3 Ways to Keep Out of Stocks from Ruining Your Holiday Season

The holiday season is a make or break scramble for retailers. Their offices are busy, and everyone is in a high stress mode to make the season profitable. They invest in getting people in their stores or on their sites with attractive offers. Unfortunately, this omnichannel approach has caused an increase in ‘out of stock’ challenges. Out-of-stocks can be costly for retailers, as a study commissioned by IHL Group found. In 2015, out-of-stocks, overstocks and returns cost retailers an estimated $1.75 trillion, and “out-of-stocks accounted for $634.1 billion in lost retail sales for the year ended in the spring.”

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Although manufacturers and suppliers do not have the same urgency around Black Friday, Cyber Monday or last-minute shopping, there may only be one or two degrees of separation between the manufacturer/distributor and the retail consumer. A recent study by Gallup claims that “B2B companies are at risk of losing more than two-thirds of their customer base.” This study concludes that strong customer relationships are built on collaboration and that good suppliers are a competitive advantage.

During the holiday buying season, inventory moves rapidly. If retailers are not confident in your product availability, they will find other suppliers. Near real-time inventory is critical, as is following integration best practices, especially if you have multiple retailers pulling from the same stock. If manufacturers and suppliers can support their retailers through the holiday season, they will build long-lasting, profitable relationships.

Vital Integration Best Practices

The following are best practices to support your retail customers:

  • Inventory feeds. Support your distributors and retailers with automated, robust, real-time access to inventory feeds. Include inbound requests, an automation where customers can call into your system for updated product information.
  • Go beyond the basic SKU# / inventory count. Your inventory feeds should go beyond SKU count. Not only should your feed show the current inventory, but consider providing such information as:
  •     Availability date. For out-of-stock or low stock items, provide both the amount and date in which the batch of inventory will be available.
  •   Inventory by location. Do not tie a specific retailer into one source location.  Retailers are calculating shipping based on a ship from and ship to address.
  • Go beyond in-stock inventory. Consider these factors:
  •    Backorder management. If your manufacturing or resupply time is relatively short, consider handling backorders internally, so your customer can get the sale.
  •    Stock alerts. Be proactive with outbound communications for low stock and back-in-stock alerts.
  •    Allocated inventory. If you have multiple retailers pulling from the same inventory, consider allocated inventory and associated product feeds for your larger customers.
  •   Automated order processing. Send orders electronically.
  •  Shipment notification. Incorporate near real-time shipment notifications with estimated arrival dates, so that retailers can communicate to their customers when their product has shipped and when they can expect it.

As manufacturers or suppliers, you may not have the ability to implement these best practices, but your goal should be to tightly integrate with your retailers and strive to make their lives easier. During the post-holiday season, retailers assess not only their own performance, but also the performance of their suppliers. They recognize who supported them best during the season and who hindered their performance. Work with your retailers now to understand how you can support them through the upcoming holiday season.

Michael Moores is CEO of Envalo, Inc.

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