What does Out-of-Stock Rate mean for your online store?
Out-of-Stock Rate is more than just a number – it's a direct indicator of missed revenue opportunities.
Out-of-Stock Rate (OOS Rate) is one of the most critical operations metrics in e-commerce. It shows what percentage of your assortment is currently unavailable. Every 'Sold Out' sign is a missed sales opportunity – and worse: a reason for customers to switch to competitors.
Why Out-of-Stock Rate matters
Studies show that 21-43% of customers buy the product from a competitor when faced with an out-of-stock. Another 27% don't buy at all. This means: out-of-stocks don't just cost individual sales, they jeopardize the entire customer relationship.
For a store with 10,000 SKUs and 8% OOS rate, 800 products are unavailable. With an average of 5 missed sales per day per SKU at $50 AOV, that's $200,000 in lost revenue per day.
How to reduce your Out-of-Stock Rate
There are proven strategies to sustainably reduce OOS rate:
- 1 Automated Reordering: Set up automatic order triggers when stock falls below defined minimum levels. This eliminates human delays.
- 2 Precise Demand Forecasting: Use historical data, seasonality and external factors for reliable sales forecasts.
- 3 Supplier Diversification: Have alternative supply sources for your top sellers. A single supplier failure shouldn't cause OOS.
- 4 Real-time Monitoring: Monitor your inventory in real-time and react proactively to developing OOS situations.
Out-of-Stock in context with other KPIs
Out-of-Stock Rate exists in tension with Inventory Turnover. Very high inventory turnover can lead to higher OOS rates, while excessive safety stock worsens turnover. The art lies in finding the balance.
Analyze your OOS rate by product categories, suppliers and time periods. Patterns often emerge that point to systematic issues – such as certain suppliers with frequent delays or categories with hard-to-predict demand.