Selling all your inventory is the dream of every small business. After all, what better sign of a thriving business than selling what you want to sell? Then when you start thinking deeply, you will realize that being out of stock is very bad. Selling is no fun!
So, what can be done to prevent inventory from running out? Also, what can you do if your inventory is completely depleted or about to expire? We will answer these and other questions below.
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So, without further ado, lets begin our guide on What to Do When You are Running Out of Stock!
What are Stockouts and How do They Affect Your Business?
First things first, let's talk about stock shortages or stockouts, also known as out-of-stock events. Out-of-stock events occur when a particular item is out of stock. Chances are, your company will run out of inventory for any items ordered at the end. This mostly holds when your business is thriving well.
However, the stockouts are quite bad and are to be avoided. Even this simple fact cannot be highlighted. Storage yields several negative consequences, which we explain in more detail below.
1. Some Customers Have to Wait Before Making a Purchase
The most obvious consequence of a shortage of inventory is that consumers cannot buy what they want. Therefore, some customers will make notes to come back at a later date. If you have information that people are allowed to say that when something is in stock, some customers will sign up for it. Otherwise, it's up to your customer to remember it.
2. If Possible, Some Customers can Backorder as Well
A better way to deal with stock shortages is to create a backorder system. That way, customers can still buy the product, but they won't receive it until they're back in stock. Less than usual, however, it will generate revenue for your business, as some customers are anxious to get something.
On the accounting side, your company will generate revenue, but it will also need to post "undeclared revenue" on the books as a liability.
3. Some Customers Will Cancel Their Order
Some customers will find out that they are out of stock and cancel their orders or will not fulfill them completely. In this case, your company will lose sales, sometimes even to competitors.
What to do When You are Running Low on Inventory
Of course, none of the above will help when you are on the road to sales. It takes time to deal with the root cause of stock closures, and sometimes you don't have that luxury.
If you are about to run out of inventory, here are four things you can do to improve your situation immediately.
1. Reduce Your Advertising Costs
If you find yourself running out of inventory, the first thing you should do is reduce your advertising costs. Nothing is as harmful as running out of inventory while advertising is still running. When this happens, you will face a double whammy of wasteful spending and lost income.
Once the stocks are replenished, you can resume your advertising. If by any chance you do not have an advertisement for your products, you can check out a good google ads agency
2. Temporarily Increase the Price.
Some sources suggest raising the prices of your products temporarily to reduce demand. This is another legitimate way to handle the risk of running out of stock, but it is not always appropriate.
3. Remove Listings on Sites Like Amazon or eBay
If you have listings on Amazon, eBay, and other websites, remove them. That way, orders won't be delivered that you can't fulfill on time.
4. Order Emergency Stock for Next Time
Finally, take advantage of this tough call. Go ahead and order additional inventory. Hopefully, your supply won't run out and all you can do is save the emergency next time.
What to do if You Still Manage to Run Out of Stock?
Let us suppose that you are finally sold out. Now what?
Here are five steps you can take to begin the process of preparation for your case.
1. If You Are in a Hurry, Air Freight Some of Your Inventory
Airfreight is the fastest way to get some inventory back to your warehouse. When you order some of your inventory, the idea is that the revenue from getting your inventory back in stock as soon as possible is enough to cover the cost of air shipping.
2. Remove Listings on Sites Like Amazon or eBay
We have mentioned it above, but it needs to be repeated. Remove your listing if you're out of stock!
3. If You Run Your Store, use a Pre-order or Backorder System to Earn Revenue
You can't always pick up the balance on other e-commerce sites, but you can always do it yourself. It's a good idea to set up a backorder system so you can still keep on earning even while you wait for new inventory to arrive.
4. Increase Your Advertising Costs as Soon as Inventory is in Stock
Once inventory arrives, increase your advertising costs more than usual. This can help you recover some of the revenue you lost during an increase in demand and a failure of inventory. That way you can continue everything as if nothing had ever happened.
5. Be honest, Open, and Polite in All Kinds of Communication with the Customer.
By running out of stock, you have caused inconvenience to your customers. it's fine. It happens sometimes. But you have to be honest with your customers and explain everything properly.
Running out of your inventory does not mean the end of the world. There are many ways to deal with stock shortages and not just deal with them but to prevent them.
With this advice, we hope you'll sell everything except the last 3-5% of your inventory!