What happens when this doesn't work

Last week the White House released a comprehensive plan intended to mitigate supply chain issues. The October 13th Briefing Room report was both overly optimistic and woefully out of touch with the realities facing Small Businesses in the United States. 

That may seem dramatic, but it isn’t. “Well let’s just keep the LA port open 24/7 that should fix it,” This is not a strategy that works, and that is proven by the fact that the Long Beach port has been open for the past two weeks and is still be underutilized. 

So where does this all fall apart? Everywhere

Where can this come together? Nowhere any time soon. 

I know this sounds doom and gloom, and frankly, most of it is... The reality is, major players like Walmart and Home Depot are buying charter jets and boats, leaving even less available space for small businesses. So while container costs are ten times more than average for small businesses, large companies are further chipping away at the American dream. 

Further, Ronald Klain, White House Chief of Staff signal boosted the idea that the economic problems of inflation and supply chain disruption are “high class problems”- and I couldn’t disagree more. 

These are problems that impact everyone up and down class system, but in reality- ten dollar eggs impact the working and middle class in a way that higher class folks will never understand. The upper class does not experience food insecurity, housing insecurity- most of us do not know what it is like. 

If you speak to someone who is one to two accidents away from homelessness- their take on the matter differs greatly.

Ronald Klain tweet

But let’s step back for a minute and process this. We are looking a potential stagflation event in the face, toy companies are typing to package soft toys on boats in order to maximize space, and oil prices are through the roof. 


Before this turns into a 45 page paper let’s pause and process. 

How are you feeling about the upcoming holiday season?

What are you worried about?

What is your “out of stock” plan?

How can we help?


What are you worried about?

The issues each merchant will be worried about will depend on size, stock position, and general holiday plans. We know everyone is worried about supply chain, that much is obvious, but what does this actually mean operationally for ecommerce businesses?

Inventory

By far the biggest concern many merchants will have is around inventory. Not everyone can be a big box store and charter extra planes and ships to ensure they maintain a solid stock position, so what can other businesses do to mitigate potential out of stock problems? If you run out of a bestseller and your next shipment is severely delayed, what will you do about it? Inventory includes not just your physical products, but also all the necessary packaging in order to actually ship them to your customers.

Fulfillment

We’re seeing a lot in the news about labor shortages causing major headaches for global warehouses and ports. Giants like Amazon are also feeling the pinch here - in the UK they’re even offering temporary warehouse workers huge bonuses just to combat these problems. This issue scales down to impact SMBs also. Say for example someone in your fulfillment team comes down with Covid and your entire warehouse has to shut down for a period of time. What impact will this have on active orders? What if this happens close to holiday deadlines? 

Delivery

Customers love fast shipping, but not at a cost and they certainly don’t like when it’s delayed. The closer we get to the holidays, the more pressure there will be on an already overloaded delivery network. This will cause price increases for shipping services, and delays to orders especially if you sell internationally. Moreover, what’s your plan if your courier partner suddenly says there’s no way they can deliver past a certain date? You don’t want to lose out on holiday sales, so you need to have a plan ready to go.

Let’s look at what you can actually do about this.

What is your “out of stock” plan? How can we help?

One vital piece in this puzzle is your out of stock strategy. It isn’t the solution to all supply chain troubles, but it will help you to mitigate its impact on sales and customer acquisition. 

It all starts with communication. Say a bestseller goes out of stock over Black Friday weekend, and you’re not sure it will be back in stock before your order deadline. It might, but there’s a strong chance it won’t be. There are two potential outcomes here for how a customer may react: 

Option one, they hedge their bets and sign-up for back-in-stock notifications. Eventually they give up realizing it most likely won’t be back in stock, and they go elsewhere.

Option two, they skip your back-in-stock notifications entirely and go straight to your competitors.

Neither of these options are great for you, and they’re a dead-end in terms of acquisition. You can’t prevent customers taking either of these actions entirely, but you can provide them with a third option - a gift card. 

On your product page, highlight that you don’t expect the product to be back in stock before the holidays are over along with an estimated replenishment date. This helps to manage expectations, and doesn’t leave the customer wondering if they should just wait it out. 

Then use Govalo’s “sold out” feature which will look something like this:

Govalo sold out integration example

You’re now giving the customer an alternative option that they’re likely to be receptive to. They’re already interested in your products and brand, they want to give you their money. They don’t simply stop wanting to do so just because that product isn’t currently available. Especially if it’s for a gift, and they really want the recipient to get a specific item from your store. Going to a competitor is a disappointment, a second option, a last resort. Whereas a gift card from the store they want to shop with is simply a “Plan B”. 

So how does this address those three key problem areas we identified earlier?

Inventory - If a product is out-of-stock, you have another option for customers to take advantage of. No packaging materials necessary.

Fulfillment - If your warehouse or fulfillment team runs into any trouble just before the holidays, you can bring your deadline forward to control order volume for when they’re back up and running and move to gift cards thereafter.

Delivery - Gift cards are instant, they don’t need to be shipped and processed and couriered to a customer. Especially when we get into deadlines and last-minute shopping, gift cards become even more important.

When there are issues in the supply chain, it can feel like a massive blow. It’s stressful wondering if your seasonal sales will be impacted by something you can’t even control. Having a plan for your out of stock product is an essential stress-reliever and something you absolutely can control.