I’ve been working in retail recently and it has highlighted to me the absolute massive importance of stock (and that half explains the absence on here of my posts – I promise I’ll be back more now!). When I worked for BHS in their ‘restaurant’ as a student 10 (and a bit more) years ago, one of my jobs was to count the amount of stuff that we had left on a Sunday so that the boss could work out what to order for the next month (pre-internet this was a tedious job of ringing up head office and reeling through a long list of order numbers and the amount we wanted).
Modern day stock management is much different, with interconnectivity between stores, warehouses and databases for the company website. But the challenges remain the same: order too much and you have to find ways of getting rid of it before the cost of storage overtakes the profit from sale; order too little and you have the missed opportunity of demand for something you don’t have (this is before you think about ordering the right amount in each colour, size, flavour, etc).
But you don’t come to this blog to learn the intricacies of how to make sure that you do not waste a load of shepherd’s pie whilst keeping Vera from number 32 happy. When it comes to internet shopping it has it’s impact as well. When I spoke at ProductTank back in August last year, Matthew Curry from LoveHoney was talking about how his reporting worked.
In Stock, Out of Stock, Off Sale Conversion Rates
One thing that Matt talked about in at ProductTank was how he dealt with out of stock products. He said that it wasn’t good enough for his team to report to him product view to sale conversion. The reason? If the site couldn’t sell the person the product then a conversion rate will be directly impacted by these people. Result:
- In stock products conversion rate: 6%
- Out of stock product conversion rate: 0%
Of course, we know that the real world isn’t quite as simple as this. It’s entirely possible that someone could browse through eight products, four in stock, four out of stock, choose the one they like and purchase. What do you do here? Is that a conversion rate of 12.5%? 25%? 100%?
The reality of course is that in all likelihood you will be looking at visits (if you think your measurement framework has one objective of selling things and another of selling more things to each person that buys something then your first one will eventually lead down to a ‘order visit/product visit’ metric and your second will lead to a KPI of ‘units per order’). The downside of this is that inevitably your data will look like:
- Total Products: visit = 10k, conversions = 5%
- In Stock Products: visits = 9k, conversions = 6%
- Out of Stock Products: visits = 3k, conversions = 3%
In our situation above where someone viewed both in and out of stock, before buying something – they’re pushing up your out of stock conversion rate.
To add another layer of complication to procedures, we have to take into consideration the difference between visits to temporarily out of stock products and permanently out of stock products (off sale products).
Temporary Out of Stock
I have quite a few conversations with people in the office about whether we should have out of stock products available to users or not. Users can be annoyed if they end up at a product page which is out of stock or a product listing pages which has out of stock items in it. This will reduce conversion rates even for those who then end up going to other products which is in stock (we’ve done the analysis on this) or the other way around.
But having temporary out of stock on your site holds some advantages:
- There is an opportunity for the site to be able to ‘convert’ in other ways. Knowing that you are going to have out of stocks allows you to create a critical success factor or goal of getting users to save the product for when it returns (which can be extended to in stock products)
- Maintaining a link through to your products will continue to provide link value to product pages to encourage their rankings in search engines. This means when they do come back in stock, they’ll have maintained their high ranking and traffic
- It gives you the opportunity to showcase what products you have (or at least will have in the future) so that users will know the variety of your range. That ‘brand’ will encourage users to come back in the future
- You can showcase similar products to promote them
So there is a balance to be had between removing removing them completely and removing the visibility enough that it doesn’t annoy those that accidentally stumble upon it.
This presents you with quite the conundrum when you are reporting – on the one hand you have a KPI for conversion from product, on the other you have one of save for laters, increasing one could actively decrease the other. One has a demonstrable value, whilst the other is a potential future value. You shouldn’t ignore you potential future value, but you are going to mostly aim for value now.
Off Sale Products
Off sale products offer you a new challenge. For off sale products you don’t have that opportunity to get you ‘save for later’ because it’s never coming back and you don’t really care whether you continue to have the traffic because it won’t benefit you directly.
However numbers three and four above still hold. Removing the pages loses your ability to get visitors to the site that you wouldn’t have been able to do otherwise through SEO. These pages obviously have some value, but less value that a temporarily out of stock product. With these pages you are probably going to try your hardest to stop people navigating to them on site, but still be able to find them from outside the site.
Partial Out of Stock
One of the biggest challenges from an analytics perspective is the partial out of stock measure.
What do I mean by partial out of stock? These are people who turn up at a product page and for some reason you can get it in one size or colour or shape, but not in another. This is an interesting concept because if I arrive at a product page for a pair of jeans, but they don’t have a 34 short (stop it), but only have a size 28 long (who wears those?) then I think that this is out of stock. But you’ll have no way of knowing that or not, because you’ll have demonstrable in stock products.
There are two solutions to tracking this:
- Make all your different sizes different product pages. This is good from a tracking perspective and an SEO perspective (unique urls for each product colour, size, etc combination), but not a great user experience (if they don’t have a pink shirt in my size, I might be tempted to buy the yellow one instead)
- Have some partial out of stock value that is passed alongside your product view (‘viewed availability’)
Of course a partial out of stock value has to be taken on face value of what it is: it’s telling you how many versions of that product are in and out of stock – it isn’t telling you whether the one that your users wants is in or out of stock.
The other thing you want to think about when creating this is what you are going to do with it. Knowing that a product converts at x% when it has 20% availability and at y% when it has 70% availability allows you to make the decisions on how much stock you should worry about being low on. Of course 50% of 2 products is an awful lot different to 50% of 30 products, so you might also want to distinguish in some way or another about how many of them were available or not.