Sephora, Trader Joe’s, and Target See High Stockout Complaints: What’s the Answer?

Out-of-stocks or stockouts are a persistent problem in retail, whether physical or digital, and new data provided by a recent DOSS report indicates that the issue isn’t a stagnant one.

Surveying 1,000 U.S. consumers and comprehensively analyzing stockout language found across social media platform Reddit, the report indicates that consumers have some tolerance for stockouts — but that patience isn’t exhaustive.

“Nearly three-quarters (74%) of consumers encountered an out-of-stock product they regularly buy in the past 12 months. On average, shoppers hit stockouts three times a year when shopping online. When a stockout happens, 45% buy from a different retailer and 32% switch to a competing brand temporarily,” the report authors wrote.

“About 62% of consumers said they have switched to a competing brand at least once because of a stockout, and 82% said they would try a competitor if their go-to is frequently out of stock. A quarter (25%) said stockouts specifically damaged their trust in a brand. More than 1 in 20 (6%) have gone further, leaving a negative review because of a stockout or fulfillment issue,” the research team added.

Other key stats pulled from the report include:

• Food and grocery tops the list on out-of-stocks: On the question of which categories saw the highest likelihood of stockouts facing shoppers, food and grocery came in at No. 1 (53%), with beauty and personal care coming in second (22%). Clothing, shoes, and jewelry took third place (14%), followed by electronics (13%), makeup and cosmetics (8%), and home, garden and tools (7%). The primacy of food and grocery could explain why 52% of shoppers simply wait for an item to return to shelves (52%), while 45% buy the product from a competing retailer (45%).
• Complaints give a bit of a pass to grocery, while fashion and apparel are scrutinized: Utilizing the percentage of relevant Reddit posts centered around stockout complaints, fashion and apparel saw the most activity (7.9%) with beauty and personal care close behind (7.5%) and electronics tucked away in third (7.4%). Grocery and food saw a 5.7% complaint rate, which is interesting given its primacy in terms of customers commonly facing stockouts, while mass retail came in at 4.2%. “Stockouts have an even greater impact on fashion and beauty products than many other categories because so many people buy these items based on trends, routines or what makes them unique. When a particular skin care product, color, size or limited release item is out of stock; consumers do not view this as simply being inconvenienced. Consumers perceive that something about their daily routine and/or identity has been impacted,” said Sebastiaan Debrouwere, VP of Business Development & Marketing at DOSS.
• Sephora sees the most out-of-stock complaints online: By the same metrics, Sephora took the lead in stockout complaints (12.8% of relevant threads), with Alo Yoga (12%) and Lululemon (11.6%) claiming the next spots. In food and grocery, Trader Joe’s led the pack (11.6%), followed by Costco (6.6%) and Whole Foods (2.4%). In mass retail, Target took the stockout complains crown (6.6%), followed by Amazon (4%), surprisingly categorized Sam’s Club (4%), and Walmart (2%). “[Continuing from above,] This explains why Sephora was at the top of our list for retailers by stockout complaint rates (at 12.8%) when we analyzed social media posts containing stockout-related words. Additionally, these categories run on limited releases, shade and size variants, and short replenishment windows – the exact conditions where a system that can’t track inventory in real-time across channels will show ‘available’ on something that’s already gone,” Debrouwere added.

When it comes to solutions, Debrouwere leaned on the study data alongside industry experience to offer a few takes.

“Stockouts are no longer seen as a one-off or short-term problem with availability. The shopper data now indicates that stockouts increase consideration of alternative products and may ultimately lead to abandonment of the original brand. If 82% of consumers indicate they would seek out an alternative to their primary brand due to frequent unavailability of their preferred item, it’s unreasonable for retailers to expect their customers to continue waiting for what they need. Therefore, retailers should utilize stronger systems for real-time inventory monitoring, which in turn enables brands to communicate more clearly about when products will again be available (and when),” he said.

“In practice, a large share of what gets recorded as a stockout is actually a visibility program – the inventory exists somewhere in the network, but procurement, warehousing, 3PLs, and sales channels are working off of different numbers, and as a consequence, are missing the sale,” he concluded.