Photo: RetailWire
A university study finds telling online shoppers that grocery supplies are low can help retain them over the long term.
The study from Boston College assistant professor of business analytics Dmitry Mitrofanov and Benjamin Knight, a senior data scientist at Instacart, provided product availability information to a random sample of more than 840,000 Instacart customers.
Customers were 25 percent less likely to purchase low-availability items when told supply was running low. At the same time, many were content enough to switch to purchasing plentifully stocked items to avoid a surprise out-to-stock. The shift from low to high-stock items helped reduce the number of stockouts.
Overall, providing low product availability information resulted in a 5.3 percent increase in revenue per customer and a 4.9 percent increase in order frequency over time.
Providing product availability information also improved shopper sentiment when stockouts do occur. “More specifically, even if customers decide to purchase low stock items after the warning and consequently experience a stockout they are less dissatisfied because of the reference effect — by sharing low item availability information we reset customer's expectations with respect to the probability that their order will be successfully fulfilled,” said Professor Mitrofanov in a press release.
Out-of-stocks and related poor substitutions are among the primary complaints around online grocery shopping.
A December 2022 survey of consumers who had bought groceries online in the previous 90 days from Chicory found product availability issues (41 percent) to be the third biggest challenge with ordering groceries online, behind high fees (47 percent) and lack of control over product selection (43 percent).
In a 2022 Lucidworks survey of U.S. and U.K. consumers who shop online for groceries at least once a month, over half of those polled said a low-in-stock notification would influence their purchase decision and 80 percent of those customers said they would be more inclined to make the purchase if alerted when desired products were low-in-stock.
Poor inventory visibility may be a hurdle, however. Auburn University's RFID Lab found traditional store inventory accuracy is typically below 70 percent.
- Stock running low? Consumers want to know – Boston College
- The Online Grocery Shopping Report – Chicory
- Shoppers Stay Hungry Online: Groceries on the Internet in 2022 – LucidWorks
- “Sorry, the product you ordered is out of stock”: Effects of substitution policy in online grocery retailing – Journal Of Retailing
- Can AI solve e-grocery’s erratic out-of-stock substitutions? – RetailWire
- RFID-Enabled Visibility and Retail Inventory Record Inaccuracy: Experiments in the Field – Auburn University RFID Lab