When stockouts happen (as they inevitably do), you might remove those SKUs from your website or post an out-of-stock message as you wait on replenishment. But both these options cost you a lot of revenue.
That’s because 21-41% of customers will buy a similar product from your competitors when your inventory is out-of-stock. More if you seemingly never carry that product.
A better strategy is to set up back-in-stock notifications for your Shopify store (via a restock alerts app like Shopify Back in Stock). These automatic alerts increase customer engagement and might even help you save the sale.
But warning: As handy as these notifications can be, they come with their share of limitations.
Read on to learn the ins and outs of the Shopify back-in-stock notifications — and to see the better stockout solution. (Spoiler: It’s selling on backorder.)
Shopify’s Back in Stock feature allows your customers to sign up for stock alerts via web push notification, email, or text message (SMS) on sold-out products. This way, customers know when you’ve restocked these products, so they can head back to your site and complete their purchase.
Many retailers who use the Back in Stock tool see it as an opportunity to win back lost sales and maintain better communication with their customer base.
While back-in-stock notifications aren’t required for running a DTC brand, implementing these alerts has some major benefits, like minimizing lost sales, reducing customer churn, and increasing your conversion rate.
When you automate restock alerts in Shopify, you can cut down on the number of lost sales due to stockouts. After all, if customers sign up for a back-in-stock notification, they’ll be more likely to wait and buy from your brand rather than spend their money with a competitor.
Why? Because providing more context around what’s happening with the product minimizes the number of lost sales.
Back-in-stock notifications give customers something to look forward to and help them jump on the product as soon as it’s restocked.
When your brand encounters a stockout, it’ll see a 0% conversion rate (AKA 100% lost sales). Back-in-stock notifications do a little better, but only a little. For reference, these alerts typically convert at a dismal 5- 25% conversion.
Comparatively, selling on backorder has a conversion rate comparable to selling in stock. Meaning, your lost sales are kept to a minimum, and your cash flow never comes to a halt.
Customer churn is the rate at which customers stop doing business with your brand. More simply, it’s the percentage of customers who stop being, well, customers.
In 2020, the customer churn rate for online retail came in at a whopping 22% (compared to only 13% in 2019). And while that statistic is specific to online retail in the United States, it still means that 1 out of every 5 US customers cut ties with brands they were once loyal to.
A high churn rate (like the one US retailers saw in 2020) not only impacts your company’s bottom line but also takes a hit on your customer lifetime value (LTV).
Fortunately, Shopify back-in-stock notifications can reduce churn by motivating customers to return to your store later. In other words, customers are less likely to move on to another retailer or forgo their purchase altogether.
Instead, they’ll hang tight (and wait on your brand) since they expect your restock to come soon.
That said, this only rings true within reason. If it takes your brand a whole year to restock, customers will still go shopping elsewhere (back-in-stock notification or not).
Customers get pretty disappointed when your products are out-of-stock. And this disappointment only increases when your stockout message is a dead end in the customer experience. That is when there’s no secondary option for payment, purchasing, and so on.
On the other hand, if you give customers the ability to receive notifications from your brand, they will feel more fulfilled by their online interaction. (This is true even if customers decide not to sign up for your back-in-stock notifications.)
Signing up for restock alerts leaves customers with a sense of satisfaction, even if they don’t eventually buy the product.
Why? Because they’ve taken deliberate steps toward completing their purchase (rather than being turned away totally empty-handed).
And when customers have a positive experience on your site, they’re less likely to seek out a competitor or spend their money elsewhere.
Perhaps the most overlooked benefit of using restock notifications is that they help you grow your brand’s email marketing.
When someone opts into back-in-stock alerts, your company has permission to contact them in the future (even when it’s not about the out-of-stock product). So, you can pop up in that person’s inbox alongside emails from family, friends, and fellow favorite brands.
By connecting with existing (and potential) customers in this way, your brand has a chance to share more of its story and overall mission. You also have an opportunity to offer these subscribers insider deals or discounts, which might be the incentive customers need to finally click ‘add to cart.’
Plus, as you expand your email list, you can better build customer relationships, increasing engagement. Hubspot’s research from 2021 revealed that 77% of marketers saw an increase in email engagement over the last 12 months — meaning customers are more tuned in to this channel than ever before.
Think about it: Anything is better than not converting at all because of a stockout. But if you sell out, Shopify back-in-stock notifications can help convert potential customers by giving them a reason to return.
Rather than leaving your site totally empty-handed during a stockout event, back-in-stock messages give customers a way to stay in the loop about those products. And it makes it easier to incentivize those folks to come back and make a purchase later on.
With these notifications, you can retain sales on out-of-stock merchandise and enjoy more consistent revenue streams over the long term.
Additionally, these customers are also looking for your emails. And you can sell them on other products as they wait for that email. Even if they don’t come back for the item they initially wanted, they might come back for something else.
For Shopify sellers, the Back in Stock: Customer Alerts app is typically the best option for managing your various back-in-stock notifications. (But Back in Stock: Restock Alerts and Back in Stock Product Alerts are other Shopify apps that can help you do this.)
This particular stock notification app takes just a few minutes to set up. Once configured, it can start collecting customer emails and creating a waiting list for currently out-of-stock products.
Note that the app can also collect phone numbers if your company wants to use SMS alerts instead of (or in addition to) your ongoing email alerts.
In most cases, SMS is more effective for time-sensitive messaging or requires urgent action. But emails work better when your messaging needs to be saved for a later date.
With these emails (or phone numbers) in tow, Back in Stock will automatically notify prospective buyers whenever that item is back in inventory.
💡 FYI: Back in Stock: Customer Alerts integrates with MailChimp, Klaviyo, and several other marketing platforms you might already be using. Their free plan gives you 14 days to try out the app. After that, pricing starts at $29/month.
Once Back in Stock is installed, you’ll still need to add your notification forms to your website and create your notification templates.
By filling out a back-in-stock notification sign-up form, customers are saying “notify me” when a sold-out product variant becomes available again.
Essentially, customers volunteer their email addresses, and your company is sent information about the product they’re interested in. This way, you can let them know when your store is restocked, hopefully encouraging them to finalize their purchase.
Shopify allows you to customize your email notification templates to reflect your brand’s voice and unique point of view. Leaning into these customizations helps build trust with your customers since they’ll have a more cohesive experience with your online store.
The customizable options in Shopify include:
To customize the text itself, there are just a few steps for you to follow:
You can test this draft by previewing your changes in the Shopify admin or by emailing the message to yourself before sharing it with your customers.
Although back-in-stock notifications have been relied on for years, the reality is they’re not the most effective solution for dealing with out-of-stock products. That’s because, with back-in-stock notifications, you can’t immediately meet customer demand, so conversion rates are wildly lower than selling on backorder.
Like it or not, today’s consumers are all about instant gratification. But that feeling of gratification will be out of reach when your products are sold out (and you can’t meet current customer demand). What’s worse, you can also expect customer satisfaction to drop off.
Meeting customer demand is kind of like Retail 101. It’s the backbone of a positive customer experience and what creates customer loyalty for your brand.
Say you’re encountering frequent stockouts or constantly sending back-in-stock notifications. Then, it can cause a lot of frustration for your customers. And while they might give your company a 2nd (or 3rd) chance, sooner or later, they’ll take their money elsewhere.
In the same way, customers expect you to have the products they want (when they want them). And if you do sell out, customers want to know when that merchandise will be back in stock. Period.
Unfortunately, too many retailers don’t give customers the information they’re looking for – such as inventory replenishment timelines. If you can’t provide a solid restock date (or you keep pushing that date further back), customers will undoubtedly lose trust in your brand.
When this trust starts to wane, so does customer loyalty and the perception of your business. This leads to lost sales and revenue for your online store (even after you’re back in stock).
Earlier, we mentioned how back-in-stock notifications can help to increase your conversion rate. And while there’s definitely truth to that statement, it’s not the whole story.
Simply put, conversion rates for back-in-stock notifications are much lower than those for selling on backorder. This is largely because back-in-stock notifications can’t guarantee customers will come back later to complete their purchase. In most cases, they won’t.
Remember: The conversion rate for these notifications lands somewhere between 5-25%. Meaning a very small percentage of customers actually buy the product after it’s been restocked.
Sure, 5% is better than a 0% conversion rate — which is where you’d probably land without this notification. But, you’re still leaving tons of revenue on the table and missing out on sales opportunities.
The more profitable approach to handling stockouts? Implementing a backorder model. That way, you don’t have to wait until products are back in stock to recoup that revenue.
After all, selling on backorder has a conversion rate comparable to selling in stock, far exceeding what back-in-stock notifications can claim.
With Cogsy, ecommerce stores and DTC merchants can avoid losing out on any revenue at all. Cogsy’s innovative backordering feature ensures retailers can continue selling during a stockout, so their cash flow keeps flowing.
Over the last few years, popular DTC brands (like Caraway) have ditched their back-in-stock notifications and started selling on backorder with Cogsy. Doing so has empowered customers to complete their purchases even when fulfillment can’t happen immediately and generated these brands 40% more revenue.
What’s more, backorders flip the cash conversion cycle by shortening the length of time you’re cash flow negative while experiencing a stockout. In turn, your brand can free up a lot of working capital that would’ve otherwise been unavailable (as you waited for your PO to arrive).
But Cogsy’s backorder functionality doesn’t just benefit your brand — it also helps out your customers.
When you sell on backorder with Cogsy, you can:
This transparency not only encourages conversions (at almost the same rate as selling in stock) but also reduces frustration and confusion when products don’t ship in 3-5 business days. As a result, fewer people will contact your customer support team to request a refund or ask where their order is.
Oh – and did we mention Cogsy can steer you away from stockouts in the first place?
With the Cogsy platform, you can:
Sounds like some pretty big wins for your brand, huh?
The best way to notify a customer when an item is back in stock is with the help of back-in-stock email notifications. You can set up notifications on your website or Shopify store so customers can enter their email addresses. Then, once the desired product has been restocked, they’ll automatically receive alerts that remind them to complete their purchase.
By filling out a Back in Stock notification form in Shopify, customers will be notified when a sold-out product becomes available again. Essentially, customers volunteer their email address, and your company is sent information about the product they’re interested in (so you can let them know when your store is restocked). You can find an in-depth tutorial on adding back-in-stock notification forms here. Alternatively, can hire a Shopify Expert to also guide you through this process.
For Shopify sellers, the Back in Stock: Customer Alerts app is typically the best option for managing back-in-stock notifications. This app takes just a few minutes to set up. Then, once it’s configured, it’ll get to work collecting customer emails on your sold-out products. The Shopify Back in Stock app will automatically email prospective buyers whenever your inventory has been restocked.