How Online Retailers Can Avoid Costly Out-of-Stock Issues – HBR.org Daily
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This article explores how providing online customers with information about high-stock delivery windows can reduce stockouts and increase customer spending. An experiment conducted by Instacart showed that this approach led to a 4.6% increase in average daily spending and a decrease in the proportion of items replaced or refunded. The study highlights the broader applicability of this strategy for various online retailers and its potential to improve customer experience and revenue.
Stockouts — when a customer wants to buy a product that’s not available — are the quintessential failure of supply to meet demand. According to one estimate, stockouts cost retailers nearly $1 trillion worldwide annually. Stockouts result in more than lost sales; they also drive negative customer experiences. This can discourage customers from returning to the retailer in the future, harm a brand’s reputation and customer loyalty, and even lead to higher operational costs.
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