You’ve worked hard to create the ultimate holiday shopping experience for your customers. Don’t let it go to waste when products run out of stock unexpectedly. Here’s how you can avoid missing out on revenue this holiday season.

This holiday season is going to be a big one.

You and your team have been preparing for months. Behind the scenes, there’s excitement for the expected increase in sales, but there’s also anxiety stemming from something breaking or not working on the most important shopping dates of the year.

Before customers crowd your digital storefront and struggle to get their hands on your products, it’s crucial that you get ahead of any potential issues and have a concrete plan on how to address them as they happen.

Namely, products running out of stock.

Stockouts are a fire waiting to happen this holiday season, particularly on Black Friday/Cyber Monday (BFCM). You can stand by or you can prepare yourself—and your team—to hold the hose, ready to put out the flames.

Let’s walk through why you need to prepare a stockout strategy and how Cogsy can play a role in helping you put out those fires without your customers or your team ever breaking a sweat.

This BFCM, there’s a bigger chance of stockouts than ever before.

The direct-to-consumer (DTC) retail space is growing exponentially.

Consider these stats:

For any brand, this is an exciting way to enter the holiday season.

But it’s also something to be apprehensive about, considering the difficulty in meeting growing demand due to disrupted supply chains.

Keeping products in stock is becoming more difficult and inventory has become the elephant in the room for retail brands.

Under normal circumstances, supply chain disruptions happen from time to time. Unfortunately, these disruptions have reached an all-time high.

To put this crisis into context:

Adobe Analytics published the following graph to highlight how pageviews for “out of stock” have exploded over the past two years.

As BFCM approaches, the increased possibility and danger of stockouts hangs over our heads.

If your brand experiences a stockout, do you have a backup plan in place?

Are you prepared?

How stockouts can affect your brand

Having an out-of-stock event during Black Friday/Cyber Monday can be disastrous for brands.

Running out of the product a customer is excited to purchase creates a big dent in customer satisfaction. Stockouts create a negative customer experience, putting customer loyalty and future sales at risk.

Brands are more than 14 times more likely to sell to a repeat customer than a new one. Losing that first sale to a customer due to a stockout means you may be missing out on many future sales, as well.

Some brands rely on “back in stock” notifications to bridge the gap between going out of stock and making the sale.

This approach is an ill-fitting bandaid, not a true solution.

Customers are rarely happy to give over their email address to, in some distant future, receive a notification that their desired item is available to purchase. Even more rarely will those customers jump at the chance to buy their desired item when they receive that kind of notification.

Conversion rates for back-in-stock notifications are dismal, between 5-15%.

Additionally, your customer’s demand for the product doesn’t just dry up when they see you’re not in stock. Their desire to purchase is still there, and they’ll likely go to a competitor to find an alternative solution.

During this holiday season rife with uncertainty, best-in-class brands will be prepared to avoid these losses by striking while the iron is hot. 

When a customer’s intent to purchase is strongest, brands should let them hand over their credit cart and buy their desired item, regardless of its inventory status.

Here’s how.

Create your out-of-stock plan by selling on backorder.

While running out of stock is a brand’s worst nightmare on Black Friday/Cyber Monday, there’s a simple and easy way to mitigate the effects of that stockout event and to eliminate the related losses, as well.

The solution? Leverage technology to sell on backorder, converting your customer’s demand and turning out of stock products into revenue.

When you sell on backorder, customers can purchase an item that is currently not in stock, knowing full well that they will be receiving the item at a future date.

Here are a few examples of brands that are selling products on backorder:

Athleta Backorders
Screenshot from athleta.com
Screenshot from ilysm.com

As a merchant, you‘re probably curious about how selling on backorder can help avoid the losses related to stockouts.

Compared to back-in-stock notifications, the conversion rate for products on backorder are much higher. In fact, they sell nearly as well as products that are currently on hand. According to brands using this strategy, the drop in conversion rate is negligible.

Imagine selling an out-of-stock product at almost the same rate as a product you have on hand. On top of that, imagine going out of stock on a particular product and not having to worry about it affecting your bottom line.

Talk about a sense of relief for your team.

The key to selling on backorder, though, is to do it in a way that feels intuitive and straight-forward to your customers and your internal teams.

Let’s dive into how to do that.

Empower everyone involved with clear communications and information.

There are a few steps you can take to make sure everyone involved in the transaction is on the same page.

Let's walk through the steps.

Set expectations with customers.

While you can natively sell on backorder with Shopify, Cogsy improves the workflow in a crucial way: increasing communication with the customer.

Communication is key to setting expectations and, thus, selling on backorder successfully.

When selling on backorder, the most important thing to communicate is the estimated shipping date. Customers want to know when they can expect to receive their desired item in the mail.

To set expectations, Cogsy publishes the product’s estimated shipping date on:

  1. the product page
  2. the checkout page
  3. the email receipt

Here is what it looks like on both Cogsy's dashboard and on the product page:

By displaying this key information in all the right places, the customer knows what they’re signing up for by purchasing the backordered product.

Making the estimated shipping date obvious and ubiquitous makes it clear to the customer that they should expect to receive the product in the future.

In our experience selling on backorder with a few world-class brands, customers don’t mind the delay in shipping. They prefer waiting for a product to be delivered over not being able to purchase it in the first place.

But communication of accurate information is paramount. 

When discussing selling on backorder, most brands worry about refund requests. If you share that worry, here’s some data to put you at ease. 

Our internal research shows refund requests spike when estimated shipping dates are changed post-purchase. When estimated shipping dates are spot-on, refunds are few and far between.

Cogsy takes care of showing the customer the estimated shipping date in various places so they won’t miss it. It’s your job to get the estimated shipping date right or be upfront about any uncertainty on that front.

Equip your fulfillment team with shipping dates.

As important as information is to your customer, your fulfillment teams also need access to the right information, in real-time.

In the Shopify admin, Cogsy enables operational workflows, too.

It’s vital to allow internal teams to view which items have been backordered by customers and the exact date that was promised to the customer. That way, teams can fulfill those orders as soon as those purchase orders come in.

Below is a view of the Shopify admin when products have been purchased on backorder:

In this way, your fulfillment team will be able to plan accordingly and feel confident in their ability to meet the shipping date promised to the customer.

Empower your customer-facing teams to provide quality support.

There’s another very important team that needs to be kept up-to-date on order status and any promises made to the customer: your Customer Experience team, or anyone who does customer support. (Maybe that’s you?)

Whoever is customer-facing needs a dashboard where they can quickly check to see which products are on backorder and when they’re expected to be on hand.

Below is an example of what this dashboard looks like, with a list of backorders on the left and a list of products currently on backorder on the right.

In addition to customer-facing teams, this dashboard is useful to all your team members, including whoever handles operations, marketing, partnerships, and more.

Keep your teams aligned during hectic times riddled with promotions, surges in traffic and a cascade of orders.

Prepare your out-of-stock strategy

Now that you know how selling on backorder helps keep your customers and internal teams in-the-know and how it can help increase your bottom line, let's walk through exactly how to implement your stockout strategy.

Enter Cogsy.

Step 1: Install Cogsy in the Shopify App Store.

Let’s walk through the process of getting Cogsy set up on your Shopify store and enabling backorders.

First, install Cogsy from the Shopify App Store.

(You can check out our pricing and tiers. We have a free plan for Shopify merchants with annual revenue of up to $250,000.)

After installing Cogsy from the Shopify App Store, you’ll be prompted to add additional integrations for services like Skubana, Anvyl, Google Analytics and more. You don't need these integrations to get started, but, if you use those services, you can connect them to complement your product data.

Cogsy will then run your forecast, which takes up to one hour to complete. No need to sit around waiting, though—we email you when it's ready.

If you've placed purchase orders with your suppliers and have that data handy, you can input that into Cogsy, so we know when to expect those SKUs to be received. If you'd like to place a recommended purchase order, Cogsy can help you do that.

Then, you can choose which products you'd like to sell on backorder. Once you enable backorders for specific products, you are ready to start selling on backorder—if and when a stockout occurs.

Once you’re all set up, when a product goes out of stock, its product pages will have that extra shipping information displayed for the customer. 

In the video below, we'll walk you through the process from start to finish—from signing up to Cogsy to creating your brand's first forecast and selling your products on backorder.

Caraway, a Cogsy customer, has been successfully selling on backorder for some time now. Here’s a what their product page looks like:

Caraway selling on backorder
Screenshot from carawayhome.com

Notice how Cogsy highlights the estimated shipping date on the product page so customers are aware of what they’re signing up for. When selling on backorder, setting expectations is our number one priority.

Step 2: Offer holiday sales earlier

Over the years, consumers have been trained to wait for BFCM for the best promotions. This year, though, the supply chain disruptions make it ripe time for chaos.

A potential solution is to offer your customers your BFCM deals early. 

The trick to making it work is to make it clear that this is the same deal—if not better—that they’ll have access to on the actual Black Friday/Cyber Monday dates.

On top of avoiding the stress of BFCM for your team, your customers will be happier, as well.

Earlier sales means their products are more likely to arrive on time, as UPS is expecting to not be able to handle holiday shopping in late November and early December, resulting in big delays in shipments to customers.

Best in class brands have an out-of-stock strategy.

Be prepared for the worst so you can come out on top.

Your customers and your teams will be happier for it. As a result, your bottom line will be, too.

Going into BFCM and the broader holiday season, remember:

  1. Customer demand will be greater than ever.
  2. Inventory and fulfillment are more complex than ever.
  3. Stockouts lead to losing revenue and creating a negative customer experience.
  4. Selling on backorder eliminates those losses.
  5. Communication ​​with customers and your internal teams is key.
  6. Consider offering holiday sales earlier than ever to mitigate out-of-stock events.

If you're ready to start preparing your stockout strategy, go install Cogsy on the Shopify app store now.

Marcella Chamorro
Head of Marketing at Cogsy · Writer and podcaster on personal growth, marketing and tech