Supply chain challenges often throw a wrench in the best laid plans to grow your business.
We saw it in 2020 when supplies from China were limited due to COVID. And we saw it again throughout 2021 when the entire global supply chain went into crisis. Even now, supply chain issues still persist for many brands. (In fact, you could say supply chain volatility is akin to death and taxes – a certainty you can bank on.)
But being out of stock shouldn’t put the brakes on your eCommerce strategies and efforts to optimize the digital shelf. In fact, times of supply chain crisis are EXACTLY the right time to double down on optimizing your digital shelf. It gives you a rare chance to get a leg up on competitors that are likely facing similar challenges but are slower to respond.
Here are 5 ways to focus your eCommerce efforts during times of supply chain volatility:
There’s no getting around it: Supply outages will hurt your sales. This is especially true when your high-priority, high-volume SKUs go out of stock. If this happens, it’s smart to have an action plan so other products in your portfolio can work harder to make up some lost ground for you.
Consider this scenario: A good portion of your online sales are generated by consumers searching on general category keywords (e.g., “coffee pods”) or brand keywords (e.g., “Nespresso pods”). If your products that rank high for these keywords (your hero SKUs) go out of stock, it poses an enormous risk for you – yet an opportunity for your competitors to take over your prime search position. During the height of the pandemic back in Spring 2020, we saw many brands in the toilet paper, disinfectant and razor categories gain new buyers when popular competitor brands went out of stock.
So, whenever possible, you want to keep your brand’s share of page 1 search results as high as possible by filling the gap with other products. Here are some ways analytics can guide you:
PRO TIP: When your top-performing products are being hurt by supply issues, shift your focus to the "unsung heroes" in your portfolio. These are your high converting, well-stocked products that have not gotten enough traffic attention. Profitero's Traffic & Conversion analytics can easily help you plot this out and maintain an updated view as market dynamics change.
When your products go out of stock on marketplaces like Amazon and Walmart.com, third-party (3P) sellers can take ownership of your product pages by “winning the Buy Box” and fulfilling the order.
Depending on how long you expect supply outages to last, you may want to consider using sponsored real estate on your product pages to direct shoppers to alternative products in your portfolio that are in stock. This way you at least have a chance to win the sale and avoid consumers having a potentially bad brand experience, which is always a risk when you don’t know who is distributing your products.
#3. Reassess and realign your pricing to match new market realities
Supply chain challenges and inflation go hand in hand. In an inflationary environment like we’re now experiencing, raw materials are more expensive, shipping is more expensive, and the labor to get your products from warehouse to retailer is more expensive.
These rising costs have to be made up or accounted for somehow. As of October 2021, 93% of brands were in the process of passing price increases on to Amazon shoppers, according to a Cleveland Research survey.
The timing is right to use competitive eCommerce price data to better understand how your competitors are dealing with supply chain scarcity and inflation. For example:
Knowing the answers to these questions will help support your own pricing conversations with retail customers until supply issues normalize – or at least help you justify why you may be cutting back on trade spend.
When your products do come back in stock, they have to work a lot harder to make up for lost sales – so be ready. One of the fastest ways to juice up your sales when products return is by upgrading and enhancing your product pages.
To do this, use Profitero to benchmark your product pages to other bestsellers in the category. with Profitero. Our research finds that increasing image count, for example, can boost sales by as much as 45%. You can boost sales even more by optimizing pages with video.
Improving your content across your entire list of priority products (including those currently in stock) can be a powerful accelerator of digital sales. Keep in mind that content enhancements take planning though, so the sooner you start your benchmarking analysis, the better off you’ll be.
Another tip: Confirm content compliance once products have come back in stock. We’ve witnessed several client cases across multiple retailers where content had reverted back to old versions after going out of stock. This can certainly slow a triumphant return of your products.
Even beyond the current supply chain crisis, the rapid growth of eCommerce makes it more challenging to forecast supply needs in general. Retail stores have to serve brick & mortar customers while also juggling the needs of click & collect buyers and home delivery orders.
If you ever ordered grocery for click & collect or curbside pickup, you’ve probably noticed how often product substitutions have to be made. If your products are out of stock or in-store inventory is low, shoppers won’t even get the option to buy your brand because more often than not the retailer will suppress your online listing. So, to preserve sales and brand loyalty, you need better visibility of your supply chain gaps.
Based on our store-based analytics, which track product availability down to the regional and store level, we’ve found out-of-stocks are usually not consistent regionally. That is, products that are out of stock in Boston, for example, may be well stocked in Boise, or vice versa. Even specific stores within the same state and within the same retail banner may have widely different out-of-stock patterns. The faster you can recognize these local supply patterns, the faster you can reallocate extra inventory to a region or store in need – and consequently, the faster you can fine tune forecasting and replenishment models to hopefully avoid going out of stock at all.
PRO TIP: Store-level analytics, like those offered by Profitero, can help you pinpoint regional and local out-of-stock patterns so you know if shoppers can actually “collect” your product when they “click.”
To learn more about our Store-Based Analytics offering, contact us or ask your Profitero Account Manager for a demo.
It’s easy to feel like there’s nothing you can do to influence your eCommerce growth when your product supply runs out. But with the right analytics at your disposal, you can somewhat stanch the impact on sales in the short term, and even get your brand in a healthier position to grow long term.
To quote myself: “When life gives you lemons, make lemonade. When the supply chain runs out of lemons, use limes and make margaritas.”