“Where’s My Order?”: Why Stores Oversell Their Inventory (And What It Costs Retailers)

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The biggest headache for companies who lose money with their ecommerce sites is overselling inventory. But how much does it cost your business in terms of people hours, customer dissatisfaction, and time wasted?

Let’s do a simple scenario.

Let’s say you sell 10,000 orders a month and do $1m in sales. At a 1% problem rate, that’s $10,000 worth of problems. Or 100 phone calls. That’s manageable.

But if you’re reading this, then you probably sell closer to 100,000 orders a month. If you do around $10m in sales at a 1% problem rate, that’s $1m worth of problems. Or 1,000 “Where’s my order?” phone calls to your customer service team.

This doesn’t take into consideration..

  • Customer dissatisfaction
  • Lower customer lifetime values and repeat purchases
  • Higher customer acquisition costs

Most merchandisers, VPs of ecommerce, and dropshippers either get the IT team to hack together a workaround or relegate the fires to the customer service team. Some of them might have given up trying to optimize their ecommerce sites and have written off these costs.

The root problem isn’t your visible website. The problem is in the legacy technology that’s holding you back from successful, stress-free sales.

In this article we’ll dig into how legacy technology and processes affect your inventory management. We’ll also talk about reliable and scalable solutions so you’ll never over-promise and under-deliver ever again.

Your systems don’t sync fast enough

For the growing demands of ecommerce, your inventory system needs to be in continuous sync with your suppliers’ or vendors’ systems. Otherwise you risk selling inventory that you never had in the first place, and having to go back to your customer and tell them you can’t fulfill their order.

For example, let’s say you’re out of stock of a popular office chair you sell. If you get three dented returns back and your system does its daily sync, so now your inventory shows you have 3 available pieces. A visitor on your site orders it and the vendor receives the order. The vendor goes to the warehouse to pick it up, but only there’s no more stock. The vendor cancels your order.

Four days later, the customer calls your customer service team to ask, “Where’s my order?” Your team calls the supplier, only then do they find out that the supplier had cancelled the order because of the damaged stock that you shouldn’t have sold in the first place.

On top of sales lost, intermittent inventory syncing costs you and your team a conservative estimate of 1% of your monthly sales.

Depending on your sales, that can be over $1,000,000 in expenses that should be going to your bottom line.

And that’s all from one synchronization. This doesn’t even factor in the actual people hours you spend trying to correct multiple inconsistencies with your vendor across both of your systems (if it’s even worth trying to correct). You need systems that continuously coordinate your inventory levels with your vendors’ as supply and demand levels change.

An employee made a mistake

Even with the current technology you have in place, there are still some parts of your system that are done manually. Maybe you have a junior person who uploads data every day. Maybe one of your staff counts inventory while another updates Excel.

The problem with this is that (1) this leaves a lot of room for human error, and (2) your inventory still isn’t up to date each minute of the day. The process of manually entering numbers into CSVs and spreadsheets at the end of the day are too prone to human error. A single misplaced period could cost you thousands of dollars down the road. In fact, it might not even matter if your processes function perfectly every day if you suffer losses as a result of human error on your vendor’s part.

In an ideal world, in addition to constantly updating your data with every purchase order, technology can completely take human error completely out of the equation, both from your processes and your suppliers’.

Your system can’t refresh to keep up with spikes

If your inventory doesn’t refresh as fast as a spike in sales, then you’re leaving money on the table. This is true, both in terms of taking advantage of fortunate circumstances or of carefully planned marketing campaigns.

For example, in the beginning of March 2020, almost every country went into some sort of lockdown. Masks, toilet paper, and hand sanitizers were in high demand. Merchants assured their customers that they had plenty of stock to sell. But while they were still pumping their fists as rolled in, merchants didn’t know that their vendors were already cleaned out (no pun intended) of these necessities.

And it doesn’t have to be a worldwide pandemic. Maybe an item was marked down incorrectly. Or someone priced a $100 item for $10. Or maybe a supplier is doing a fire sale before discontinuing a product.

Regardless of the circumstance, you need a system to handle spikes from event, as flawlessly as if it were just another normal weekday.

Convictional: A modern solution for a classic problem

It’s the age-old merchandising problem: A customer buys an item in good faith because your website shows that you have plenty of inventory. They go through the checkout process, you and your team get excited at the orders pouring… Until you realize that your inventory never synced from your seller. They’re actually out of stock and you can’t fulfill those orders.

Even with the advances in ecommerce technology, it’s surprising that this industry-wide problem has yet to be solved.

Whether they market themselves as inventory management software or a marketplace solution, the truth is, most B2B companies focus only on solving one half of the problem: either the merchandiser or seller side. Simply put, this approach makes it clunky and difficult for a seller and a buyer’s system to communicate, not to mention the technological challenges that EDI poses.

At Convictional, this is one of the biggest problems we’re setting out to solve with technology. Our technology is aimed specifically at preventing overselling in the first place. We want you to know exactly how much inventory you have at any point in time and significantly reduce your customer service phone calls and merchandising costs.

Here’s our secret: Best-in-class seller enablement is baked into our product. We value your relationship with your sellers as much as you do. Once you connect your systems to Convictional, we make it dead-easy for your vendors to come on board, too. All you have to do is click a box and send them an email to get set up.

If you’re curious whether or not our product is right for you, schedule a call with us. We’re excited to see how we can help.

Powerful Infrastructure To Launch & Scale Your Digital Marketplace — Chat with us to learn more
Powerful Infrastructure
To Launch & Scale Your Digital Marketplace

Chat with us to learn more