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Out of stock – a problem worse than you think

“Zero availability” – not having an item in stock – damages business more than most merchants realise. “You can’t imagine how much you lose,” says Johan Lidenmark, the chief digital officer of Intersport, laying out seven reasons for why the 0 is so bad for you.

Johan Lidenmark brings up the significance of “the zero” as often as he gets the chance; how it hurts business

Johan Lidenmark

in many different ways and should be one of your highest priorities.

“It’s easy to be seduced into thinking that you need to put your time into learning about and integrating Instashop in your business, or building an app like H&M,” he says. “But if you don’t have the item in your store once a customer shows up, that doesn’t matter, does it? I know that the basics – taking care of the flow of logistics so that all items are available – may not be as cool, but they need to be prioritised.”

Here are his seven reasons why zero availability is so damaging to retail businesses.

 

1. The money you have already spent to get the customer to the door goes down the drain

When a prospective customer shows up in your store, it’s a result of your previous efforts. You might have spent lots of money on ads on social media or SEO. You might have put months or years of time and money into building your brand attractiveness. Or you might have invested in different marketing initiatives. Congratulations, you succeeded! The customer is here! Too bad the product is not available after all that effort.

 

2. It hurts your brand

How does it affect your brand when people search for a specific item or are pulled into your store via an ad, and then end up staring at an empty shelf or that “zero availability” message online? You’re right. You’ve wasted their time and given them a negative experience, and they may not bother to give you a second chance.

 

3. You don’t lose a visitor – you lose a buyer

Most people visiting your store won’t even notice that an item is out of stock. However, the people who do are in buying mode. They intend to buy that particular item. Think about that for a minute. It’s not an average browsing visitor you are losing – but a buyer. That person was ready to hand over money to you, but now can’t.

 

4. Your competition gets a larger piece of the market pie

What do people do when they want to buy something, but can’t find it in your store? Unfortunately for you, they often go somewhere else. Perhaps your competition fulfils their need instead and creates a happy customer. Guess what that customer just learned? That they might have more success if they go to that other store next time, too.

 

5. You lose lifetime value

When you lose a sale, you decrease the likelihood of that person coming back. Ever. Or at least not as often – it depends on the kind of business you have. If you add up all the money that they would have spent in your store the next months or years, money that they from now on might spend with your competitors, how much money do you lose?  All because of that zero availability experience.

 

6. You miss the opportunity to upsell

If someone decides to buy a pair of shoes, there’s an opportunity to add to the transaction by offering socks or soles as well. If the shoes can’t be sold because of zero availability, those opportunities are lost too.

 

7. More staff attention is needed

What do people do when they can’t find what they’re looking for? Many of them ask for more information, like when the item will be available. In an online store, those questions are usually sent to customer service; offline they might ask staff face to face. Of course, those inquiries take time to deal with, slowing down response times overall.

 

What Johan does to prevent the zero availability problem at Intersport

As the chief digital officer of Intersport, Johan does everything in his power to avoid zero availability issues.

“When I took this position, I thought my focus would be on digitalising this company with beacon technology and everything. But there’s no point in delivering that before the logistics are taken care of. Even now, the most important thing I do in my work is making sure we can meet product flow challenges. Every Monday I ask: “Do we have the products ready for the weekend campaign?”. Two days later I ask again: “Are we ready now?”

He learned the importance of thorough planning and looking ahead when he previously worked for Max Hamburger.

“The principles are the same. It’s about having everything in order so you’re ready when the peak comes. If you run out of onion, you need to be able to find it fast. Everyone needs to be trained and know what to do so they can act quickly and intuitively. It comes down to basics.”