Study: Online retailers losing billions in sales to out-of-stocks
Out-of-stocks are a problem for retailers that may be almost twice as bad online than in stores. That’s the conclusion of new research from the Grocery Manufacturers Association (GMA), which found sites across the globe could be losing billions in sales every year because products aren’t available online when consumers wish to purchase them.
The report, “A Worldwide Study of Extent, Shopper Reactions, and Implications for Non-Food Online Retail Categories,” written by Daniel Corsten, professor of operations and technology and IE Business School, and Thomas Gruen, professor of marketing at the University of New Hampshire, tracked online product availability of baby care, fabric care, hair car, oral care, skin care and shaving products on websites operated by retailers in China, France, Germany, Japan, the UK and the U.S.
“This is one of the first studies on online availability after previous reports over the past decade studying on-shelf availability and its effects on consumer purchasing patterns,” said Keith Olscamp, director of industry affairs and collaboration at GMA, in a statement. “The findings should encourage retailers and brands to collaborate and enhance online availability in the fast-growing area of online retail.”
The GMA research found that out-of-stocks on the categories covered in the report was 15 percent online compared to 8.3 percent in physical stores.
The somewhat good news for e-tailers in these findings is that, unlike consumers in stores who will walk if a product is out-of-stock, those same shopping online are more likely to look for a substitute product rather than going to another site or a physical location.
Despite the silver lining, the report finds that both online retailers and brands are hurt by out-of-stocks, with U.S retailers taking “25 percent of the adverse consequences compared to 35 percent for brands.”
- New GMA Report Highlights Costly Online Out-of-Stock Problems for Consumer Goods – Grocery Manufacturers Association
DISCUSSION QUESTIONS: Do you see out-of-stocks as a significant problem for retailers selling online? Are the solutions for avoiding out-of-stocks different online than in stores? If yes, how?