Running out of stock is an expensive prospect for any retailer. Barring a suitable replacement, the retailer misses out on revenue. Even if there is a replacement, the customer might be frustrated, which could mean less customer loyalty and lower lifetime value. The pandemic made this even tougher for retailers, thanks to the combination of supply-chain disruptions, increased spending on consumer goods, and labor force shortages. Recent research shows that by May 2020, the frequency of stockouts within the United States had increased to more than 35% — more than double the pre-pandemic level of 14%.
Why You Should Warn Customers When You’re Running Low on Stock
Research suggests that transparency up front will improve customer satisfaction in the long run.
September 05, 2022
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Summary.
Experiments by Instacart during the Covid-19 pandemic suggest that when it comes to out-of-stock items, honesty is the best policy. Customers were more satisfied and spent more when they received a warning that an item was “Likely out of stock.” That warning was generated by a machine learning algorithm that flagged the possibility that the item would not be available by the time the order was fulfilled.
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