margins are deeply improved.

According to research, 71% of consumers switched brands or retailers because they couldn’t find their desired product in stock during Covid times, when inventory disruptions impacted everyone. Only 13% stayed loyal, waiting for the item to be back in stock.

So, avoiding stockouts should be the number one priority of any brands. After all, you don't want to pay for your customer to buy from a competing brand.

Even if you don't have any active promotions in play, you can still experience a rapid increase in sales pace. It’s a great problem to have, but now you're consuming more inventory than you planned.

When a stockout is imminent, the best thing you can do is reduce your sales by increasing your price or reducing your advertising. Once the risk period is over, you can get back to selling at your usual pace, but with better margins and less risk for the business.

To drive the point home, let’s take a look at a quick ‘would-you-rather’:

If you have 100 units to sell, would you rather sell them at $10 knowing the units are going to be finished in 10 days and out of stock for 20 days.

Or would you rather sell the same 100 units in 30 days at $15 and no stockout period?

More money. No stockouts. It's a no-brainer, right? Yet very few companies are taking this approach.

The modus operandi in e-commerce is to keep both eyes fixed on topline sales, even at the expense of bottom line margins. But it doesn’t have to be that way.

Better visibility. Better sales. Better business.

At the end of the day, the best way to avoid lost sales due to stockouts is to better plan your stock purchases.

That means not only better forecasting, but better visibility.

You need to know exactly how much inventory you have in stock, including a clear view of your future inventory positions at the time you're going to make a purchase or transfer.

With Flieber, you get deep visibility into your current inventory positions and your future inventory availability to identify patterns that lead to lost sales before they wreak havoc on your business.

If you’re ready for an efficient, profit-first approach to inventory planning, Flieber can help.