Discover how retailers can combat the trillion-dollar problem of out-of-stock items. Learn the importance of accurate inventory data, demand forecasting, and efficient distribution strategies.
How often have you seen a product you love on social media, clicked the link, and found out it’s out of stock? Or you’ve ordered something online, only to receive a notification that your order has been canceled because the item was oversold. This happens more often than you think, a huge problem for consumers and retailers. The IHL Group estimates that retailers miss out on almost $1 trillion in sales annually due to out-of-stock items.
A survey of 1,003 retailers and direct-to-consumer brands revealed that 58% had less than 80% accuracy in their inventory data. That means there’s a 20% likelihood that the product a consumer wants to order is not in stock. Sometimes, the product is available elsewhere, in-store or at an external retailer, but it doesn’t appear online. That’s even worse. The customer is disappointed, and the retailer misses the opportunity to sell the item they have, and no one wins. This is an issue, but how can it be solved?
Inventory Visibility
Managing stock and data from different places, such as warehouses and stores, is challenging for retailers. Since inventory changes constantly, they must keep up in real time to know what and where products are available. Retailers can achieve this by using modern inventory and order management systems that rely on data, ensuring accurate and timely inventory. This will greatly lower the risk of mistakenly selling too much or too little of a product.
Retailers can use a data-driven approach to align sales channels with the latest inventory levels. These systems allow retailers to easily identify trends and adjust their inventory accordingly. Implementing a proper system is crucial for maximizing revenue. This method can be beneficial during high-demand periods such as back-to-school or holiday seasons. It allows retailers to match their intense marketing efforts with fluctuating inventory levels.
Also Read: The Future of Retail is AI: Personalized, Efficient, and Customer-Centric
Clean Data
Once businesses can ensure that the quality of their data is sorted, they can start investing in new systems and processes. Integrating modern inventory systems with legacy systems and workflows can be complex. A careful plan, extensive staff training, and a dependable platform must be chosen to do this successfully. This can achieve a consistent and accurate data flow across all platforms, enabling customer interaction based on the most current information. Here are some other areas teams should focus on:
- Demand Forecasting: The ability to predict and meet consumer demand is crucial. Businesses can uncover demand patterns by analyzing data from previous sales and fulfilled orders. This insight ensures that products are available where they sell quickly, focusing on fulfillment in areas with less foot traffic. Website search queries can inform retailers of consumer interests, enabling them to devise effective fulfillment strategies catering to customer needs.
- Capacity or Network Planning: Strategic product placement is a cornerstone of maximizing distribution efficiency. Utilizing data to assign stores and suppliers ensures the network operates at peak performance. This approach guarantees resources are in place for a robust distribution that can adapt to the demands of the retail industry.
- Distributed Order Management Solution (OMS): A modern OMS stands out as an indispensable tool for operational excellence. It’s the starting point for balancing demand forecasting and network planning. Look for an OMS that promises a swift implementation, boasts a flexible platform, and offers scalability to grow business. It can streamline operations to deliver on a brand’s promises.
There are many ways to use data to create a better customer experience while adding to the bottom line. Narrowing down what is important to a retailer typically becomes important to the end customer. Smoothing out the buying process allows sellers to sell more and buyers to buy enjoyably.
Also Read: How Predictive AI is Transforming the Retail Industry
In today’s market, where cost of living pressures make customer loyalty more precious than ever, removing antagonizing hiccups from the process is even more important. The answer lies in optimizing inventory allocation, distribution, and fulfillment strategies using data-driven methods. By doing so, retailers can avoid the trillion-dollar problem of dirty data and out-of-stock items and delight customers with products they love and can access anytime, anywhere.
