Future of Commerce Blog

The Cost of Out-of-Stock: How Retailers Can Master Inventory Planning


Don’t let poor inventory management cut into your company’s profits. Learn how small and mid-sized retailers can calm their inventory chaos during the hectic holiday season.

Last Cyber Monday brought in big sales, but also a record number of out-of-stock messages on big retail sites like Target and Walmart. In fact, for every 100 product views there were 13 out-of-stock messages. That’s double the usual Cyber Monday rate, according to data from Adobe.

These statistics beg the question: If large retailers with seemingly boundless resources can’t properly anticipate inventory shortages, how are small and mid-sized (SMB) retailers with limited resource (but just as much business complexity) supposed to effectively manage their inventory during the hectic holiday season?

The Cost of Complexity

Today’s SMB retailers are leveraging the World Wide Web to not only grow their businesses, but to also better compete with big-box retailers. This means having more than just a physical store (or two or three) and a branded eCommerce site. Small and emerging retailers are increasingly leveraging online marketplaces like Amazon, eBay, and Etsy to tap into larger consumer audiences and grow sales. However, as sales channels are added and orders increase, so does the complexity of the business’s operations, ultimately compounding the challenges of managing inventory.

Whether businesses are experiencing stock shortages or surpluses, poor inventory management is costly. CNBC recently reported that out-of-stocks, overstocks, and returns are costing retailers a whopping $1.75 trillion per year. That was trillion, with a T.

Being out-of-stock during peak sales seasons causes missed sales opportunities, and overselling fuels aggravation, frustration, and brand distrust in customers. Conversely, retailers who are overstocked have unsold products taking up space on warehouse shelves and cutting into their profits.

Calming the Inventory Chaos

The core driver of inventory chaos is the multitude of disparate systems and spreadsheets required to track and maintain accurate stock counts and order information. And this number of systems grows with each additional sales channel and operational tool a business puts in place.

In order for SMB retailers to master inventory management for their multichannel businesses, they must integrate all the essential tools and information throughout their retail ecosystem into one centralized solution. A streamlined and automated inventory management solution allows retailers to track purchase orders, stock quantities, sales invoices, and detailed reports across all sales channels.

Having a simplified, singular dashboard to manage and maintain all their retail operations, saves SMB businesses valuable time and resources while helping them avoid the costly stock shortages and surpluses that even larger retailers still struggle with.

Megan DeGruttola

As Stitch's Content Strategist, Megan has a passion for telling and sharing compelling stories that educate, engage, and excite audiences.

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