Digital Out of Stocks - and How to Prevent

Digital Out of Stocks

You Can’t Sell What Shoppers Can’t Find 

Out of stocks are the nemesis of brick and mortar retailers and the brands they sell.  All the effort spent on assortment, price, promotion, category management and supply chain is wasted when the product a shopper wants to buy isn’t available.

Online retail is supposed to be nearly immune from out of stocks.  But I’ve found instances where hundreds of products available for sale aren’t shown to customers wanting to buy them.  That creates digital out of stocks.

Search Data is the New Category Definer

In the physical world, strolling a category aisle is the product search function.  The data used to locate a product is brand packaging followed by product information from the label.

With online shopping, search changes how products are discovered.  Shoppers often start their product search using product attributes that suit their needs.  Brands come along for the ride.

Whether to merchandise organic ketchup with regular ketchup or with other organic products doesn’t matter online.  Users will either search for, “ketchup” or, “organic ketchup” and expect to see all the relevant products available for sale. But often they don’t.

Digital Out of Stock Example

The digital out of stock problem runs across product categories.  I’ll use a simple grocery example to illustrate.

According to Google Trends data below, gluten free is a popular search term.

Searches for gluten free are about double the searches for low fat and well above searches for sugar free.  Thus you would expect searches on a retailer's site for a popular term like gluten free to return all products that can claim this attribute.

To see what really happens, I started with a search for gluten free soup products on amazon.com.

My amazon search for gluten free soup returned 1,829 products.  The sidebar of additional search filters shows 14 unique soup brands among these products.

The same gluten free search performed on a national supermarket chain site results in 3 soup products.  On a regional supermarket chain the search result is only 1 soup product.  I also noted that the products presented by both supermarket chains featured, "Gluten Free" on the product label.

To verify that these supermarkets have digital out of stocks, I jump back to my amazon search results and filtered the list by one of the brands from the amazon list of gluten free soups.  That brand filter shortened the Amazon list from 1,829 to 26.  The brand I chose is a brand I expected both supermarket chains to carry but neither offered for sale based on my gluten free soup search.

To confirm that the supermarkets could have offered the soup products from this brand, I searched their sites again for soups from this brand.  Those searches showed that both chains carry many of the gluten free soup products from this brand that are offered in the amazon.com gluten free soup search.  Digital out of stocks confirmed.

You can do this exercise yourself on a variety of product attributes.  You’ll find some surprising gaps in what could be sold online versus what’s offered for sale.

As an additional check, I performed the gluten free soup search on Walmart and Target.  Two retailers that do a strong online business.  Both returned large and seemingly complete results.

Why Digital Out of Stocks Exist.

Someone isn’t paying attention to the product attribute data.

Retailers with more online experience understand that search is how their customers create categories and find products.  They are not going to miss a chance to sell by failing to supply products with all the relevant attributes they deserve.

Established brick and mortar chains, where online sales aren’t a large part of their business, don’t seem to be keeping up.  You could argue that the share of online sales for these chains is so small that it’s not worth their effort to worry about all these product attributes.  You could also argue that the online sales for these chains are so small because shoppers can’t find what they want to buy.

How to Eliminate Digital Out of Stocks

The solution is to make sure your online product database contains all the attributes each product deserves.  For example, all your products that qualify as being low sodium, low fat, gluten free, etc. should have those attributes in your product attribute database.  It’s the only way to make sure all the products that should appear in searches for those attributes actually show up. 

To make the problem a bit more challenging, many products can qualify for attributes that aren’t stated on the label.  There are some pretty clear rules you can use to derive accurate product attribute claims; specially in food. The FDA offers a very detailed Food Labeling Guide for food label claims regarding:  nutrition, health, qualified health, and structure/function. 

There are also services that can help you know which attributes each product deserves but is missing and close those gaps.  One service is Label Insight.

Label Insight handles over 15,000 product attributes in food alone.  They also cover product attributes for apparel, personal care and electronics.

They do a very thorough job of identifying the relevant attributes for each product based on industry regulations and an analysis of the product label.  As an example, if a product’s stated salt content is below a specific level, that product can earn a low sodium attribute, even if it doesn’t make the claim on its label.

Option B is to do it yourself.  But evidence suggests that’s not working out so well.  And if you look through the FDA Guide, it doesn’t look like it would be a lot of fun.

Retailers could require brands to provide a complete list of attributes for each product offered for sale.  Brands should be interested in complying since having the right attributes in the retailer’s product database eliminates digital out of stocks for their brand.

Whatever approach you choose, and whatever products you sell, you need to address the issue of product attributes.  It’s the only way to avoid lost sales opportunities from digital out of stocks.  It’s also how you make sure your shoppers are able to buy all the products they want to buy when they shop your online store.

As an added bonus, effective use of product attributes and site search data will give you insights to better understand the changing preferences of your shoppers.