{"id":4533,"date":"2022-11-20T19:04:21","date_gmt":"2022-11-20T19:04:21","guid":{"rendered":"https:\/\/www.shipbob.com\/au\/inventory-kpis\/stockout-costs\/"},"modified":"2025-10-28T16:51:35","modified_gmt":"2025-10-28T16:51:35","slug":"stockout-costs","status":"publish","type":"page","link":"https:\/\/www.shipbob.com\/au\/inventory-kpis\/stockout-costs\/","title":{"rendered":"Stockout Costs"},"content":{"rendered":"\n<section class=\"wp-block-shipbob-blocks-section-hero-standard-form hero-standard\"><div class=\"container row\"><div class=\"col hero-standard-content\"><h1 class=\"hero-standard-title \">Stockout Costs Guide<\/h1>\n<p>Ever been excited to come across the product you\u2019ve been looking for online only to discover it\u2019s out of stock? We\u2019ve all been there. As a customer, it can be a huge letdown. For an ecommerce business, it\u2019s a surefire way to lose revenue.&nbsp;<\/p>\n\n\n\n<p>When products are constantly out of stock, it can cause a big dip in potential sales, drive customers away, and ultimately stunt business growth.<\/p>\n\n\n\n<p>In this article, we\u2019ll go over what causes stockouts and how to prevent them from impacting long-term business growth.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"#what-are\">What are stockout costs?<\/a><\/li>\n\n\n\n<li><a href=\"#calculate\">How to calculate the costs of stockouts<\/a><\/li>\n\n\n\n<li><a href=\"#what-causes\">What causes stockouts?<\/a><\/li>\n\n\n\n<li><a href=\"#affect\">How a stockout affects your business<\/a><\/li>\n\n\n\n<li><a href=\"#prevent-stockouts\">How to prevent stockouts<\/a><\/li>\n\n\n\n<li><a href=\"#3pls-optimal-stock\">How a 3PL can help you maintain optimal stock<\/a><\/li>\n\n\n\n<li><a href=\"#faq\">Stockout costs FAQs<\/a><\/li>\n<\/ul>\n<\/div><div class=\"col hero-standard-form offset-1  \"><div class=\"card hero-home-customer-card form-card\"><h3 class=\"form-title\">Request Fulfilment Pricing<\/h3><h3 class=\"h4 form-subtitle\">Let&#8217;s talk. Our experts can help you boost your order volume by 30% year over year.<\/h3><p class=\"form-copy\"><\/p><div class=\"card-body form-fbd53fc0-a20b-4df6-8df7-0fa1e8d5b8d4\" data-controller=\"form-controller\" data-form-controller-form-id-value=\"fbd53fc0-a20b-4df6-8df7-0fa1e8d5b8d4\" data-form-controller-form-container-query-value=\"form-fbd53fc0-a20b-4df6-8df7-0fa1e8d5b8d4\"><\/div><p class=\"form-note\">A fulfilment expert will get back to you shortly. <a href=\"\/privacy-policy\/\">Privacy Policy<\/a><\/p><\/div><\/div><\/div><\/section>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-are\">What are stockout costs?<\/h2>\n\n\n\n<p id=\"calculate\">Stockout costs is the capital lost from inventory that has become unavailable for the customer to purchase. When a customer cannot buy something because it is not in stock, the business loses money. This is especially detrimental to a business if there is no indication on when the item will be back in stock and available for purchase.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How to calculate the cost of stockouts&nbsp;<\/h2>\n\n\n\n<p>Stockouts cost your business, but exactly how much? You can calculate the cost of stockouts by using the following formula:&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-style-blog is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>(Number of days out of stock * Average units sold per day * Price per unit) = Cost of stockout<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p>For example, imagine a shoe retailer has been out of their most popular sandal for 3 days. The sandal is sold at $50 per pair and the shop sells around 15 pairs per day. They would calculate their stockout cost as follows:&nbsp;<\/p>\n\n\n\n<p>(3 days * 15 pairs * $50) = $2,250<\/p>\n\n\n\n<p id=\"what-causes\">With inventory management tools and the use of reorder points, this company would have been able to avoid the stockout cost of $2,250.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What causes stockouts?&nbsp;<\/h2>\n\n\n\n<p>Stockouts happen for a variety of reasons \u2013 and many times, they\u2019re inevitable and out of your control. However, with the help of good partners and technology, you can mitigate some of those issues.&nbsp;<\/p>\n\n\n\n<p>These are the top factors that contribute to stockouts:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Inaccurate demand forecasting<\/h3>\n\n\n\n<p>Demand forecasting can seem daunting \u2013 it\u2019s no small feat to try to predict how much of a certain product you need to meet customer demand. Your business needs a solid grasp of historical sales data so you can make accurate forecasts \u2013 if not, you may face stockouts. In addition to inaccurate data, seasonality of your business and geographic locations (of both your fulfilment centre and end customer) can all affect your demand forecasting.&nbsp;<\/p>\n\n\n\n<p>Partnering with a <a href=\"https:\/\/www.shipbob.com\/3pl\/\">third-party logistics<\/a> (3PL) provider and using tools to help with <a href=\"https:\/\/www.shipbob.com\/inventory-management\/inventory-forecasting\/\">inventory forecasting<\/a> can help your brand avoid stockouts.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Supplier and production delays<\/h3>\n\n\n\n<p>Reliable partners are crucial to running a successful business. If you\u2019re met with constant delays and you aren\u2019t able to get products into the hands of your customers, you\u2019re likely to face stockouts.&nbsp;<\/p>\n\n\n\n<p>If these types of delays happen often, you may need to consider switching to a different supplier or find other ways to improve supply chain management.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Poor cash flow management<\/h3>\n\n\n\n<p>Not having enough cash on hand can also cause stockouts. You may have forecasted the amount of inventory you need to have in stock, but you cannot buy it without sufficient funds.<\/p>\n\n\n\n<p>If this is a recurring issue for your business, more funding or better financial planning could be beneficial. Companies like <a href=\"https:\/\/www.shipbob.com\/partners\/kickfurther\/\">Kickfurther<\/a> help ecommerce businesses secure the funding they need to purchase inventory, avoid stockouts, and grow their business. Additionally, taking a look at your business plan and finances can help you understand when is the best time to purchase inventory \u2013 this way you\u2019ll be able to determine when you have more money to spend.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Human error<\/h3>\n\n\n\n<p>Mistakes happen! If you\u2019re manually counting inventory or have an outdated inventory management system, you may face issues with inaccurate inventory counts. As a result, stockouts could occur.&nbsp;<\/p>\n\n\n\n<p id=\"affect\">Implementing a reliable inventory management system is one way to ensure human error is minimised.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How a stockout affects your business<\/h2>\n\n\n\n<p>Most often, stockouts not only harm your business, but also significantly impact your customer\u2019s experience. As a result, stockouts are something you\u2019ll want to focus on avoiding. Stockouts create disappointment and frustration, for you as a business owner and for the customer who is ready to buy and may need your product quickly. Ultimately, it leads to a loss in revenue and can potentially damage your brand\u2019s reputation.&nbsp;<\/p>\n\n\n\n<p>However, if you face stockouts, there are some ways to turn a negative into a positive. Read on to understand the pros and cons of stockouts and how they affect your business.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Losing a customer to a competitor<\/h3>\n\n\n\n<p>Think about what it costs to attract a single customer to your online store. If you have a stockout, not only will you see a major drop in conversions because there\u2019s nothing to buy, but the customer will most likely purchase from a competitor that has the item currently in stock. And they may continue to purchase from the competition again in the future.&nbsp;<\/p>\n\n\n\n<p>After a bad shopping experience due to stockouts, the chance of the customer returning to your store later is slim. <a href=\"https:\/\/intuendi.com\/blog\/out-of-stock-products-affect-ecommerce\/\">91% of customers<\/a> aren\u2019t willing to engage with an online store in light of a bad experience. It\u2019s no doubt that stockouts can take a huge toll on potential business growth.&nbsp;<\/p>\n\n\n\n<p>If an out-of-stock product is hard to come by, some customers are willing to subscribe to back-in-stock notifications, which is a great strategy to alert and encourage customers to purchase when items are back in stock. But even so, this doesn\u2019t guarantee a sales conversion in the future.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Paying for a canceled order<\/h3>\n\n\n\n<p>It\u2019s one thing for a customer to know a product is out of stock before they attempt to purchase it, but it\u2019s another thing when a customer makes a purchase only to find out the item is unavailable. This occurs when inventory is poorly managed and stock counts are inaccurate.&nbsp;<\/p>\n\n\n\n<p>If this happens, you\u2019ll have to get in touch with the customer with the bad news and offer a refund. The cost of canceled orders can add up over time and harm your business\u2019s reputation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Negative reviews<\/h3>\n\n\n\n<p>Negative <a href=\"https:\/\/www.shipbob.com\/blog\/get-customer-reviews\/\">customer reviews<\/a> and poor customer satisfaction can make or break your ecommerce business. If customers regularly see your product is out of stock, they may leave negative reviews on your site or third-party review sites. Potential customers can see these reviews and may perceive your brand as unreliable. Your negative reviews provide an advantage for brands selling similar products, giving them insight into what your brand is underdelivering on so they capitalise on it.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Losing revenue<\/h3>\n\n\n\n<p>As mentioned earlier, stockouts can cost your business money. Using the stockout cost formula, you can determine just how much. Loss of revenue can be detrimental to businesses of any size. Using the suggestions above can help you set your brand up for success so you don\u2019t experience stockouts and therefore, a loss in revenue.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. Makes your products seem popular<\/h3>\n\n\n\n<p>Products that are in high demand have a good chance of being out of stock. This is true for products that are created in limited quantities or for items that have recently gone viral. When there is not enough inventory to meet customer demand, a stock out could signal that your item is desirable and exclusive. When this happens, shoppers are likely eager to make a purchase when you restock.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6. May lead to future sales if there is a CTA<\/h3>\n\n\n\n<p>If done right, you can use stockouts to your advantage. People are likely vying to get their hands on popular products and want to be first in line when it returns. Having customers fill out a form to get on a waitlist or submit their email for an alert when the item is back in stock is a great way for you to turn a stockout into a sales opportunity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"prevent-stockouts\">How to prevent stockouts from costing your ecommerce business<\/h2>\n\n\n\n<p>Avoiding an out-of-stock situation is critical for&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/direct-to-consumer-brands-and-3pl\/\">direct-to-consumer brands<\/a>. Customers can look up alternatives in a matter of seconds if your products aren\u2019t readily available. Not only do you lose sales and decrease your&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/average-order-value\/\">average order value<\/a>, but you may also lose potential and returning customers for good, impacting your&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/brand-lifetime-value-customer-taylor-holiday\/\">customer lifetime value<\/a>.<\/p>\n\n\n\n<p>To avoid stockouts from impacting the success of your business, here is what you can do.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-calculate-your-safety-stock\">Calculate your safety stock<\/h3>\n\n\n\n<p>Safety stock is the excess product you keep on hand in case of an emergency or&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/retail-supply-chain\/\">retail supply chain<\/a>&nbsp;failure that causes a drop in inventory levels. To accurately&nbsp;<a href=\"https:\/\/www.shipbob.com\/inventory-kpis\/safety-stock\/\">calculate safety stock<\/a>, you will need the following for each&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/how-to-find-sku-number\/\">SKU<\/a>:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Maximum daily usage<\/li>\n\n\n\n<li>Maximum lead time<\/li>\n\n\n\n<li>Average daily usage<\/li>\n\n\n\n<li>Average lead time<\/li>\n<\/ul>\n\n\n\n<p>Once you have the inventory data for each SKU, follow the steps below:<\/p>\n\n\n\n<p><strong>Step 1<\/strong>: Calculate your max: (maximum daily usage x maximum lead time)&nbsp;<\/p>\n\n\n\n<p><strong>Step 2<\/strong>: Calculate your average: (average daily usage x average lead time)<\/p>\n\n\n\n<p><strong>Step 3<\/strong>: Subtract the average number from the maximum number for a complete safety stock calculation: (Maximum daily usage x maximum lead time) \u2013 (average daily usage x average lead time)<\/p>\n\n\n\n<p>Here\u2019s an example of how it works in practice:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Company A can has sold as many as 20 units of dog food in a single day (maximum daily usage)&nbsp;<\/li>\n\n\n\n<li>It has taken up to 20 days for the product to be shipped from the manufacturer to a fulfilment centre (maximum lead time in days)<\/li>\n\n\n\n<li>Company A sells an average of 10 units of dog food a day (average daily usage)<\/li>\n\n\n\n<li>On average, it takes about 15 days to get the dog food delivered to a fulfilment centre (average lead time in days)&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>So for Company A, their safety stock levels would be:<\/p>\n\n\n\n<p>(20 x 20) \u2013 (10 x 15) = 250<\/p>\n\n\n\n<p>This means Company A would need to have about 250 units of dog food safety stock available at any time. With 250 units of safety stock, selling about 10 units of dog food each day (70\/week) means they have enough stock for about 3.5 weeks.<\/p>\n\n\n\n<p><strong>Note:<\/strong>&nbsp;The maximums should be adjusted for seasonality, including if you forecast higher demand (e.g., for major Black Friday\/Cyber Monday promotions) or expect major shipping delays (e.g.,&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/chinese-new-year-shutdown\/\">Chinese New Year shutdowns<\/a>).<\/p>\n\n\n\n<p><a href=\"https:\/\/www.shipbob.com\/inventory-kpis\/safety-stock\/\">Click here for more on how to calculate safety stock<\/a>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-forecast-future-demand\">Forecast future demand<\/h3>\n\n\n\n<p>Planning for demand can be tough, but it\u2019s not impossible. By using historical inventory data to predict future&nbsp;sales trends, you can make better decisions on how much inventory you need in&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/inventory-to-sales-ratio\/\">stock<\/a>&nbsp;at a given time.&nbsp;<\/p>\n\n\n\n<p>For instance, you can use data such as the amount of product you sold during a specific season versus a specific day (like a holiday) to make decisions on when you\u2019ll need to order more inventory than usual. Similarly, if demand for your product decreases (e.g., travel products during the COVID-19 pandemic), you may need to plan for a stock reduction and have less safety stock available to avoid having too much working capital tied up in inventory.&nbsp;<\/p>\n\n\n\n<p>If you\u2019re using multiple warehouses to store inventory, you can use historical data by location to&nbsp;<a href=\"https:\/\/www.inventory-planner.com\/post\/optimize-stock-by-comparing-location-demand\" target=\"_blank\" rel=\"noreferrer noopener\">optimise stock levels<\/a>&nbsp;per location based on demand.<\/p>\n\n\n\n<p>Recognizing these types of trends will help you prepare for a change in sales while optimising&nbsp;<a href=\"https:\/\/www.shipbob.com\/inventory-management\/inventory-control\/\">inventory control<\/a>&nbsp;and inventory storage on the operations level.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invest-in-inventory-management\">Invest in inventory management<\/h3>\n\n\n\n<p>Forecasting future demand is just one aspect of&nbsp;<a href=\"https:\/\/www.shipbob.com\/inventory-management\/\">inventory management<\/a>. You must ensure the right inventory levels are available to not only meet customer demand but also budget costs.&nbsp;<\/p>\n\n\n\n<p>Not having enough inventory to fulfil orders and meet customer demand is one thing, but you also don\u2019t want to have&nbsp; too much inventory, which can lead to higher&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/inventory-carrying-costs\/\">inventory carrying costs<\/a>&nbsp;as well as \u201c<a href=\"https:\/\/www.shipbob.com\/inventory-kpis\/dead-stock\/\">dead stock<\/a>\u201d or outdated inventory that can\u2019t be sold (i.e., it\u2019s expired, obsolete, or out of season).&nbsp;<\/p>\n\n\n\n<p>Without proper inventory management, you\u2019ll inevitably see a negative impact on your bottom line. Fortunately, managing your inventory doesn\u2019t have to be hard. You can either invest in&nbsp;<a href=\"https:\/\/www.shipbob.com\/inventory-management\/software\/\">inventory management software<\/a>&nbsp;or, even better, you can store your inventory with a tech-enabled 3PL like ShipBob that provides built-in inventory management tools along with robust&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/order-fulfillment\/\">order fulfilment<\/a>&nbsp;services.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"3pls-optimal-stock\">How tech-enabled 3PLs use inventory data to maintain optimal stock and mitigate stockout costs<\/h2>\n\n\n\n<p>Unlike using manual&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/inventory-sheet-template\/\">inventory sheet templates<\/a>, many ecommerce businesses partner with a tech-enabled 3PL like ShipBob that makes it easy to track inventory levels and <a href=\"https:\/\/www.shipbob.com\/blog\/inventory-flow\/\">movement<\/a> at any given time. With ShipBob, you can automate&nbsp;reorder points, view inventory counts in real-time&nbsp;at the SKU level, and run reporting on inventory trends and forecasting to ensure you never run out of stock again.&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=1280px\" alt=\"\" class=\"wp-image-12386\" data-responsive-img srcset=\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=700px 650w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=860px 768w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=1180px 1080w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=1400px 1280w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2019\/08\/art22.png?w=1600px 1440w\" fetchpriority=\"low\" \/><\/figure>\n<\/div>\n\n\n<blockquote class=\"wp-block-quote is-style-blog is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cSo many 3PLs have either bad or no front-facing software, making it impossible to keep track of what\u2019s leaving or entering the warehouse.<\/em><\/p>\n\n\n\n<p><em>On the supply chain side, I just throw in what we placed at the factory into a WRO in the ShipBob dashboard, and I can see how many units we have on-hand, what\u2019s incoming, what\u2019s at docks, and so on. I can see all of those numbers in a few seconds, and it makes life so much easier.\u201d<\/em>Harley Abrams, Operations Manager of&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/superspeed-golf\/\">SuperSpeed Golf, LLC<\/a><\/p>\n<\/blockquote>\n\n\n\n<p>ShipBob also offers a&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/new-free-analytics-reporting-tool\/\">free analytics reporting tool<\/a>&nbsp;that provides insights into fulfilment performance, shipping,&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/demand-forecasting\/\">demand forecasting<\/a>,&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/logistics-costs\/\">logistics costs<\/a>, and&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/inventory-allocation\/\">inventory allocation<\/a>.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=1280px\" alt=\"\" class=\"wp-image-7717\" data-responsive-img srcset=\"https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=700px 650w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=860px 768w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=1180px 1080w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=1400px 1280w, https:\/\/www.shipbob.com\/wp-content\/uploads\/2021\/04\/soldshipped-1.png?w=1600px 1440w\" fetchpriority=\"low\" \/><\/figure>\n<\/div>\n\n\n<p>To maintain optimal stock, you\u2019re given the inventory data needed to answer questions like:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>How much inventory do I currently have on hand at each ShipBob fulfilment centre?<\/li>\n\n\n\n<li>What were my historical stock levels at any point in time in any location?<\/li>\n\n\n\n<li>How many days do I have left until a SKU will be out of stock?<\/li>\n\n\n\n<li>By when do I need to reorder inventory for each product?<\/li>\n\n\n\n<li>If I run a promotion or&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/how-to-run-an-e-commerce-flash-sale\/\">flash sale<\/a>&nbsp;on my store, how will this affect my available inventory levels?<\/li>\n\n\n\n<li>And more!<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-style-blog is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cShipBob\u2019s analytics tool is really cool. It helps us a lot with planning inventory&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/reorder-quantity-formula\/\">reorder quantities<\/a>, seeing when SKUs are going to run out, and we can even set up email notifications so that we\u2019re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.\u201d&nbsp;<\/em>Oded Harth, CEO &amp; Co-Founder of&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/mdacne\/\">MDacne<\/a><\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\">Conclusion<\/h2>\n\n\n\n<p>Preventing stockouts should be a high priority for your ecommerce business. The best thing you can do is focus on&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/supply-chain-optimization\/\">optimising your supply chain<\/a>&nbsp;so you can better manage inventory and prepare for future demand.&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-style-blog is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cAnother ShipBob integration I love is Inventory Planner. It saves me hours every week in Excel spreadsheets, and I can raise a PO in minutes when it used to take me hours. For every order I placed for years, I was ordering too much or not enough. Between inventory forecasting tools and the ability to auto-create WROs, we don\u2019t have stockouts much anymore. I sleep better at night.\u201d<\/em>Wes Brown, Head of Operations at&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/black-claw\/\">Black Claw LLC<\/a><\/p>\n<\/blockquote>\n\n\n\n<p>By partnering with a tech-enabled 3PL like ShipBob, you\u2019re given the&nbsp;<a href=\"https:\/\/www.shipbob.com\/blog\/retail-fulfillment\/\">retail fulfilment<\/a>&nbsp;expertise, technology, and&nbsp;<a href=\"https:\/\/www.shipbob.com\/ecommerce-logistics\/inbound-outbound-logistics\/\">inbound and outbound logistics<\/a>&nbsp;support you need to get products to your customers\u2019 doors quickly.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-style-blog is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cWe have a Shopify store but do not use Shopify to track inventory. In terms of tracking inventory, we use ShipBob for everything \u2014 to be able to track each bottle of perfume, what we have left, and what we\u2019ve shipped, while getting a lot more information on each order.\u201d<\/em>Ines Guien,&nbsp;Vice President of Operations&nbsp;at<a href=\"https:\/\/www.shipbob.com\/blog\/dossier\/\">Dossier<\/a><\/p>\n<\/blockquote>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"ShipBob Fulfillment Center Guided Tour - 3D 360\u00b0 VR Video\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/YdTbM4XlizY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>Learn about ShipBob\u2019s robust fulfilment centre network and proprietary technology by clicking below to request a fulfilment quote.&nbsp;<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.shipbob.com\/quote\/\">Request Fulfilment Pricing<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"faq\">Stockout costs FAQs<\/h2>\n\n\n\n<div class=\"wp-block-shipbob-blocks-single-faq single-faq direction-col\" data-controller=\"faq-controller\" data-faq-controller-open-value=\"true\"><div class=\"single-faq-title-contianer\"><h4 class=\"single-faq-title\">What is the difference between a stockout cost and a shortage cost?<\/h4><div class=\"single-faq-expand\" data-faq-controller-target=\"expand\"><img decoding=\"async\" src=\"\/wp-content\/themes\/shipbob-2022\/resources\/svg\/plus-solid.svg\" \/><\/div><\/div><div class=\"single-faq-childs\" data-faq-controller-target=\"answer\"><div>\n\n<p>A shortage refers to a general shortage of goods, where a stock out refers to a specific item unavailable in inventory. A stockout can occur when there was lack of ordering, lack of capital to order,&nbsp;customer demand, or items on&nbsp;backorder.&nbsp;<\/p>\n\n<\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-shipbob-blocks-single-faq single-faq direction-col\" data-controller=\"faq-controller\" data-faq-controller-open-value=\"true\"><div class=\"single-faq-title-contianer\"><h4 class=\"single-faq-title\">Why are stockout costs difficult?<\/h4><div class=\"single-faq-expand\" data-faq-controller-target=\"expand\"><img decoding=\"async\" src=\"\/wp-content\/themes\/shipbob-2022\/resources\/svg\/plus-solid.svg\" \/><\/div><\/div><div class=\"single-faq-childs\" data-faq-controller-target=\"answer\"><div>\n\n<p>Stockouts can have a heavy impact on your business.&nbsp;Costs include lost inventory which could lead to lost sales. This could last until there is a stock replenishment.&nbsp;Stockouts often go unanticipated, which could lead to difficulties when trying to get back on track.<\/p>\n\n<\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-shipbob-blocks-single-faq single-faq direction-col\" data-controller=\"faq-controller\" data-faq-controller-open-value=\"true\"><div class=\"single-faq-title-contianer\"><h4 class=\"single-faq-title\">What are the two types of stockout costs?<\/h4><div class=\"single-faq-expand\" data-faq-controller-target=\"expand\"><img decoding=\"async\" src=\"\/wp-content\/themes\/shipbob-2022\/resources\/svg\/plus-solid.svg\" \/><\/div><\/div><div class=\"single-faq-childs\" data-faq-controller-target=\"answer\"><div>\n\n<p>There are two types of stockouts: one is related to delivering products to customers, the other is regarding production issues that cause delays in getting your products.<\/p>\n\n<\/div><\/div><\/div>\n\n\n\n<div class=\"wp-block-shipbob-blocks-single-faq single-faq direction-col\" data-controller=\"faq-controller\" data-faq-controller-open-value=\"true\"><div class=\"single-faq-title-contianer\"><h4 class=\"single-faq-title\">Why are stockout costs difficult to determine?<\/h4><div class=\"single-faq-expand\" data-faq-controller-target=\"expand\"><img decoding=\"async\" src=\"\/wp-content\/themes\/shipbob-2022\/resources\/svg\/plus-solid.svg\" \/><\/div><\/div><div class=\"single-faq-childs\" data-faq-controller-target=\"answer\"><div>\n\n<p>There are various factors that go into calculating your stockout costs, which can make it challenging to determine. Try using this formula next time you need to calculate stockout costs: (Number of days out of stock * Average units sold per day * Price per unit) = Cost of stockout<\/p>\n\n<\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>What are stockout costs? Stockout costs is the capital lost from inventory that has become unavailable for the customer to purchase. When a customer cannot buy something because it is not in stock, the business loses money. This is especially detrimental to a business if there is no indication on when the item will be [&hellip;]<\/p>\n","protected":false},"author":149,"featured_media":0,"parent":4522,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"hub.php","meta":{"content-type":"","inline_featured_image":false,"footnotes":""},"class_list":["post-4533","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Stockout Costs: Causes + Tips to Prevent Stockouts<\/title>\n<meta name=\"description\" content=\"Stockouts happen, but there are ways to prevent them from affecting your business. 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