eCommerce is booming. The increase of online shoppers is a development set in motion by the pandemic, but it looks like it’s here to stay. People will continue working from home, and consumers are used to the convenience that eCommerce offers. What the enormous growth of purchases on the digital shelf entails is a growth of online competition. Getting and keeping your products standing out on the digital shelf is more challenging than ever.
Do you want to win on the digital shelf as a brand, vendor, or manufacturer? Then keep reading, because this blog is for you!
You can take certain steps to improve your digital shelf performances, and it’s definitely worth the effort. In the upcoming weeks, I will tell you what you need to pay attention to and how you can upgrade quickly, allowing you to win on the digital shelf ultimately.
Physical vs. Digital Shelf
Multiply the number of products in your brands' portfolio with eCommerce channels you are selling on, and you will have the number of touchpoints where shoppers discover, research, and (hopefully) purchase your products.
When you walk into a physical store, the shelf is apparent. Products with the same properties but from competing brands are always categorized to find the right products in the right place. Is a digital shelf anything different? Not really. The digital shelf is where a product is presented online, and whether it is in a webshop or a physical store, shoppers buy products they can easily find.
Online shoppers scroll and click through product listings, find out more about the products they are looking for, and discover related products. In a physical store, they do the same when roaming the shopping aisles. Yet, there is a significant difference between physical and digital shelves. Whereas in a brick-and-mortar store, a shopper picks up a product, feels it, and takes a good look at it, digital stores have to use product images, videos, and other product information on product detail pages to entice a shopper into buying.
If you want to score on the digital shelf, shelf optimization is indispensable to win. I will tell you how to start!
Step 1: Prevent Online Stockouts
A product that can’t be found or is not available online will not sell. Simple as that. But do not underestimate the negative consequences it can have for your brand in the short and long run.
When an online shopper wants your product, and that product turns out to be Out-Of-Stock (OOS), what does he do? Chances are he'll look for a competitor that has stock available or a similar replacement, or he doesn't buy a product at all. In any case, it negatively influences the experience he has with your brand, and you directly miss out on sales.
The Consequences of Running Out-Of-Stock on the Digital Shelf
- Search Rankings will go down: When your assortment is often out of stock and competitors can keep a steady stock level, your search ranking will go down, and you give your rival free rein to conquer those top 3 positions on the digital shelf. That's a pity because we all know it's not easy to crawl back up again.
- Issues on Marketplaces occur: When running Out-Of-Stock on marketplaces, your product most probably loses the buy box to a 3P seller. When out-of-stock events occur frequently, a marketplace can put you on a list of underperforming seller. This then results in you losing the buy-box, a low search ranking, and lower sales numbers, and in the end, it could even lead to delisting by that marketplace.
- Jeopardize Customer Loyalty: According to a McKinsey study in March 2020, one of the biggest drivers for abandoning brand loyalty during the shutdown was items being out of stock. When running out of stock, you're not only disappointing shoppers in the short run but jeopardizing customer loyalty. It's more than one single sales opportunity. If someone has been a loyal customer for many years but switches to another brand because your product is out of stock, you put that person's loyalty at stake, plus losing years of likely sales in the future.
How to Minimise Online Stockouts?
- Start with defining your core portfolio. I can imagine that your cash cows and stars, products with high-profit margins, newly introduced products, or products your brand is famous for are the ones you want to keep an eye on closely since they will have the most negative effect on your brand and profits when running out of stock.
- Track daily if your defined core portfolio products are listed and available, there where they should be, using Digital Shelf Analytics tools. Automatically monitor availability on all your sales channels and anticipate availability issues and when they might occur. This way, you do not longer need to check product pages manually. That will save you and your team much time.
- With the right data and insights into the availability of your products over time, you can predict specific patterns and talk to resellers about how to optimally manage your inventory. Both you and your resellers will benefit from protecting your search rankings and customer loyalty and avoiding lost sales. A win-win!
In the next two blogs, I will show you how you can optimize on the digital shelf as a brand owner in a well-founded way. Keep an eye on our channels and stay tuned for next weeks' article. Meanwhile, get our free eBook below!