The perennial problem of landing on an e-commerce site only to find that the product is partially or completely out of stock is one of the most significant causes of customer frustration. This has undoubtedly been exacerbated by COVID-19 supply chain issues, which you may have experienced yourself when shopping recently. Those websites that allow you to turn on the “show out-of-stock items” can reveal the extent of the problem at present on some categories of products.
But COVID-19 aside, this is a problem as old as retail itself: On the high street, as soon as a product is placed prominently in a shop window, it will drive demand for that specific item. The retailer might be hoping to drive demand for the menswear category, but the specific men’s plaid shirt in the navy colorway will be the one that sells out first.
The Pitfalls of Promoting Products
In the online world, our merchandising decisions directly impact demand in exactly the same way. If you feature a specific product prominently in a merchandising banner, in paid search results, or on social media, demand frequently goes up and product sales follow. This often results in an out-of-stock or partial out-of-stock situation (where the most common sizes, colors and variations are not available). At this point you’re probably thinking, “Great!! Job done!” after all because we need to sell out of the full range. But have you thought about the impact on customer experience for those trying to buy the promoted product?
Out-of-stock experiences are incredibly frustrating for customers who get excited about a potential purchase only to be disappointed. But it’s actually worse than that: The fact that the product is being promoted sets an expectation with the customer that the product will be available — you wouldn’t be paying to advertise it if it wasn’t in stock.
Digital Experience and Loyalty
There are many studies that show there is a strong link between experience and loyalty, and since repeat purchases are key to profitability for e-commerce, we should all care that we are delivering a great experience for customers. So, what is the impact of these out-of-stock experiences? One of the most visible metrics is the bounce rate: Customers landing on a product detail page are almost twice as likely to bounce off, view fewer pages, and spend only 50% of what visitors landing on any other page spend. This phenomenon is not solely due to out-of-stock experiences, but it is one of the most important factors.
6 Fixes for Out-of-Stock Experiences
1. Measure the size of the problem. The old adage applies here, “If you aren’t measuring it, you can’t fix it,” so the start of any customer experience initiative has to be with measurement. Start with trying to understand the monetary impact of customer experience, including out-of-stock experiences. For most e-commerce sites, it will be a significant revenue leak — often 10% or more of total site revenue. Once you can put a dollar amount on it, you can then start figuring out where it sits on your priority list and how to fix it. This will likely require some data wrangling — the regular analytics products don’t help much here.
2. Offer alternates. Offering alternates is a simple way to mitigate the poor experience with one slightly better. If she’s clicked through to the product detail page for a white blouse that is out of stock, showing other white blouses that are available will definitely help and may sell other products in the range.
3. Allocate promotional budgets in proportion to inventory. When promoting products on paid media, consider the inventory level and match the advertising budget to the inventory level. Some simple analysis of typical costs per click and conversion rates (or use cost per acquisition data if you have it) for similar products is a great start to determining what budget to set. This will not only reduce customers’ frustrations but also stretch your ad budget further.
4. Monitor stock levels of promoted products. A daily check on current promoted products and their inventory availability will help you to see where customers are having out-of-stock experiences. Turning off paid media where this is happening and redirecting it to in-stock products will drive both revenues and customer satisfaction.
5. Offer a “back-in-stock” notification. Some e-commerce platforms and tools offer the ability to trigger a “back in stock” message for customers who subscribe to inventory alerts. For those products where you have more on order (as opposed to end of line), this can work well, but be careful about how you set these up. There’s nothing more infuriating than being emailed that a product is back in stock only to find that it is available again — but not available in your size. This is the difference between being back in stock and available in all variants.
6. Monitor for broken links. Some e-commerce platforms show customers a broken link when the underlying product is out of stock. If your platform does this, it is really important to monitor broken links and set up redirects immediately. Even if your platform doesn’t have this flaw, you should still monitor for broken links — they’re remarkably common.
Out-of-stock experiences frustrate customers, especially for promoted products, yet this is incredibly common. Monitoring your customers’ shopping journeys for product availability issues, especially for promotional campaigns, is key to delivering a better shopping experience which consumers will love.
— Charles Nicholls, Founding Director and Chief Strategy Officer, SimplicityDX
About the Author
Nicholls is a social commerce expert and board advisor to several e-commerce startups. He founded SeeWhy, a real-time personalization and machine learning platform, which was sold to SAP. Serving as SVP of product, he built SAP Upscale Commerce, an e-commerce platform for direct-to-consumer brands and the mid-market. Today, Nicholls serves as founding director and chief strategy officer for SimplicityDX, the edge experience company. He has worked on strategy and projects for leading e-commerce companies worldwide, including Amazon, eBay, Google, and many others.
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