More Musings on Out-of-Stocks (part 3)

“How in-store out-of-stocks impact online shopping and the labor serving that customer.”

In parts one and two of this series, I spent time interpreting the latest findings from P&G and the University of Colorado as it pertains to CPG out-of-stocks.  The new news, in the now decades old and largely unsolved dilemma of out-of-stocks, is that the average consumer spends 21% of their in-store grocery trip dealing with product that has gone missing from the shelf.

Online shopping for the CPG consumer is first and foremost about convenience.  Shopping for staples in-store is typically one of the consumer’s least favorite weekly chores.  The online alternative has great appeal if it is quick, comparatively priced with the store and does not disappoint. Out-of-stocks are the source of great disappointment and, it turns out, are one of the three most common reasons that consumers who try online shopping for CPG products eventually abandon the practice and return to in-store shopping, or find another source.

Most retail CPG shopping sites do not mark a product as out-of-stock.  This means the consumer sees the product image and details in its “home category” or on their list and then expects it available for purchase.  Almost 75% of non-CPG sites have the ability to report on a product’s availability.  That fact impacts many consumers who have been conditioned to believe that if the product’s stock status is not flagged, the product is available.

Out-of-stocks have a markedly altered definition for consumers in the online CPG arena.  Some are legitimate out-of-stocks, which the retailer can either substitute with alternative products or simply leave the voids in the order.  The second definition involves on-shelf products that physically are akin to the product represented on the online webpage, but do not exactly match their online representation.  The size may be different, the nutrition table may have changed, the ingredients may have changed, or the product package graphics may have been updated.

The impact on the consumer is exaggerated beyond the in-store out-of-stock experience.  Consumers in-store expect some level of disappointment and have prepared themselves to substitute on many items they normally shop if they find an empty shelf where their product should live.  They don’t like it - and if they encounter the issue on a favorite item on multiple trips, they will change stores. However, 50-60% of the time they will substitute another size or perhaps another brand for that trip.

Online consumers have both the disappointment of not getting what they want and the surprise of finding either a product void or a store selected substitute, which may or may not reflect their preferred choice.  In the case of multiple out-of-stock items from the same site, almost 70% of consumers abandon the provider, with most moving to a competitive online service if available.

In the case where the online image or label detail is incorrect or dated and the product delivered differs from the product viewed, the consumer is at best uneasy and at worst sends the item back believing it a substitute or a bait-and-switch effort on the part of the retailer.

The same two issues impact store labor.  Trying to find product that is indeed out-of-stock wastes labor resources and then trying to determine and locate a substitute that makes sense, consumes considerably more than a fifth of the order’s “pick-time” as we would expect.  This is further complicated by the mismatch in the out-of-date or incorrect product information on the site, on the shelf tag or both.  The order picker must try to solve the puzzle of whether the 11 oz. product on the shelf is the same product listed as 13 oz. on the pick-list (the same process the consumer will go through when he/she unpacks the bags three hours later).  Further, if the customer does send back the product, it may need to be restocked or thrown out (which is why many online retailers simply credit the amount paid for the product, but tell the customer to keep it).  In some cases, the retailer needs to make another trip to the consumer’s house to drop off a different substitute product!  Needless to say, dealing with out-of-stocks is the most expensive item on the online CPG retailer’s fulfillment P&L.

How can Gladson help?  Four ways:

For manufacturers our new Gladson eBroadcast tool makes sure that your latest and greatest products are captured fully (all label detail), imaged and then broadcast not only to Gladson re/e-tail clients but to most known users of CPG content.

For re/e-tailers:

1. We supply the Gladson Full Label Detail Database for online use.  Hundreds of thousands of Food, HBC and GM products with thousands more added every week.  Major players such as Peapod, Amazon, Safeway, Albertsons and many others use our ongoing service.

2. We supply Permanent Image Shelf Strips which give pickers and shelf stockers an image to help in re-ordering and re-stocking out-of-stock items and help the order picker conclusively understand that an ordered product is indeed out-of-stock. 

3. We can tie your online system to your in-store systems and to all of your other departmental silos so that every application is tied out to a single version of the product truth through our unique Primary Product Item Masterfile Feeder system.

Interested?  Drop us a note at salesteam@gladson.com.

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