Amazon and Brands are Using the Wrong Stock Availability Metric

One of the most important elements of succeeding in ecommerce is making sure products are in stock through your ecommerce sales management platform. Managing stock availability involves balancing customer demand with inventory costs, requiring accurate insights into current inventory levels and demand forecasts. The impacts of being out of stock are multiple and significant.

First, there is the lost sale itself. If a shopper visits a detail page and a product is not available for purchase, the brand will almost certainly lose the purchase. And, being out of stock has long-term impacts. The brand has also lost repeat sales on the product. The lost sale reduces the relevance of the product to future searches, reducing future sales overall. So, maintaining a good in-stock rate is critical for any brand wanting to succeed in ecommerce.

Understanding Stock Availability

Stock availability is a critical aspect of ecommerce supply chain management that refers to the degree to which a business has enough inventory of each item to meet customer demand. It is a delicate balance between fulfilling orders and keeping customers happy with the cost of buying and storing inventory. Ensuring stock availability means that a business can meet customer demand promptly, which is essential for maintaining customer satisfaction and loyalty.

Importance of Stock Availability in Ecommerce Supply Chain

Stock availability is crucial for ecommerce businesses to meet customer demand and maintain a healthy supply chain. It has a direct impact on customer satisfaction, revenue, and brand reputation. When customers find the products they want in stock, the likelihood of conversion (making a purchase) increases. On the other hand, stockouts can lead to frustrated customers who may turn to competitors for their needs. This not only results in lost sales but can also damage the brand’s reputation. Therefore, maintaining stock availability is essential for ensuring customer satisfaction and driving business growth.

Measuring Stock Availability Effectively

Measuring stock availability effectively is crucial for ecommerce businesses to optimize their inventory management and supply chain. Accurate measurement helps businesses understand their inventory levels, predict future demand, and make informed decisions about restocking. Here are some common mistakes to avoid:

Common Mistakes in Measuring Stock Availability

1. Not tracking inventory levels in real-time: Failing to track inventory levels in real-time can lead to inaccurate stock availability data, resulting in stockouts or overstocking. Real-time inventory tracking systems are essential for maintaining accurate data and ensuring stock availability.
2. Not considering lead times: Failing to consider lead times can lead to stockouts or overstocking, as businesses may not have enough time to restock or adjust their inventory levels. Understanding and planning for lead times is crucial for efficient inventory management.
3. Not accounting for demand variability: Failing to account for demand variability can lead to stockouts or overstocking, as businesses may not have enough inventory to meet changing customer demand. Using reliable inventory management tools can help businesses predict and manage demand variability effectively.
4. Not using reliable inventory management tools: Failing to use reliable inventory management tools can lead to inaccurate stock availability data, resulting in stockouts or overstocking. Investing in a reliable inventory management system is essential for optimizing inventory and ensuring stock availability.
5. Not monitoring supplier performance: Failing to monitor supplier performance can lead to stockouts or delays, as businesses may not have enough inventory to meet customer demand. Regularly evaluating supplier performance helps businesses ensure timely deliveries and maintain stock availability.

What’s RepOOS?

The metric Amazon uses to track how well a vendor is keeping products available is Replenishable Out of Stock % (RepOOS), which is the number of detailed page views for which products were not in stock and available for purchase. It’s the “detail page views part” that makes RepOOS a poor measure for brands because the metric treats the impact of every detail page with the same weight.

That makes sense for the retailer because every customer visit to a detail page with an unavailable product is what Amazon calls a “poor customer experience” that will lower customer engagement with Amazon. But every detail page view is not the same for the brand. 1000 OOS page views on a low-priced or low-converting product simply aren’t as great an impact as the same number of OOS views on a high-converting or high-priced product.

For a brand, a much better metric is % of Total Sales lost to Out of Stock. This does not necessarily correlate to RepOOS %.

Understanding the actual sales impact of OOS requires integrating the current and projected velocity and ASP of every OOS product and using that data to determine the actual sales loss that OOS is causing.

This is exactly the kind of insight that CommerceIQ provides by matching up multiple data points from Amazon.

But this is not merely a trailing metric that tells brands how they are doing now. It functions as a key leading metric that shows a brand where it needs to prioritize adjusting stock levels. Having this data both historically and projected enables brands to move their availability, ordering, and forecast conversations with Amazon out of anecdotal demands that never go anywhere to a data-based conversation that can produce real action.

CommerceIQ’s ecommerce sales management platform provides other important insights and automated actions that help brands solve the availability issues that $ of OPS lost to OOS reveals, including:

• Past forecast and purchase order quantities relative to actual consumption to create more accurate internal forecasts

• Automated identification and correction of purchase order product data errors

• Automated identification and dispute of OOS and unavailable ASINs with inventory

• Automated identification and dispute of suppressed ASINs. If you have questions about how availability on Amazon works or how a machine

learning-based ecommerce platform can help manage the thousands of decisions a brand must make to successfully run an Amazon business, contact me at [email protected].