We asked thousands of DTC merchants: Is selling out during a product launch a success or a missed opportunity? The results were surprising.
60% of retailers see selling out mid-product launch as leaving money on the table (so... not a success).
We agree. (Crossnet, for instance, missed out on $250k in revenue when just 1 product sold out for 5 days.)
But the impact of this stockout goes beyond a few missed sales and affects the long-term demand for that new product.
Franz Sauerstein, founder of SCHWUNGVOLL, a Germany-based ecommerce consulting firm that focuses on "hedonistic goods" (think: coffee, wine, craft beer, and the likes), likens this 2nd-order effect to "letting water out of a bathtub."
You do all this work – and spend a lot of money – to build hype around your new product (AKA, fill up the tub).
And no matter your marketing campaigns, some initial demand will drain simply because that SKU can't be the hot, new thing forever. But if you remain in stock, that tub should stay somewhat filled as long as you continue marketing the product.
However, a stockout seriously drains that demand.
Sure, a launch day stockout might generate some immediate hype (like it does for Supreme). But unless you can immediately replenish your inventory (or guarantee that every new product will perform the same), that demand will go down the pipes, unfulfilled.
That said, you could always market your way through the out-of-stock event. This will ensure you hold onto some of the initial demand. But that's like running a faucet while the water floods out the bottom: long-term, ineffective and expensive. And the longer you're sold out, the harder it is to keep that tub filled.
The more sustainable option? Per Franz, match your inventory plans to your actual sales from the get-go. (Bonus points for factoring in the inevitable change in sales velocity as that product ages). That way, you can meet customer demand without selling out (or getting stuck with excess inventory).
👉 Launching something soon? Check out this step-by-step guide to forecasting demand for a new product.