eStar sales director Patrick Gaskin discusses how to avoid over and under selling.
When a customer makes a purchase on your website there is a justifiable expectation that you have the item you made available for sale. It makes sense then that we use the term “Available to Promise” to describe inventory that a business can guarantee to have in stock to process future customer orders. Whilst it may seem like a very simple concept, it can be hard to accurately determine if you don’t have the right tools.
Retailers that have a single distribution centre and one sales channel should have very accurate inventory. That style of business, however, is now quite rare. It is now more likely that a retailer will have multiple distribution points, multiple sales channels, or both. It follows that having accurate inventory in a true omni-channel retailer is much more complex. It is therefore safe to say that accurate inventory is crucial to any sophisticated eCommerce business.
With accurate inventory, you can consistently meet customer expectations, foster trust, and loyalty, and fuel the growth of your business. Conversely, poor accuracy can lead to overselling and underselling, which negatively impact revenue, customer satisfaction, and brand reputation.
Inaccurate inventory management often results in overselling, where products are sold that are out of stock and cannot be shipped. Overselling occurs due to manual inventory management processes, delayed stock updates, ineffective reporting on cancelled orders or poor systems integration.
Conversely, underselling usually arises from maintaining excessive safety stock levels as a precaution against overselling.
Both over and underselling lead to a poor customer experience, lower sales, inefficiency and wasted marketing investments.
The key to resolving overselling and underselling is to have an accurate view of inventory. This includes understanding what is currently available for sale, what has been sold online and is in progress, what orders have been put aside for click & collect, what stock is damaged and what stock is missing.
Beyond this, inaccuracies in picking, cumbersome processes and manual interventions can all exacerbate the problem, decrease staff morale, and lead to further order cancellations.
Poor inventory can even cause pickers to avoid orders with multiple items due to a higher likelihood of encountering inventory-related problems. This not only reduces productivity but can also compromise customer satisfaction.
A lack of accuracy on inventory can also result in suboptimal order fulfillment, such as unnecessary splitting of orders or unfulfilled Click & Collect orders due to outdated inventory files.
Implementing a modern Order Management System (OMS) is crucial for effective inventory management.
A reliable OMS provides near real-time updates of inventory to online channels, offering a unified view of stock levels. It accurately represents the "Available to Promise" inventory and seamlessly integrates with key systems, manages in-progress orders and quarantines stock for investigation when necessary.
Real-time inventory data enables the system to make informed decisions and optimisations to routing and prioritisation. Additionally, comprehensive reporting on inventory and cancelled orders facilitates the identification and prompt resolution of inaccuracies, leading to improved processes, accuracy, and profitability.
Embracing intelligent order management practices enables businesses to streamline their operations, enhance customer satisfaction, and drive sustainable growth in a highly competitive landscape. By avoiding overselling, businesses can save valuable time and resources, improve order fulfillment speed, and ensure a consistent customer experience. Increased stock accuracy builds trust in the brand and boosts sales.
Furthermore, businesses can reduce stock buffers and make more inventory available for sale, improving turnover and efficiency.
By implementing intelligent order management practices and utilizing modern OMS solutions, businesses can overcome the challenges of overselling and underselling, delivery better outcomes for customers and drive success.