Photo: @cannelle.olga via Twenty20
How much inventory visibility do retailers need to give consumers?
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.”
- Latest OrderDynamics Global Research Finds Only 37.6 percent of Retailers Offer Click & Collect – OrderDynamics
- 5 Ways Consumers Connect to Stores With Mobile Shopping – Google
- Technology: A Small Business’s Secret Weapon – Aqua Magazine
- Seventy-Six Percent of Gen Z Shoppers Pick Stores as Shopping Destination – Profitect/Globe Newswire
Discussion Questions
DISCUSSION QUESTIONS: How transparent should retailers be in giving consumers information on inventory availability? Should the goal be active (as close to real-time inventory availability as possible) or passive (only out-of-stock disclosure)?
Poll
BrainTrust
David Weinand
Chief Customer Officer, Incisiv
Art Suriano
Chief Executive Officer, The TSi Company
Let’s differentiate between “just shopping” and “I am on a mission to BUY.” If I am in BUY mode then inventory availability is an immediate tie-breaker, a definite advantage. Active is true customer service. Passive is “gee, I hope I have it in stock, but if I don’t maybe the customer will buy something else.” And I get that it is no small task for the systems to handle real-time inventory availability by SKU by location, but obviously there are retailers who have figured that out.
Letting the customer know the item is available at the store for purchase is a tremendous convenience, but it needs to be accurate. BOPIS helps to solve that problem. However, when the customer wants to see the item before making the purchase they want to know if it is in the store they’re looking to visit. We have all had the misfortune of reading “in-stock” online and then getting to the store only to find out it was an error. That is a bad customer service experience and does not sit well for future sales with any customer. So retailers are smart to provide this service on their website, but it is vital to make sure their information is 100 percent correct. When done correctly, it’s a great way to get customers into the store and to increase sales.
I have pointed many times to IKEA’s inventory visibility for consumers as the gold standard for how to share inventory. Not only do they show you today’s inventory, they give you an assessment on how much that means the inventory will likely actually be there (a red-yellow-green risk assessment), and they project that inventory level two days out into the future. Now THAT is inventory visibility.
The intent should be to give consumers the confidence to know that if they come to the store, the items they’re looking for will be there. That’s it. Whatever it takes to do that should be plenty. Sometimes that’s just an assessment of risk all by itself – there’s a high probability of it being there, a medium probability, a low probability. Sometimes that means giving specific inventory levels. With IKEA, sometimes you’re selling things like chairs, and just “some probability of it being in stock” is not enough. Do you need two chairs? Four? Eight? That’s when you need specific inventory levels. And it’s important to note that you don’t have to have one policy for all items – you can vary it, for all the reasons above.
Whatever visibility customers need in order to have the confidence to come to the store: that should be the bar.
Active — all day long. Expectations around visibility were set by Amazon a long time ago and that train has left the station. The tools exist to provide visibility and the examples cited prove it can be done. Also, tools like auto replenishment below a certain threshold (Home Depot has this capability) can go a long way to ensuring a better in-stock position. Confidence around that makes it easier to enable things like active inventory visibility.
Transparency can get tricky. Certainly, if a customer orders something online the retailer should immediately inform the customer if the item is not in stock and if it is on order. Showing an abundance of an item in stock can also cause a customer to postpone a store visit, until there’s none. Additionally, displaying the stock position of an item in stock (or in warehouse), but below a low threshold can, in fact, cause a customer to place an order immediately, or visit the store immediately.
A retailer has to make the choice of yes/no for inventory and, if yes, make sure it’s accurate. I’m with the Gen Zs – if you tell me you have the product and you don’t, I’m not going back to your store for some time (are you listening, Target?). If you opt out of inventory, you run the risk of having a competitor who makes that available. If you are giving shoppers a choice between my store, which may or may not have it, and your competitor, who is more precise, you’re going to have problems. This is probably more important for more expensive items, but not exclusively so.
Why not provide complete and total visibility? There is nothing more frustrating for the shopper when the item they want to purchase is not available or, even worse, when a retailer makes it look like it is available. Trust is everything.
Confusion. Disappointment. Frustration. Anger. That’s the unhappy path consumers take when things go awry. Out-of-stocks are an absolute trigger. By providing transparency into inventory, retailers can stop the downward slide at the disappointment stage (where there are mechanisms to recover) by coming clean on lacking inventory.
A great example is the BOPIS situation my wife experienced at Target, which I recounted on yesterday’s BrainTrust Live! Target had the items she ordered available for pickup, but half were damaged. The customer service rep said that she couldn’t leave her post so my wife had to walk the store to check the shelves for replacement inventory that it turned out they didn’t have. Aside from other aspects to the BOPIS failure itself, the customer service desk should have been able to check inventory and save my wife from walking back and forth across the store and compounding the inconvenience Target already created.
To paraphrase what I said to Will Hogben in the BTL conversation, the solutions to most UX failures are getting the basics right. Real-time inventory transparency is basic.
Well said. All these great path-to-purchase solutions foiled by a failure to execute Retail 101.
And… I learned today that on that store visit, my wife also tried using a customer price scanner and it was non-functional. Pointless to offer “technology” or “service” to customers if it’s not maintained. Yes Jeff, Retail 101.
Real-time inventory visibility is fast becoming table stakes both for online and physical store shopping. Of course, inventory visibility has its inherent risks… such as highlighting out-of-stock conditions. So before you lose that shopper, ensure you have real-time product substitutions available.
Retailers should absolutely be transparent in giving consumers information on inventory availability, with the big caveat of only if the technology can do it accurately. As noted in the article, shoppers could leave and never come back if they feel like they’ve been misled by inventory data. Assuming the tech can accurately display what’s available, then it’s a no-brainer for retailers. It’s just good customer service.
Out-of-stock disclosure is getting pretty close to being table stakes. Real-time inventory levels can be helpful and low levels obviously promote action by creating a sense of urgency, but brands should be careful not to lean too heavily on those type of psychological tactics as they can sometimes cause consumers to make a non-optimal decision leading to buyer’s remorse and a disincentive from future interactions.
Interestingly U.K.’s Competition and Market Authority recently dinged some hospitality brands for how they were utilizing inventory and similar tactics with their online booking tools.
Retailers are in business to sell stuff. For all the retail-speak of the touted “customer experience,” this is a top level no-brainer. This is not a “good to have” this is a “have to have.” At the top of the list, real-time inventory. Forget robots sweeping the floor on aisle 10, forget AI to enhance the customer experience. It all means nothing if the customer has no clue if the item they want to buy is or is not in stock. The lasting sting of poor customer experience.
The transparency is important especially for BOPIS. The more information that is available, the better the shopper can make store pickup decisions. My experience last night was not so good. I found a clock radio I was looking for listed as available in a local Target store. I drove to the store and found an empty spot on the shelf. The associate’s handheld also said the item was in the store. Then he said to me “The systems have been giving out bad information lately.” He called another store, talked to an associate who looked on the shelf and found one at the second store where I drove to get it. It did not make for a pleasant experience and shows the importance of accurate inventory.
Knowing the number of items available gives me more confidence that the item the shopper is looking for will be there. As one associate said to me, “If it says there is more than one item in the store, it is probably there. If it says one in stock, be careful.” Passive signals are good, but active numbers are better.
Many people who want total visibility to me ignore the basics of retail operations.Those of us who actually have worked in stores or with retailers in stores know the frustration of saying, “The computer shows we have three but I can’t find them.” There are many reasons for this but the implication of showing product availability implies those numbers are static, so someone looking today might plan for tomorrow and be disappointed. But also could discover a sweater online, go to the store in an hour and can’t find it because someone had it in a fitting room, the tag was missing, it was stolen — a million reasons. I agree with Nikki on the IKEA model which states risks and likelihood, not fact.
Through the lens of the shopper who is on a journey to purchase, near real-time inventory visibility- online or in a physical store is expected. Based on experience, I suspect many retailers have fairly accurate insight to their inventory at the Distribution Center level, but their visibility and accuracy falls dramatically at the individual store level.
The myriad of paths of both shopping and buying available to today’s digitally-empowered shopper forces both brands and retailers to have near real-time visibility of where their products are at any given moment. While this may not be necessary for a $3 box of Corn Flakes, it is mandatory for a Makita drill at The Home Depot or Lowe’s.
Digitally-empowered shoppers and buyers at the very least expect an accurate experience. As noted by Nikki, IKEA is a “gold standard” as they mitigate, forecast and manage shopper expectations. The Target experience shared by Harley highlights the experience that reflects poorly on the brand.
I think the only things stores “must” do is to be accurate. Few things are worse than being told something is in stock, going to the store, and finding it isn’t. Of course that’s presumably one of the purposes of “real time.” If there’s only one or two showing, you know you’re taking your chances.
Consumers expect inventory visibility and retailers need to offer inventory visibility – in real-time. As noted, many consumers check inventory availability at their local store before visiting the store.
The problem with many retailers’ systems is that their inventory visibility is based on yesterday’s latest batch inventory update, which causes problems. Without real-time inventory visibility, you risk customers reserving products that are out of stock or retailers need to keep a safety stock to prevent this from happening. Safety stock is an expensive proposition and you also risk turning customers away when you actually have the product.