How Product Out-Of-Stocks Can Help You With Better Inventory Management

Learn how Product Out-Of-Stocks Can Help You With Better Inventory Management.

If your eCommerce brand follows a poor inventory management strategy, it will face product stockouts. And more than 50% of your customers who land on those out-of-stock pages will opt for a competitor's product.

Now, most eCommerce businesses restock the products within a week unless there's a supply/ manufacturing issue. And because it's restocked in such a small period, many eCommerce business owners find the loss numbers manageable.

However, the numbers become daunting when we measure the number of all out-of-stock events by their average duration. Research shows stockouts that last ten days are responsible for 50% of lost sales due to product unavailability.

So, the longer your inventory is empty, the more revenue and reputation loss you'll have to deal with. This is why businesses must have a demand forecasting strategy to manage inventory properly. And the better you manage inventory, the fewer stockouts you'll face.

In this blog, we'll share how demand forecasting can help manage the inventory, the associated challenges, and how you can use your out-of-stock strategy for this purpose. Hop on!

What Is Inventory Management?

An inventory consists of all the products that your company handles with the intention of selling them. And inventory management is the process of controlling and tracking the inventory.

In this process, everything from production to sales is monitored to ensure that the right quantity of products is available at the right time. Inventory management consist of five stages:

  • Purchase: Buying raw materials to turn them into products
  • Produce: Making finished products using raw materials
  • Hold: Store finished products before sale
  • Sell: Shipping products to customers in return for payment
  • Report: Updating the inventory count and revenue generated

With proper inventory management, you can give a smooth shopping experience to your customers. Moreover, it's the most critical factor determining how often an eCommerce business will face a stockout.

How Does Demand Forecasting Help Improve Inventory Management?

Demand forecasting in eCommerce is used to estimate customers' demand for products.

Simply put, predicting future sales. With demand forecasting, businesses get a basic idea of how many sales they can expect for a particular product.

When demand forecasting is not a part of the strategies, decision-makers do the guesswork to reach an expected sales number. It will consume production cost and storage space without generating revenue if the expected sales number is too high from the true value. And if it's low, there will be a stockout leading to a bad customer experience.

But with a forecasted number (using the right data), more often than not, your product count will go neither too high nor too low. This will improve the cash flow too for your brand.

ECommerce Demand Prediction Challenges

Nothing great ever comes without challenges, and eCommerce demand prediction is no different. Here are some of them:

Applying the Wrong Forecasting Methodology

Many Shopify store owners apply the wrong methodology to make product demand predictions. And sometimes, relying on just one methodology is not enough to come to the right conclusion. You should put some time and thought before you go with any of the following options:

  • General Collective Knowledge: Get collective input from your sales, marketing, and support teams about product performance, sales trends, etc. This is the best way to identify the current trends with higher demand in the market.
  • Expert Insights: Gathering thoughts and insights from experts in your industry can help you determine the demand for different product categories.
  • Historical Analysis: This forecasting methodology will help you make the best business decisions. Here, you use your own store and product data to forecast the demand. For example, if a product did well on Christmas last year, there are high chances that it'll perform well this year too.

Moreover, there's a way that helps your forecast demand without having to go with any of these methodologies — Back in Stock Strategy. Later in the blog, we'll discuss how you can implement it for demand forecasting.

Using Incomplete Data for Decision Making

Using incomplete or unfiltered data can increase the difference between the true demand and forecasted demand. Your dataset needs to be extensive to make more informed eCommerce demand forecasts.

3 Ways to Forecast eCommerce Demand

Here are some ways to estimate the demand for your Shopify store's products:

Quantitative Data Analysis

In Quantitative data analysis, you use the historical metrics of your store and the fluctuations in those metrics over a period of time. These metrics can be previous sales, repeat purchases, website analytics, etc. You then identify patterns and create a model out of these metrics to predict the demand.

Qualitative Demand Forecasting

In qualitative demand forecasting, the conclusion is based on market research, target audience surveys, and the opinions of industry experts. Moreover, qualitative forecasting also considers the market's economic circumstances.

Using Out-of-stock Products

This is a completely out-of-the-box strategy to forecast demand. So every eCommerce business faces a stockout. But stock outs don't always have to be treated as a loss.

You can find multiple opportunities in it to not just forecast demand but also boost overall sales. You can let people sign up for back-in-stock alerts, which will give you an idea about how many people want your product before the launch.

You can estimate current and future demand based on how many people sign up for the alert. Let's discuss how you can use out-of-stock products to forecast demand.  

Using Out-Of-Stock Products for Demand Forecasting

When some of your products are out-of-stock, you get an opportunity to get to know from customers if they would want to have them. You can create strategies around these products like Restock Alerts, Pre-order, campaigns, etc.

These strategies will help you forecast demand easily and uniquely. Here are some strategies to help you forecast demand and boost sales for your stocked-out products.

Keep Out-Of-Stock Product Pages Live

If you wish to create any strategy around out-of-stock products, you should never unpublish or delete the product page. The idea is that if your customers can't see your stocked-out products, how will they ever feel like buying them?

When you keep the product page live, customers can visit it and find an expected restock time. You can also give them options to sign up to receive an alert or pre-order the product.

These strategies will help in increasing sales as well as forecast the demand.

However, if there are some products that you have discontinued, then you can redirect the customers from the stocked-out page to the product that you want to increase the demand for.

Assess Demand Using Back-In-Stock Strategy

Doing all the qualitative and quantitative analysis consumes multiple resources and a truckload of time. Sometimes, by the time you conclude, the trend in the market changes. This is where a back-in-stock strategy trumps the out forecasting methods.

A back-in-stock strategy gives you access to the data of people who signup to receive an alert. With this data, you can determine which products are most in demand.

If many people sign up for a specific product, it has to be your store's current trending product. So, when you restock, you must have that product in abundance. A back-in-stock strategy ensures that products are constantly restocked in the right quantity — neither too low nor too high.

You can use Appikon Back in Stock Alerts app to create a robust strategy around out-of-stock products. This app allows your customers to receive an alert on the channel of their choice, ensuring the maximum open rate. And the higher the open rate, the higher will be the conversion rate.

Simply put, you can boost the sales of restocked products with a solid back-in-stock strategy while ensuring you have enough left for those yet to order.

Open Pre-orders for Currently Unavailable Products

Opening pre-orders is a significant way to keep selling the products even when they are not in stock. So, when a product is stocked-out, you can replace the "Buy Now" button with "Pre-order Now" so that customers who reach that page are not entirely disappointed.

Ideally, the demand for pre-ordered products is higher than the product that has brought the same number of back-in-stock alert signups.

Here's the thing, when people pre-order a product, they promise you a sale. These are buyers with higher purchase intent. And if they are ready to pay for the product beforehand, the demand for it must be higher.

Suppose you got 25 sign ups for back-in-stock alerts and the same number of pre-orders. So, if you've restocked 50 units of the product based on alert sign ups count, then you should restock around 100 units for the same number of pre-orders.

Moreover, the pre-order strategy is not just for out-of-stock items. You can also use it to forecast the demand for products that you're yet to launch.

Use Historical Out-Of-Stock Data to Identify Trends

If you've faced a stockout for your products in the past, you have access to data related to product trends. You can use this data to identify the products with the highest demand at a given time of the year.

Let's say you run an eCommerce store where you sell products for decoration. Now, it's Christmas, and you've to find out which product will have the highest demand to increase its production and avoid a stockout situation.

Using historical data, you'll find that stars, bells, and lights are some items that have gone out of stock during this time of the year. So, when you keep more units of these products in your inventory, you can avoid a stockout.

Forecast Demand for Better Inventory Management

One of the keys to success for an eCommerce business is forecasting the demand accurately. And doing it using out-of-stock products is one of the easiest and most reliable ways.

Stockouts are something that you can't avoid in an eCommerce scene. It's bound to happen. But if you have a proper strategy around it — restock alerts or pre-orders — you can still keep the sales going and predict demand for the future.

The Appikon Back in Stock Alert app allows you to set up a robust back-in-stock strategy so that none of your customers leave the product page disappointed.

It offers multichannel notification support to give customers a satisfactory purchase experience. Install Appikon today for more sales and better inventory management!

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Percy’s Powder

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CAINTÉ

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"I've had the app for about 2 weeks now and it has helped me get a few extra orders. I wasnt sure if it would really help but it’s increased sales by about 20% so far and clients generally dont mind waiting because its very clear that they are placing a back order."

Legion Health

Australia

"A very useful tool, simple and with a good customer support service. It has helped us to sell products that we do not have in stock yet."

Andromeda Moto

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SpaceTek

Australia

"Helps me inititiate pre orders for my customers so I can manage sales! Helps me better understand the demand I have coming in for an item."

Chérie Lane

United States

"I love this app because it gives our customers the option of pre-ordering their product before it's released. Plus it helps us to continue having revenue whilst we wait for our supply. I am very happy with the customer service too. Highly recommend this app!"

Percy’s Powder

Australia

"I just started using the app and so far I am loving it. It helped me launch my pre-orders and allows me to collect orders on items that have sold out for the time being. A plus for my revenue stream. The support staff is very helpful and patient. Absolutely recommend this product."

Life Light Healing Services

United States

"Increased sales by 20%. We always have pre orders waiting when our stock arrives. Recommended to anyone who wants to maximise bottom line."

SpaceTek

Australia

"Helps me inititiate pre orders for my customers so I can manage sales! Helps me better understand the demand I have coming in for an item."

Chérie Lane

United States

"I've had the app for about 2 weeks now and it has helped me get a few extra orders. I wasnt sure if it would really help but it’s increased sales by about 20% so far and clients generally dont mind waiting because its very clear that they are placing a back order."

Legion Health

Australia

"A very useful tool, simple and with a good customer support service. It has helped us to sell products that we do not have in stock yet."

Andromeda Moto

Spain

"Helped my business a lot! Perfect app. No problems in using it and very very good support. Would install it without a doubt."

CAINTÉ

Australia

"Super easy to deal with, customer service is super responsive and great app for catching sales, thank you :)"

Kina & Tam

Australia

"This app has made me soooo much extra money and helps with knowing exactly what inventory and sizes to restock! It’s easy to install and customize, not to mention the super fast and friendly customer service! I literally could not be any happier with this app. It is a game changer!"

MBM Swim

United States

"If you don't have this app your losing sales. No question about it. We are making so much more money on our new release items and out of stock products."

Seek Jesus

Australia

"The app increased my sales by at least 20%. Also their customer service is great. Fast response times and very helpful. I'd definitely recommend this app."

Lakes Rivers Streams

United States

"This apps brought me $900 on the free plan, I've upgraded now as I'm sure it'll do even better for my sales. The customer service is amazing, helped me with using the app super quick responses and solved my question with ease. Thanks!"

Zani Collective

Australia

"This APP has helped my brand grow in sales and customer service. The support is top-notch. I also find the APP immensely valuable in forecasting demand and what customers are willing to buy. I would recommend this APP if you are looking to grow and convert customers."

NOTIQ

United States

"Great product, I think after the 2nd day of using it we had already gotten $188 in sales from the reminders. It's nice because sometimes people return an out of stock item that we wouldn't normally announce a restock for. I also had a question about something and they responded very quickly in the chat."

Geode Swimwear

United States

"This app has been amazing for our company! We are able to have people sign up for an item that we are in the process of making, or an item that is out of stock. Once the item arrives, we generate a lot of sales from this app!”

Godiva's Secret Wigs

United States

"Great app!! I needed a way to quickly and efficiently alert my customers when items were back in stock and this app does the trick!! One of my favorite features is the "Text" option, so my customers get an almost immediate notification! This app has definitely increased sales!

Live Love Posh

United States

"This app is great for scaling businesses that are struggling to stay in stock. Before integrating this app I had trouble keeping track of customers who wanted to buy my products that were sold out, now as soon as I'm back in stock the sales come in by themselves.”

Xstream Audio Systems

United States

"This app is so valuable to our store. We like to alert customers of up coming new releases, so people sign up to be "notified". Helps us limit over ordering, and customers are happy as they get notified instantly when stock is in stock. Helps with sales and moving stock quickly. Fantastic App"

OzToyStore

United States

"This app has made me soooo much extra money and helps with knowing exactly what inventory and sizes to restock! It’s easy to install and customize, not to mention the super fast and friendly customer service! I literally could not be any happier with this app. It is a game changer!"

MBM Swim

United States

"If you don't have this app your losing sales. No question about it. We are making so much more money on our new release items and out of stock products."

Seek Jesus

Australia

"The app increased my sales by at least 20%. Also their customer service is great. Fast response times and very helpful. I'd definitely recommend this app."

Lakes Rivers Streams

United States

"This apps brought me $900 on the free plan, I've upgraded now as I'm sure it'll do even better for my sales. The customer service is amazing, helped me with using the app super quick responses and solved my question with ease. Thanks!"

Zani Collective

Australia

"This APP has helped my brand grow in sales and customer service. The support is top-notch. I also find the APP immensely valuable in forecasting demand and what customers are willing to buy. I would recommend this APP if you are looking to grow and convert customers."

NOTIQ

United States

"Great product, I think after the 2nd day of using it we had already gotten $188 in sales from the reminders. It's nice because sometimes people return an out of stock item that we wouldn't normally announce a restock for. I also had a question about something and they responded very quickly in the chat."

Geode Swimwear

United States

"This app has been amazing for our company! We are able to have people sign up for an item that we are in the process of making, or an item that is out of stock. Once the item arrives, we generate a lot of sales from this app!”

Godiva's Secret Wigs

United States

"Great app!! I needed a way to quickly and efficiently alert my customers when items were back in stock and this app does the trick!! One of my favorite features is the "Text" option, so my customers get an almost immediate notification! This app has definitely increased sales!

Live Love Posh

United States

"This app is great for scaling businesses that are struggling to stay in stock. Before integrating this app I had trouble keeping track of customers who wanted to buy my products that were sold out, now as soon as I'm back in stock the sales come in by themselves.”

Xstream Audio Systems

United States

"This app is so valuable to our store. We like to alert customers of up coming new releases, so people sign up to be "notified". Helps us limit over ordering, and customers are happy as they get notified instantly when stock is in stock. Helps with sales and moving stock quickly. Fantastic App"

OzToyStore

United States