The online grocery market is growing at a dramatic rate as technology in the industry continues to develop. According to Nielson, almost two-thirds of New Zealanders have shopped online in the last 12 months. This is staggering considering that in 2006 just 37 percent of customers were buying online and this is expected to grow to a whopping 83 percent by 2026.

With this increase in consumers turning to the convenience of online shopping it's even more crucial for retailers to ensure that the products online are actually available and not out-of-stock. The Grocery Manufacturers Association reports that online out-of-stocks are nearly twice what they are in-store which can potentially lead to losses of up to $17 billion a year globally.

A report issued by the association revealed that out of the top 100 publicly listed companies’ relevant manufactures had sales of 1.7 trillion dollars in 2016. 80 percent of these sales were available to be purchased online. However, these companies also showed a 15 percent out-of-stock rate which is double the rate of in-store.

In order to have high sales and good customer relationships, it is key for retailers to have items in stock. A recent survey from the Trading Partner Alliance consisting of FMI and GMA revealed that shoppers identified product availability among the top three factors when considering where to shop. This shows the impact that out-of-stocks can have on customer loyalty and spend.

When asked about ensuring sales increases, US President and CEO of Walmart Greg Foran, stated that focusing on shelf availability was essential not only to prevent out-of-stocks but also maintain a good supplier/ retailer relationship.

So how do retailers reduce these out-of-stocks?

Better communication between the manufacturer and retailer, and inventory management systems are both answers in reducing the issue of online out-of-stocks. While Countdown tries to keep on top of online stocks sometimes, out-of-stocks are hard to avoid. “We have a lot of processes in place to ensure we keep out-of-stocks to a minimum.  Our online shopping service is incredibly popular and continuing to grow all the time, and likewise, we continue to refine the service and experience for our customers at every step along the way,” said a spokesperson from Countdown.

New World, on the other hand, uses insights to predict recommended stock volumes. “Stores receive tailored reports on their stock volumes and sales and uses these insights to determine if they should add or remove products from online. This enables us to accurately meet fulfilment orders and ensure stores have products that their customers are looking for on their shelves in-store and online,” added Antoinette Laird, Head of External Relations for Foodstuffs NZ. “New World stores are locally owned and therefore have control over their own online range. They source local products that are available online as well as at their local store, which is unique in global grocery e-commerce. Now that the rollout of online shopping across New World locations in the North Island is almost complete, we’re looking forward to launching a PAK’nSAVE online service.”

Using buffers to reduce out-of-stocks is a solution for retailers. Displaying only 50 precent of the volume will stop out-of-stocks from appearing for customers. Forecasting and recording sales from shoppers allow supermarkets to predict relevant stocks in the future and what products are proving popular.

Reducing out-of-stocks to a minimum is a crucial part of the online shopping experience for retailers. To keep loyal customers and increase sales store owners must harness all the tools available to help them achieve a full stock list.