Whether you are the world’s biggest company or a small retail shop, one of the concerns is about out-of-stock products whenever it comes to inventory management. َAlmost half of the customers leave your website as soon as they see you lack products they want. If you’ve ever wondered how to manage these sold-out items, I will show you four strategies to take.
Out-of-stock products waitlists
Even if you run out of some products, some customers are still interested in buying them later. The best way to find these customers is by enabling pre-orders or waitlists. You need customers’ email addresses or phone numbers to create waitlists and tell them when your out of stock products become available again.
Fortunately, many plugins in WooCommerce can create such lists. MC Wishlist plugin is one of my favorite ones, I guess. This plugin helps you know every customer’s interests by creating lists of items they want. Also, it shows your most popular products and sends promotional emails based on customers’ wishlists. What a relief, yeah?
ABC stock analysis
Which out-of-stock products should you focus on more? ABC analysis answers this question. ABC stock analysis divides your products into A, B, and C categories based on their value. Let me explain this strategy with an example.
- A category: Always have them in stock
We say you own a flower shop. If you run out of gift baskets, I could accept that. Even vases are optional items. But your out-of-stock products shouldn’t include flowers. Flowers are the main product or, as ABC analysis says, A category of your store and generate most of your income. Also, a backup stock is necessary for this category when the demand suddenly increases.
B category: Less important, but try to have them
This category helps your business cash flow. Vases, home plants, or cheaper flowers are B category items of our flower shop. Although these items account for 15% of your revenue, some of them can move to the A category over time. So try to have this category in stock too.
C Category: Main out-of-stock products, sometimes have them
Seed plants, gift cards, or candies. How much money can these items make compared to other categories? Not so much that you worry about them being available. You can have them sold out every once in a while.
How to use ABC analysis
You can use plugins like Sales Analysis for WooCommerce to apply ABC analysis automatically, but if you are ok with a little math, you can also categorize products manually. Let’s see how it’s done.
- Find Item value
Multiply each item’s price by the number of purchases.
Price * Number of Purchase = Item Value
- Calculate the Total value
Sum all the items’ values.
First Item Value +Second Item Value + … + Last Item Value = Total Value
- Find the Item value ratio
Divide each item’s value by the total value.
Item Value / Total value = Item Value Ratio
- Calculate the Item value percentage
Multiply each item’s value ratio by 100.
Item Value Ratio * 100 = Item Value Percentage
- Categorize items
Order your items from most valuable to least valuable. Then sum percentages to reach category limits.
- A: 70% to 80% of your total value
- B: 15% to 25% of your total value
- C: 5% of your total value
For example, 5 items with value percentages shown below would categorize like this:
Item 1: 54% , Item 2: 19%, Item 3: 12%, Item 4: 10%, and Item 5: 5%.
First 2 items classify as A category: (Item 1 + Item 2) = 73%
Second two items go in B category: (Item 3 + Item 4) = 22%
And the C category includes the last item: Item 5 = 5%
Related or replacement product offers
How do customers find what they need in a regular store? A sales consultant may help them out. Sales consultants usually ask about the features customers want and recommend items that fit their needs. But you don’t have this option in your online shop. You must rely on a search and filtering or a recommender system to replace consultants.
There are two simple ways to recommend in-stock items to replace out-of-stock products.
- Different items with the same features
In this method, you offer products with similar specifications based on the customer’s chosen product. Mobile stores are a good example of this product recommendation. They ask about the main features you require, like camera resolution, battery capacity, and memory storage. Then you will face several items that match your preferred item.
- Same item from different brands
If I hear a brand’s name in ads or from friends, I will probably be motivated to buy its products. However, everything depends on the moment of purchase. I’ll think more about my final choice if there are other options. This is the feeling you should create in your customers. Now, you may ask, how?
Just look at the WooCommerce website to come across many product recommendation plugins. For example, Smart manager for WooCommerce, with its user-friendly interface, enables several tools to check your stock status, monitor customers’ activities, and different inventory information to replace out-of-stock products offered with related items.
Old but gold stock products management methods
“Nothing ever dies. It only changes into something else, like old songs that blow gently into new ears to find new meanings”. The story of digital marketing strategies is similar to this quote. Most of the methods used to increase online sales were done in real stores.
So let me introduce some of these methods and how to use them on WooCommerce. Maybe they work better for you than any plugin or software.
- JIT (Just In Time)
Using JIT, items are prepared just when you run out of them. You need to monitor product availability from your WooCommerce dashboard and check whether the product inventory is running out. When there are only one or two items left, refill your stock. If you sell products like food items that expire after a while, this is the strategy for you.
- This method enables a faster inventory cycle. So don’t worry about out of stock products.
- It requires less money to supply products every time.
- Fewer products means more chances to sell before expiration.
- You have to supply the products at short intervals and different prices. So price changes greatly impact this method.
- If products are not provided on time, sales and customer trust will be risk.
- EOQ (Economic Order Quantity)
EOQ identifies the economic number of product units to order. You can find this number for each product by a simple math formula:
D = Demand of the product
V = Product value
H = Product holding cost
Let’s make it clear with an example. Remember our flower shop. We sell 2000 roses per year (D) for $3 (V). But it costs us $10 annually to keep the roses fresh (H). What is the Economic Order Quantity for our roses?
The EOQ is the square root of (2×2000×$3)/($10), which equals 34.6. So with rounding, 35 is the ideal number of orders every time you want to supply roses for your stock.
- The formula helps you determine the optimal number of orders for each product.
- This is a good choice for short periods or at the beginning of your business.
- This method assumes constant product demand and no price changes, sometimes leading to additional or low stock orders.
- If sales increase, you need to supply out of stock products continuously. And this means the need for constant supervision on inventory.
- MRP (Material Requirements Planning)
MRP system analyzes in-stock products vs the need to provide out of stock products based on forecasts. This method includes three steps:
- Estimating demand and the number of items required.
- Scanning demand against inventory and assigning resources.
- Calculation of the money and number of items required to supply inventory.
Implementing this strategy is not as simple as the previous two methods, and you need computer software to get accurate results. NetSuite is one of the cloud-based programs used for inventory management and MRP. It provides cash flow and stock availability data suitable for small or mid-sized businesses like WooCommerce stores.
- The amount of in-stock budget is significantly reduced.
- Clear data on customer activities or supplier conditions are accessible.
- The time and cost of running an MRP system are high.
- Ignores delivery or product access problems that lead to errors in the calculated cost or number of items.
Don’t try these on your out-of-stock products
If I were a life coach, I would say: “Make mistakes. Learn from them. Move on.” But business is different. One small mistake can ruin your brand image forever, especially inventory management directly related to customers and sales. Following, I mention common mistakes in product management you shouldn’t make on WooCommerce.
- Removing the Add-to-cart button
Imagine entering a store but only being able to look at the products! This is exactly what removing the add-to-cart button feels like. Without this button, it seems you are using WooCommerce as a catalog. This way, customers review products and their features but make the final purchase from another store.
Even if a product is out of stock, you can keep the Add-to-cart button for it. Many people only visit your website to view or compare products. If customers click the button, you can use a Request Quote to navigate them to a form for collecting their name and contact info. Then call and tell them, “We do not have this product at the moment, but it will be available within X days. We also have a replacement item if you are in a rush.” Plugins like Request a Quote for WooCommerce does this for you easily.
- Unpublishing out-of-stock products
Do you know what happens when you unpublish a product on WooCommerce? Anyone who searches for that product will face a 404 error, The most hated error in human history! Whenever you want to hide the out of stock products on your WooCommerce store, keep the URL active for Google searches.
If you manually hide out-of-stock products with the out-of-stock visibility option on WooCommerce, your products hide from search results, product tag pages, and related product sections. To keep these products on specific pages, you can use plugins like Zoho.
- Hiding the out-of-stock products’ price
Visit your Instagram right now to face multiple online shops that say you should message or call them to find out the price. Do you think how many visitors bother themselves to send direct messages for price information? People always prefer the easiest way in the world of fast food and home gyms, and you can not force them to do anything.
If you always show the prices, it means you are sure about the value of your products, and you are not worried about unsatisfied customers or lost sales. It also shows that customer comfort is very important to you. However, if you want to show prices only to customers who sign up or log in, it becomes a loyalty strategy and does not cause much problems.
- Marketing Campaigns for out-of-stock products
A fun fact: Many marketing campaigns are created for out-of-stock products. If you are running ad campaigns, linking to a static URL can lead to unwanted errors, as we said. Your customers love your products, and campaigns motivate them to buy. If you promote your products and run out of stock after a while, you’ll make your customers disappointed. Predict demand based on previous sales and supply your inventory ahead of time. Sometimes it’s okay to run out of stock, but always try to keep your campaign items in stock.
Out-of-stock products are not always bad. They can show how much customers love your products. An interesting idea to use this opportunity is to start a social media countdown campaign based on any product going low or expiring, such as C category items in ABS analysis. When you run out of items, create a waitlist and tell customers if the number of requests reaches X, the product will be available again. In this way, not only are old products sold, but also new products enter the store.
If some of your products are not available for some reason, it is best to let the customer know why and when this product will be available again. This will have two positive effects. Honesty makes it easier for the customer to trust you, and sharing store information with the customer makes them feel like they are an important part of your business.
Sometimes selling products in person is less trouble than selling them online. If the products are unavailable for a while due to packaging, shipping, or the high volume of online offers, you can announce that other channels are available to buy the products. This will reduce your workload and create a warmer relationship with customers.
If this article were helpful to you, we’d love to send the link to your friends to help their business. Finally, as always, we are happy to share your experiences and questions with us in the comments section.