Skip to main content

From food to gadgets to appliances to toilet paper, 2021 was all about shortages. The pandemic has disrupted global supply chains with serious implications for brands, customers, and distributors. Some supply chain shortages lingered while others were resolved quickly.

Supply chain shortages are having a disrupting effect on almost every aspect of eCommerce, from shipping and order fulfillment to in-store inventory and availability. With 40% of American retailers “very concerned” about stockouts and inventory problems, Accenture data shows that 55% of companies plan to downgrade their growth outlooks.

In October 2021, the number of stockouts rose by 250% when compared to pre-pandemic levels. That same month, North America’s largest shipping port in Los Angeles was up against a 200,000 container backlog, forcing the White House to intervene. Out-of-stock messages have become an unwelcome feature that business owners need to find creative solutions for and fast.

Will this be another year of shortages or will supply chain challenges ease off in 2022? Most likely, a bit of both. What you can do in this uncertain environment and not be caught napping, is to heed the words of Benjamin Franklin: “By failing to prepare, you are preparing to fail.” And that preparation starts by investing in innovative digital tools, like Smart Merchandiser, and begin to prepare for success. When opportunity knocks, you will be ready.

supply chain shortages

The Impact of Out-of-Stocks for Your eCommerce Business

Adobe research shows that in 2021, consumers saw over 2 billion out-of-stock messages online, giving a sense of the devastating impact of supply chain shortages on eCommerce entities. Of the 18 categories tracked, electronics had the highest out-of-stock levels, followed by jewelry, apparel, home & garden, as well as pet products.

There are many possible causes for stockouts, including:

  • Inaccurate or outdated sales forecasts
  • A sudden or large increase in demand
  • Poor inventory management
  • Supply chain challenges

Inventory control and order fulfillment are crucial operational areas for any eCommerce entity. If not effectively managed, it can drive up cart abandonment. As the numbers show, over 52% of online shoppers abandon their carts when one or more items are out of stock. Overall, in terms of impact on revenue, cart abandonment is estimated to cost eCommerce operators $18 billion annually!

If empty shelves and out-of-stock messages become a regular occurrence, consumers will perceive your online store as unreliable. It’s even worse if you’ve hyped up a certain product and customers come looking only to find it’s not available. They might become angry, feel misled and lied to, and in both instances, may walk away, sometimes permanently.

Side Effects of Supply Chain Shortages

Sales will take a hit, of course, negatively impacting your bottom line. Then there’s the reputational cost to your business, which once lost, will be even harder to claw back. If your online platform fails to deliver on customer expectations, this can tarnish your brand, drive down satisfaction levels and diminish trust, meaning your brand will no longer be the go-to option for shoppers.

People spreading negative encounters with your brand add to your woes. Surprisingly, sharing negative experiences has a stronger influence on customers' probability of purchase than positive word-of-mouth referrals. In fact, 74% of consumers cite word-of-mouth referrals as a key influencer in their purchasing decisions.

Some $72.4 billion was spent online in October 2021, representing 8% growth over the previous year. This is where smart software solutions, like Smart Merchandiser, can help you tap into this multi-billion-dollar pool by preventing stockout problems from turning into full-blown crises.

With Smart Merchandiser, you have improved data analytics at your fingertips. eMerchandisers can see who’s visiting their site, which products they’re searching for, and most importantly, which items they’re buying. These data-driven insights help enhance the customer experience and facilitate the highest possible conversion rate.

supply chain issues

Real-Time Inventory Management to Combat Supply Chain Shortages

Real-time inventory management is an automated process to track, assess, and manage inventory through the use of dynamic software.

Businesses are leveraging real-time inventory management as a way to streamline workflows and gain better visibility of their stock levels. It gives you a complete picture of what’s happening with inventory, allowing your business to react quickly to mitigate the effects of supply chain shortages.

As the pandemic has shown, consumer demand can change at a moment’s notice. Even just one out-of-stock item can result in a major loss of revenue. Real-time inventory management systems enable you to detect supply shortages quickly and issue stock reorders promptly, keeping customers happy and minimizing the chances of them leaving for your competitors.

The ability to respond quickly to sudden shifts in supply gives businesses a real advantage over their competitors. This advantage, however, only comes about through digital management systems that enable you to better manage and optimize your inventory levels. Smart Merchandiser’s Out-of-Inventory Alerts feature, for instance, allows you to set visual trigger alerts for each product, warning merchandisers when inventory is getting low (orange bar) or is completely out (red bar).

Smart Merchandiser gives you unobtrusive data overlays–right on the product images–providing you with page views, sales revenue, abandonment, and conversion rates, eliminating the need to switch between layout and the analytics dashboards for deeper analytics insight. This way, you can develop much more targeted interventions to stay ahead of and on top of supply chain issues and keep your eCommerce motor running.

Implement Accurate Demand Forecasting

The ability to tell what products your customers will want in the future is vital to every business and can be the difference between flying or failing. Demand forecasting is a statistical process designed to help you predict customer demand. It leverages historical data while analyzing patterns in consumer buying habits to make long- and short-term predictions about what your customers are likely to purchase during different demand cycles.

With external out-of-your-hands factors affecting the supply chain, the need for accurate demand forecasting is becoming increasingly important for eCommerce operators to keep control. Forecasting is generally one of the most overlooked areas of successful retail, with 73% of corporate retail professionals citing inaccurate demand forecasting as a constant challenge. Having the right online system to record and track the data provides online retailers with a powerful means to formulate precise demand forecasts.

Have Automation Rules for Low-Stock Items

supply chain shortages

Using AI and automation reduces workloads, streamlines workflows, and strikes out manual (and error-prone) methods from the inventory management process. Instead of requiring staff to constantly sift through mountains of data to determine which items are underperforming or nearing low stock status, for example, automated processes can execute these tasks faster, more accurately, and on a regular schedule.

As stock items drop below a set level, automated systems can flag this occurrence. At the same time, a reorder of the product is issued immediately. Retail operating systems prevent miscalculations that can arise through a combination of repetitive tasks and worn-out managers. The accuracy and response time that comes with automation makes this and other processes much more efficient.

Leverage Smart Merchandising Tools to Avoid Out-of-Stock Problems

The global supply chain disruption has been just one consequence of the debilitating COVID-19 pandemic, compounded by acute labor and material shortages to ships getting stuck in ports to container delivery backlogs.

It’s become clear that only those retailers agile enough to adapt and respond to ever-changing consumer expectations, sudden increases in demand, and shifts in the supply chain will weather the storm. Yes, incorporating omnichannel trends into your existing retail strategy will help you navigate these uncertain times, but leveraging the power of technology will not only help you steer these choppy waters but also thrive in these volatile times.

Smart Merchandiser–the only visual eCommerce merchandise management solution available in the marketplace–will empower you to take complete control of your online storefront. The long hours spent shuttling between numerous programs, databases, and spreadsheets to gain insight into real-time stock levels and how products are performing are no more. Instead, online merchandising changes can be made in real-time on a single interface.

Smart Merchandiser integrates IBM WebSphere Commerce’s data analytics and retailers’ visual product details in a single graphical interface that streamlines the online visual merchandising process based on critical analytics, ratings, conversation rates, inventory.

Schedule a Smart Merchandiser demo today and discover how improved stock levels, enhanced customer experiences, and a marked ability to respond to market changes are all just a click away.