While keeping product in stock is key to driving results both online and offline, there are significant differences in how availability should be managed on each, in order to optimize shopper experience and business results. Understanding the peculiarities of online availability is fundamental to maximizing sales and share growth, and to leading an effective and efficient business operation.
Beyond the obvious: Online availability peculiarities
There are three main aspects to consider when embarking on a journey to optimize online availability management:
Differentiate ‘Physically out-of-stock’ vs ‘Digitally out-of-stock’
A product may be out-of-stock online even when it is physically in-stock at the location from which the online platform is sourced. The magnitude of this gap and the reasons behind it vary from retailer to retailer – but it pretty much always exists. It is important to be able to distinguish between physical and digital out-of-stocks, since they require very different actions and capabilities to resolve the issue in an effective and efficient way.
Out-of-stock impact goes beyond immediate sales loss
While the obvious potential impact of being out-of-stock is the loss of that specific sale, the impact may go beyond just. When a shopper can’t find the product they want, their loyalty is put to the test; losing a customer for good would not only cut their lifetime value short, but it would also increase costs if a new customer were to be acquired. Another example of extended impact is that of organic share-of-search; out-of-stocks can affect share-of-search results even after the product becomes available again, stretching the sales impact beyond the unavailability period.
Retailers can be partners in tackling availability problems
Out-of-stocks are bad for both brands and retailers – they share a goal of delighting shoppers, and out-of-stocks do exactly the opposite, risking the loss of the shopper. Being effective and efficient in managing out of stocks is beneficial for retailers too, and they are typically eager to discuss a collaborative approach to getting there, together.
Mastering online availability management: a maturity model
Mastering online availability management is an important capability to develop for any eCommerce / Omnichannel business, as it will impact the top and bottom line in the short and long term. It is a journey that will vary slightly from company to company, depending on several factors including portfolio complexity, organizational structure, and available resources, to name a few.
Based on our experience in designing and building availability management capabilities, and in executing them while continuously improving them, we have developed an Availability Management Maturity Model. The model outlines an illustrative development journey ranging from basic through to best, across 4 key pillars: Insights & Analytics Capabilities, Prioritization Capabilities, Cadence, Retailer Partnerships, and other miscellaneous considerations. This model is not intended to be a one-size-fits-all model, but a illustrative model for what a journey to mastering online availability could look like.
Figure 1: Illustrative Availability Management Maturity Model
As with any initiative – make sure the developed solution is actionable, and that processes to act on the insights delivered are developed as part of the initiative. Even the most sophisticated data won’t have an impact on its own.
Bottom line
Mastering online availability management can result in significant returns in a short time period and contribute to building a sustainable and growing business over time. To do so, it is important to understand the peculiarities of online availability and carefully plan a journey for your company to develop the capabilities to efficiently and effectively manage it.
This is pretty much the definition of “long-hanging fruit” – do it!
