For years, the retail industry has discussed the out of stock (OOS) problem and how to solve it. The real challenge is how OOS’s are identified, since there is no way to survey customers as they leave the store to ask what items were missing from their cart, and taking a once or twice a year full physical inventory or conducting frequent cycle counts can be costly.
The wonderful part of ecommerce is that you have full visibility into the customer journey - how a customer got to your site (attribution from another website), what they were looking for, what they bought in addition to the initial purchase (attachment rate), what they abandoned and what they eventually bought.
As more chains satisfy ecommerce orders from store inventory via omnichannel solutions, ship-from-store, buy-online-pickup-in-store (BOPIS) or curbside pickup, for the first-time, retailers can view a sampling of their in-stock store inventory positions.
The chart below shows several retailers that have aggressively moved to store fulfillment for their ecommerce orders. As they started showing what’s called “available to promise” (ATP) inventory for omnichannel fulfillment, these retailers were able to see how good or bad their inventory position was.
There is a term called “pick decline”, where an employee can’t find an item on their “pick list”, (where it’s either not there, or worse, it’s there but they can’t find it), and they hit pick decline. For Ship from Store, this item gets routed to the next best store until it’s found, or it’s cancelled if they can’t find these items within the customer delivery promise timeframe, called an SLA (service level agreement).
The bottom line: The more these retailers drive ecommerce for fulfillment from their stores, the more they need 95%+ inventory accuracy.