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How much inventory visibility do retailers need to give consumers?

Written by Tom Ryan

Photo: @cannelle.olga via Twenty20

According to an evaluation of about 2,000 retail websites from OrderDynamics, only 38.1 percent of retailers show basic inventory visibility on product pages. A strict like-for-like, year-over-year comparison found a 30.7 percent drop in active online inventory visibility. OrderDynamics noted that passive inventory visibility is a factor in the decline. Unlike active inventory visibility, a passive approach only signals when an item is out of stock. A cursory review of retail websites by RetailWire showed that inventory transparency generally referred to product availability at stores. Checking in-store inventory availability is often cited as one of the primary shopping tasks for mobile phones. Recent research from professors from Emory University, Washington University in St. Louis and Northwestern University unsurprisingly finds that showing limited availability of an item encourages purchases. Google research further finds that one in four consumers who avoid stores say it's because they don't know if a product is in stock. Google also found ads displaying real-time inventory availability drive customers to visit stores, with 50 percent making an in-store purchase after searching for products sold nearby. But saying an item is in stock when it isn’t carries risks. A survey by Profitect of more than 1,000 U.S. Gen Z (18-22) consumers found 60 percent always or sometimes check a store’s in-store inventory availability online before going to make a purchase. Twenty percent, however, said they would never shop at the retailer again if a website said a product was available in-store and then found that it was out of stock. A RetailWire review of websites found many retailers enable checking availability at the store level, but encourage consumers to reserve items for in-store pick-up to apparently avoid out of stocks. Retailers have a variety of approaches to providing inventory transparency:
  • Home Depot’s site stands out for showing the exact number of items available at nearby stores;
  • On Kohls.com, consumers can check whether an item is in stock, with availability “refreshed every 10 minutes;”
  • Best Buy shows whether a nearby stores has an item “ready in one hour” or for a certain date in the future;
  • Amazon.com shows most items listed as “in stock,” but some carry messages such as “only 17 left in stock.”
 

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