Out-of-stock rates could present a significant challenge for retailers and CPG companies, according to a report from the Grocery Manufacturers Association. Out-of-stock rates for online purchases of consumer products in the U.S. are nearly twice as high as in-store availability, and as a result, potential online sales losses could be as high as $17 billion a year globally.
While 85% of products are available online in the U.S. and 80% worldwide, the U.S. has a 15% out-of-stock rate online, nearly double its out-of-stock rate of 8.3% for brick-and-mortar stores.
In the U.S., 16% of online shoppers come across an out-of-stock product, compared to 19.9% of global shoppers. China has the highest out-of-stock rate, at 31.6%.
Of those U.S. shoppers, an item was stated to be out-of-stock about 45% of the time; delayed in delivery or pickup about 27%; not displayed or cannot be found, about 20%, and only available in a brick-and-mortar store, about 5%.
Non-white and younger shoppers experienced much higher out-of-stock levels, the report found. White shoppers encountered out-of-stock products less than 14% of the time, while non-white shoppers averaged above 20%. In addition, while out-of-stocks affected 20.9% of shoppers younger than 25, just 11.3% of shoppers 45 and older were affected. There was no substantial difference between the out-of-stock rates for men and women.
U.S. consumers react differently to online out-of-stocks than out-of-stocks at brick-and-mortar stores. For instance, online shoppers are more likely to remain on the e-commerce website and switch a brand or substitute an item within the brand, which the researchers dubbed “the Amazon effect.” However, if a brick-and-mortar store is out of a product, consumers are more likely to visit another store to find the product.
Specifically, 15% of U.S. shoppers switched online stores to purchase the product they wanted, while 60% purchased a substitute item from the same online retailer. Of the 60%, half switched brands, and the other half found a substitute within the same brand. About 10% of consumers went to a brick-and-mortar retailer to purchase the item, while about 15% indicated they delayed or canceled their purchase.
Online store switching was noticeably higher in other countries than in the U.S., as nearly 25% of international shoppers indicated they purchased the item they wanted from a different online retailer.
French and UK retailers tend to void product pages rather than indicate the product is unavailable. The researchers believe these retailers prefer to avoid time-wasting searches for products that are not available and to avoid reputational damage if stock-outs are signaled.
Omnichannel retailers that pick up online orders in brick-and-mortar stores have more demand variability, since their store inventory must serve both online and brick-and-mortar shoppers. In contrast, pure online retailers only serve online demand and benefit from inventory pooling, since they pick from warehouses that serve larger regions.
Comparing out-of-stock rates by category and country, overall there was less variability among categories than among countries.
In the U.S., only 16% of shoppers indicated a delay in shipping/pickup, which was the lowest of all countries, and 10% found the item can only be purchased at a brick-and-retail store, which was the highest of all countries. Except for Japan, all other countries indicated higher levels of delay than the U.S. Japan has the highest percentage of identified out-of-stock items, while China and the U.S. have the highest percentage of items not being found, at 24% and 26%, respectively.
In 45% of out-of-stock incidents in the U.S., items were stated as out-of-stock, and in another 27%, items had a shipping delay. Combined, shoppers reported the item was found but not currently available in 72% of the cases, while in only 20% of the cases, the item was not found. Researchers say this suggests online shoppers may be more cognizant of stated out-of-stocks than items they cannot find.
For the full story, go to this week’s Food Institute Report.
Animal agriculture is responsible for about 18% of human-caused greenhouse gas emissions globally, according to PreScouter's Meat Alternatives-2019 research. Reducing or stopping the consumption of red meat could help fight environmental issues from these emissions.read more
Chris focuses on fresh, canned and frozen fruit and fresh and dried vegetables for the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He is a proud Rutgers University alumnus with a degree in English, and has a background in web writing for a variety of industries, including legal, foodservice and small-to-medium sized businesses. In his downtime you can find him watching New York Yankees baseball, hiking, enjoying live music and spending time with his dog Kaiden. He invites you to contact him via email at email@example.com to talk about anything food-related.
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