Online Out-of-Stock Rates Twice Those of In-Store: GMA

According to new report from the Grocery Manufacturers Association (GMA), out-of-stock rates for online purchases of consumer products in the United States are almost twice as high as in-store availability, leading to potential online sales losses of up to $17 billion annually worldwide, because of item unavailability.

The report, “A Worldwide Study of Extent, Shopper Reactions, and Implications for Nonfood Online Retail Categories,” investigated the online availability of baby care, fabric care, hair care, oral care, skin care and shave care products at retailers in China, France, Germany, Japan, United Kingdom and the United States.

“This is one of the first studies on online availability after previous reports over the past decade studying on-shelf availability and its effects on consumer purchasing patterns,” explained Keith Olscamp, a director of industry affairs and collaboration at Washington, D.C.-based GMA, which in September will be moving its headquarters to Rosslyn, Va. “The findings should encourage retailers and brands to collaborate and enhance online availability in the fast-growing area of online retail.”

Among the key findings of the report:

• The number of items available online (OLA) is 80 percent worldwide and 85 percent in the United States, and the 15 percent online out-of-stock rate in the United States is nearly double the out-of-stock rate of 8.3 percent for U.S. brick-and-mortar stores.
• Consumer reaction to out-of-stocks varies on ecommerce sites as compared with stores. U.S. shoppers are more likely to remain on the site and switch a brand or substitute an item within the brand, in a move the researchers dubbed “the Amazon effect.” However, if a physical store is out of a product, the consumers are more likely to go to another store to find the product.
• Globally, brands and retailers both suffer negative consequences equally when consumers don’t find the products they want online: Worldwide, 31 percent of the total loss is to retailers and 33 percent to brands, while in the United States, retailers on average experience 25 percent of the adverse consequences, versus 35 percent for brands, when products are unavailable online.

The study indicated that OLA is a substantial challenge for retailers and their suppliers of fast-moving consumer goods, and that a “surprisingly large” amount of products aren’t available online as measured on retail websites. Further, the report noted, the problem is made worse when retailers make a product digitally inaccessible by taking down an online product page for technical or commercial reasons.

“Greater on-shelf availability of products is already a top priority for our industry, and this report shows the critical importance of reducing out-of-stocks for online sales as well,” said Olscamp, adding that GMA member companies are working to reduce out-of-stocks through the GMA Supply Chain Committee, along with a separate joint task force with retailers.