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How Out of Stock Items Impact Sales

Frustrations over out-of-stocks were again sparked by a fairly innocuous article last week in The Wall Street Journal that explored a push by many retailers to reduce inventories. One theme running through the numerous comments on the article was that out-of-stocks are causing shoppers to buy on Amazon.

Among the readers’ reactions:

  • “I try to shop at local retail stores but, too often, they don’t have the items in stock. I’m referring to basics like razor blades and shampoo. Now, I just order from Amazon. It’s faster, easier and usually without a shipping charge.”
  • “When I have gone into the stores recently, a lot of what I’m looking for (especially sale items) are sold out or unavailable. So I wasted time and gas to come up empty.”

Recently, retailers have been emphasizing smaller, more frequent deliveries to improve inventory management, according to the Journal article. Mark Wilkinson, a U.K. food industry supply chain consultant last October told, “Some retailers have moved from a single delivery every 24 hours to as many as three.”

Other strategies, according to the Journal, include lowering backroom stocks and reducing the level of items on upper shelves to lessen the need for ladders and forklifts.

The Journal indicated that the greater urgency to lower the cost of inventories has been prompted by the need to at the same time expand inventory to cover both online and offline selling as well as deal with the complexities in shipping from stores and the overall erosion in retail profitability.

Walmart in recent years faced numerous media reports of “out-of-stock” situations that were attributed to employee cuts that hampered restocking efforts.

In a twist, Toys “R” Us last holiday moved to fill shelves with more products. Toys “R” Us CEO David Brandon told the Journal last December, “If a customer can’t find what they’re looking for at your store, 60 percent of the time they will shop somewhere else and never come back.”

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