Tell me if this sounds familiar: You get a notification that you’ve sold a product. Awesome! But then, you find out what no ecommerce seller ever wants to hear – the “Out of Stock” notice. Something didn’t go as planned and you sold more units than you actually had. Unfortunately, it isn’t likely that your customer will wait for you to get more products in stock, rather he or she will leave your store and go to a competitor’s shop. And worse, the customer may leave a nasty review. In this post, we’ll take a look at overselling, what it is, how it happens, and how automation can help you prevent overselling from happening in the future.
What is Overselling?
In ecommerce, overselling is a situation in which a customer (or even worse, multiple customers) purchased an item that you don’t have in stock. This can be a serious issue if you don’t have any contingency plans in place. It is a warning sign of inventory management trouble and it’s better to address it quickly.
What Causes Overselling?
Overselling is a completely avoidable event. Before we discuss prevention options, let’s review what typically causes an online retailer to oversell:
- Stock hasn’t been accurately updated across all sales channels
- A discrepancy between actual stock-on-hand and recorded quantities
- Damaged or destroyed inventory not accounted for
- A very sudden spike in the demand for a specific product
- A combination of any two or more above
Now that you know what causes you to oversell, let’s talk about why overselling can be detrimental to your business.
Why Overselling Can Ruin Your Online Business
Overselling can be a source of distress for both you and your customer. Once the customer orders your product and confirms payment, you receive the sale confirmation email. Only at that point do you realize that someone has bought a product that you no longer have in stock. There are two ways this is going to go:
- You have a contingency plan and can order more stock ASAP. Whether you have a dropship supplier on hand, or another retailer you partner with, you can still get the product to the customer, maybe just a bit later than they expected.
- You don’t have a contingency plan and the new sales order is moved to a backorder status, or worse, it is completely sold out and you won’t be able to deliver the product to the customer.
Scenario A isn’t too awful, it will just cause a delay in delivery which may result in negative feedback. Scenario B is definitely the worse-case scenario. Instead of receiving a shipping confirmation email, your new customer will receive an “oops, we’re out of stock email.”
Now, you have to cancel the order and refund the customer or move it to a backordered status. From there, you’ll most likely lose the customer as they’ll go and find a replacement product, seeing that 70% of online shoppers opt to buy from a competitor rather than wait for a backorder.
For sellers, mitigating customer complaints due to overselling can quickly eat up their time and energy – which could be better spent on other aspects of the business. These negative experiences usually come with an onslaught of negative reviews, which will affect your overall seller status. Overselling could also lead to account suspensions on some sales channels, especially Amazon, who is almost impossible to get reinstated.
Not only is it the time and energy, but there are quite a few added costs to think of. What’s considered inventory distortion (stockouts, overstocks, and shrinkage) costs retailers an estimated $1.1 trillion worldwide. Reducing those stockouts and overstocks can lower your overall inventory costs by 10%.
One of the best ways to prevent overselling is to automate much of the inventory updates across your channels.
Automation Can Prevent Overselling
A robust inventory management software will have the capability to automate various functions around updating inventory across all your online and offline channels. A good software option should provide many options for automating different tasks including:
- Order management between your ecommerce sales platforms and fulfillment systems.
- Product quantity updates across all sales channels when a shopper makes a purchase or you receive new inventory.
- Notify customers when an item ships with tracking details.
- Manage product pricing changes across all sales channels.
With the time saved with a tool automating all the tasks above, you’ll be able to focus on more pressing tasks such as marketing and product sourcing.
Not only will automation ensure that you don’t sell stock that you don’t have, it will greatly improve a customer’s experience. Here’s how:
- Listings have consistent and accurate product information, ensuring that the customer knows what they’re buying and lower your return rate.
- Product quantity levels across all sales channels are always accurate, so they know that when they buy something, they’ll receive it.
Better Inventory Management Improves Customer Experiences
Customers who shop online become savvier every day. They want more than just great products – they want great products fast, and they want positive shopping experiences when they make purchases. Using automation, you can ensure that happens every time, for every customer. And providing that optimal customer experience will help you stay out in front of your competitors.
Using automation will help your ecommerce business improve the customer experience by helping you prevent overselling, backorders, and much more. That’s why you should give our inventory management software a try. We helped this customer reduce backorders by 92%!
Ecomdash will help you manage inventory no matter where you sell. It’ll save you time and sanity by automating the various tasks outlined above, allowing you to focus on growing your ecommerce business.