Every move your business makes online is aimed at converting a visitor into a customer.
Branding is about conversion, product selection is about conversion, and marketing is about conversion. If you don’t get orders, you won’t have a business for long.
What if you convert, but don’t have the product in stock?
Ouch! That’s the worst case scenario for an ecommerce site.
The cost of losing those sales aren’t the only losses. You’re leaving your customers with a negative impression of your brand and ruining the reputation you’ve built as being a reliable company to purchase from.
The average out-of-stock rate for ecommerce businesses is about 8 percent, and it rises to 10 percent for promotional or discounted items. Here’s the thing: It wouldn’t be that high if every ecommerce business owner had an effective strategy for dealing with out-of-stock events.
In this Insight we’ll be looking at the cost that those events can have on your site’s conversion rate, then provide actionable steps you can take to reverse those impacts.
How Do Customers Perceive Out-of-Stock Events?
The best way to answer this question is with empathy. You’ve been on the receiving end of stockouts before. You need something, and you need it now… but finding it in-stock turns out to be a tough proposition.
How did you deal with the situation?
- Did you find the product at another store and buy it there?
- Did you backorder the item, settling for getting it later?
- Did you decide you could live without the item after all?
- Did you switch to a replacement product that could fill the gap?
Which did you choose?
And, maybe just as important to the seller, how did you react?
- Did you leave a negative review for the store?
- Did you rant and rave a bit before calming down?
- Did you swear to never shop with that seller again?
- Did you take it in stride and not let it get to you?
Nobody likes stockouts. At best, they are disappointing to the eager buyer. At worst, they hurt sales and create irate customers. It doesn’t have to be that way, though. There are a variety of effective ways to deal with out-of-stock products that increase revenue and boost customer satisfaction.
The Business Costs of Out-of-Stock Events
If the C-suite received a notification every time someone tried to buy an out-of-stock item, you would hear moans and groans all day long.
Stockouts are like completing the perfect pass, only to watch the receiver drop the ball before crossing the goal line. Only in the game of business, both sides lose when an item isn’t in stock.
A poignant example is Best Buy’s trouble fulfilling holiday orders a few years back. Complaints like those in Matt Burns’ article, How Best Buy Stole Christmas, hurt the brand and hurt customers too. Matt reported:
“Best Buy started reaching out to customers earlier this week — you know, mere days before Christmas — stating that the retailer was unable to fulfill orders placed as far back as November. Big Blue was sorry but they were canceling the affected orders. Happy holidays! Signed, your merry friends at Best Buy!”
There is a lesson to be learned here. Your out-of-stock events can become a disaster if they’re not handled well.
The Common Response to Out-of-Stock Items
Here are some common ways brands handle stockouts:
- Take the order anyway, then alert the customer about delayed delivery
- Pull the out-of-stock item from the catalog until it is back-in-stock
- Let the customer know the item is out-of-stock, and suggest related items
- Take a backorder from the customer and ship when the item is available
- Offer to alert the customer when the item is back-in-stock
- Do nothing… just ship the item when you get it and hope nobody notices
All these tactics for handling stockouts mean well, but the most effective way involves a few of these and some extras.
The good news about stockouts is they are 100% predictable. Stockouts will happen. Your strategy for responding to them will determine what happens next.
Recovering from Out-of-Stock Events
There is a silver lining to out-of-stock events. With a few steps, you can make sure you’re keeping many of those potential customers engaged, and turning a potential negative situation into a positive customer experience. Your key tool is the back-in-stock notification.
Customers who’ve opted to receive a back-in-stock notification are more likely to convert.
Your overall site wide conversion rate might be 2% but when you’re emailing those who’ve already expressed an interest in the product, that conversion rate increases significantly.
Relate to the customer immediately. Sincerely apologize for the inconvenience. Make it absolutely clear that you appreciate the business.
7 Simple Steps to Recover Out-of-Stock Revenue
1. Don’t delete out-of-stock product pages from your website
Removing and then re-adding a product on your ecommerce website when it’s out-of-stock can be detrimental to your SEO. Deleting a page that has backlinks or receives organic traffic could cost you valuable link equity, and will likely end up sending potential customers to a 404 page.
Additionally, redirecting out-of-stock pages to the homepage of your website is another common mistake. This creates a user experience headache for customers and hinders your ability to collect the user’s information to send out a back-in-stock notification.
2. Collect an email for when it’s back-in-stock
Replace your Add-to-Cart CTA with clear and positive notification text. Consider A/B testing specific CTA language to see what resonates most with your customers. With permission, you can also use this email for subsequent promotions and other brand emails.
Buck Mason is a great example of how you can collect a customer’s email for the purpose of sending a back-in-stock notification, without being intrusive. If you click on an item that’s currently out-of-stock, the “Add-to-Cart” CTA immediately changes to read, “Notify me when available”. It’s a simple and effective way to elevate the user-experience of your site and keep customers happy.
3. Be clear about the expected return date
If you are able to provide an expected date of return, it can help to give your consumers more to consider when browsing your site. This is most helpful when you have shorter out-of-stock windows as it will capture visitors who are willing to wait a little bit, but is also helpful for longer wait times in order to show goodwill and build trust.
4. Share related products
At this point on your product page, it can be effective tactic to share related products. This will capture sales from consumers who are less concerned with some of the details of the out-of-stock product. Related products not only help you save a sale when something is out-of-stock, but they can help increase your average order value.
5. Utilize back-in-stock emails
The next step is to work on your back-in-stock emails themselves. There are a few details to note here. Include the brand, the product, and its price in the email subject line. In the body of the email, we recommend including an image and mentioning the brand, product name, and price again. You can also include a reminder of why they are receiving the email, clearly explain that it’s back-in-stock, and include a very clear CTA that brings them to the exact product in the store.
8. Utilize SMS and push alerts
SMS text is quickly becoming one of the most effective ways to reach customers on their mobile devices. Providing customers with the option to input their mobile number instead of an email address may be an even more impactful way to notify customers that an item is back-in-stock.
Research shows that SMS open rates reaching as high as 98 percent, compared to average 20 percent of email communications. Additionally, it only takes around 90 seconds for a person to respond to a text message and 90 minutes to respond to an email.
7. Make it personal
One final step you can take that may potentially improve your conversion rate further is to personalize the back-in-stock email. If you can, collect the user’s email address and their name so you can send them a more personalized email when the item does get restocked. If the user has an account with your website, include saved items in the back-in-stock email to increase the likelihood that they’ll click-through on the email and return to your site.
8. Consider bonuses for out-of-stock items
You can include bonuses on orders of out-of-stock items. Free shipping, a discount coupon, or similar offers can help drive those conversions. Additionally, offering something “extra” to your users will increase their motivation to sign-up for a back-in-stock notification.
Going Beyond to Keep their Business
By offering options to your customers when they are disappointed, you show them you understand and you care.
The Best Buy experience illustrates the importance of going beyond perfunctory out-of-stock notifications to make sure the customers know for sure that you “feel their pain.”
Stockouts have persistently been lose-lose propositions. Nobody wins.
By reframing your response to stockouts, though, you can turn those results around.
We’ll leave you with one more thing to think about: Out-of-stock events provide the opportunity for you to find out more about your audience, and they give you an excellent reason to stay in touch with your customers.
Every out-of-stock event is an opportunity to learn and improve.
If you’re actively working to improve conversion rates on your website, it may be time to consider looking into a conversion optimization program. We offer a free landing page teardown for ecommerce business owners looking to improve the conversion effectiveness of their website, sign-up for your teardown here.
Want a free landing page teardown?
We’ll provide a data-driven critique of the usability and effectiveness of your site free of charge.
About the Author
David Hoos is the former Director of Marketing at The Good, conversion rate experts who deliver more revenues, customers, and leads. David and the team at The Good have made a practice of advising brands on how to see online revenue double through their conversion rate optimization services.