What Happens When You Run Out Of Stock?

A Retailer’s Perspective On Stock Outs

As a retailer, managing goods well is the key to a business that runs smoothly. Without stock you have nothing to sell – and you have no business. So far, so obvious.

Yet the management of stock is far from simple. It depends on many factors. In fact large stores and manufacturers rely on complex algorithmic calculations to predict what goods they should hold.


Low inventory causes problems

Carrying too little stock is as bad as carrying too much

Smaller businesses on the other hand don’t always enjoy access to these kinds of tools. It’s therefore not uncommon for them to run out of crucial supplies at the hour of need. As an entrepreneur, I have identified bad inventory as one of the elements that can have a damaging effect on any company. In fact, poor stock control can affect more than just the bottom line as I will show you in the next few paragraphs.

Your Customer Satisfaction Levels Fall

Customers are naturally impatient people. They want their orders fulfilled with no delays and the last thing they want to think of is following up with a business whose stock is running low. In business, we all know that customer satisfaction is key; and that the only way to meet growing expectations is by working towards making timely deliveries always. Given that we live at a time when cut-throat competition exists, it makes sense for you to keep track of your stock-flow all the time. Failure to do that is comparable to giving your competition a through pass during a game of football – ultimately you’ll end up losing.

Inaccuracies That Can Ruin Your Reputation

Inaccuracies are likely to arise when you run out of stock especially where complementary products are involved. Let’s say you run a business of supplying construction materials and your customer who normally buys cement alone decides to order cement and tiles. To your dismay, you learn that you don’t have enough tiles available. Since you don’t want to lose business, you may be tempted to supply an inaccurate order (and correct the mistake later). However, this may not always go down well with your customers as inaccuracies are a sign of incompetence.

Lack of Stock Breaks Loyalty

While maintaining optimum stock levels leads to what every business constantly strives for – repeat customers, running out of stock has the opposite effect. For customers to come back for more, you need to be able to meet their demands quickly. And how can you achieve that if your stock levels are always low? This therefore is a wake-up call to all entrepreneurs out there. The effect of insufficient stock has potential to ruin your future plans because as you know, it is easier to keep a loyal customer than to get a new one.

It’s Impossible to Attend to Returns

Insufficient stock makes it impossible to attend to customers who return faulty or damaged products. Normally, when a product is returned because of such reasons, and it is still under warranty, the best thing to do is to give out a replacement from your available stock and later arrange with the manufacturer for a swap. When you run out of stock, you are unable to mirror your return rates meaning that customers have to wait as you sort out things with your suppliers. Waiting leads to dissatisfaction and dissatisfaction yields disloyalty.

It Affects Your Staff Morale

Inadequate stock affects several areas throughout the organization. In additional to crippling operations in the warehouse, poor stock levels affect restocking, purchasing, sales and more. For example: In this highly competitive world, customers have many options to choose from. If they call the sales team to place an order only to find that the item they were interested in is out of stock, they would simply buy elsewhere. In addition to losing customers, low stock levels can further affect your sales team’s morale. They might find it quite difficult to approach new markets because they are not sure if the items they’re promoting are readily available in the warehouse. Generally, bad stock can ruin your sales department’s ability to make smart decision (yet smart decisions are the ingredient for success in entrepreneurship).

Final Word

There is every reason to worry when you run out of stock. In my opinion, if every organization was to master the important aspects of inventory control, the world would be a much better place. Luckily, modern technology is changing things and with tailor-made solutions readily available there’s no excuse for poor management of stock-flow.

Author: Miss Inventory

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