From makeup and skincare to phone cases and kitchen tools, products can quickly become overnight sensations thanks to the power of social media. According to a survey by Statista, 71% of global TikTok users said they shopped after stumbling across a product on their social media feed, and 58% said they used the platform for shopping inspiration. Across global platforms including TikTok, YouTube and Instagram, overnight social media hype can drive dramatic and sudden surges in popularity for viral products. In efforts to keep up with the constantly evolving trends, this has meant that as fast as products become viral sensations, consumers are just as fast to purchase products in stores and online – leaving retailers facing unexpected stockouts.
by John Shapiro
As a result of stockouts caused by overnight global popularity, retailers are left scrambling to manage inventory levels and reorder products in order to meet newly growing demands. Data reported in 2023 by POS and payments platform provider, Lightspeed, estimates that merchants are losing out on a combined $3.3 billion in revenue as a result of out of stock inventory. Further, by eliminating stockouts, merchants can grow their gross transaction value (GTV) by 20%. As such, in the age of emerging and evolving technologies, retailers must leverage these tools to better prepare themselves to avoid stockouts and lost revenue even as products unexpectedly gain overwhelming demand. 
What are the Top Causes of Stockouts?
In a survey of nearly ten thousand global online shoppers, nearly 60% of shoppers in the US reported that out-of-stock issues impacted their shopping behavior. While overnight product sensations caused by social media hype has recently emerged as a dominating cause of unexpected out-of-stock inventory for retailers, additional contributing factors include poor product forecasting, inaccurate reporting records as well as manufacturing and supply chain disruptions.
Without access to the right data used to predict consumer demands, retailers are left facing stockouts, product shortages or overstocks – all which ultimately lead to lost revenue opportunities. Fluctuating demand as a result of seasonality, changing consumer preferences and growing competition means retailers must ensure that their data is accurately and continuously updated to help properly forecast stock levels despite unexpected changes. Further, without access to the right forecasting and reporting tools, retailers are left solely relying on manual input for everyday operations including stock management, tracking and measuring. As a result, and coupled with rising costs and labor shortages, retailers open themselves up to human errors, slowed progress and inaccurate and inefficient forecasting and reporting practices overall.
Global events and conflicts also present major and often unexpected challenges to supply chain and manufacturing sectors. An all-too familiar example of this occurred at the onset of the Covid-19 pandemic, as retailers and suppliers worldwide faced an overwhelming surge in demand for products including toilet paper, hand sanitizer and cleaning supplies. This ultimately led to stockouts lasting weeks and months – disrupting operations across supply chains and for retailers – coupled with periods of halted operations as a result of the growing risks of the spread of the virus. Effects of worsening geopolitical conflicts and labor shortages inevitably reverberate across manufacturing, supply chain and retail industries and reiterate the importance of staying ahead of inventory forecasting and reporting.
Leveraging the Right Technology to Respond to and Avoid Stockouts
Alongside the direct challenges presented to a retailer’s overall inventory levels, today, businesses are also expected to do more with less as costs surge and labor shortages worsen. As such, retailers must adopt and leverage a single platform to solve for their current and future business needs. By leveraging a unified retail point-of-sale (POS) and payments platform catered to a single business, retailers gain access to multilocation management, quantitative and qualitative inventory forecasting, advanced reporting and advanced marketing capabilities.
Quantitative inventory forecasting – which relies on past business data to inform future demand levels and qualitative data – which relies on wider market trends, expert opinions and research, are both key tools retailers must leverage for inventory forecasting. In the instance of trending products across social media platforms, the use of qualitative inventory forecasting to investigate current market trends would be increasingly helpful for businesses to predict and prepare for the next product that becomes a viral sensation. On the other hand, quantitative inventory forecasting may be most helpful in peak holiday seasons, utilizing previous years data to predict future demand and periods of increased shopping both in-store and online by consumers. Advanced reporting and marketing also means retailers are able to track real-time updates, spot consumer trends and segment customers based on real-time data.
Retailers today are challenged now more than ever to stay ahead of competition and improve customer experiences despite facing rising costs, labor shortages, and shifting consumer demands. As social media platforms capture the attention of billions globally, retailers are also faced with managing a new and unpredicted impact to their inventory levels, and as such, must remain prepared. Unified POS platforms are providing businesses with a single solution to their long and short term needs and challenges, and adoption remains a critical step to ensuring they are maintaining profitable growth and staying ahead of growing competition.
John Shapiro is Chief Product & Technology Officer at Lightspeed
Photo by Simon Ray on Unsplash
