Out-of-stocks and supply chain mentions have taken over every facet of the industry. Messaging first peaked in July 2020 with shoppers encountering 3x more out-of-stocks compared to before the pandemic; in January 2021 that rose to 4x.
The baby category is the latest to be hit significantly with out-of-stock levels of baby formula up to 25% in February, from 11% in December, according to an analysis by the consumer product data firm Datasembly. With all of this awareness of the problem and deep dives into how sizable an issue it is, very few pieces of literature have actionable solutions for brands to combat their inventory issues.
Media waste, defined as the amount of marketing efforts that direct to an out of stock page on a retailer’s site continues to be a major challenge for brands. The amount of media wasted every year could be compared to how much it costs to be featured during the Super Bowl halftime show – so a lot!
Who is the Most Impacted?
In addition to recent baby product woes, out of the 18 product categories tracked by Adobe, electronics currently has the highest out-of-stock levels, followed by jewelry, apparel, home and garden, and pet products.
Since the pandemic, more than half of omni channel and e-commerce executives cited out of stocks as their biggest challenge and 40% have manually prioritized high-demand SKUs to maximize their production capacity. In a digital-first, automated inventory and supply chain seem to be the biggest hurdle to overcome. This hurdle has a waterfall effect on every component of a brand’s success and the advertising partners they leverage. This can lead to irreversible issues down the line (reduced brand loyalty), which is why it should be a marketer’s top priority to find a sustainable solution. Don’t worry, Hyphen has you covered.
The Impact of Out-of-Stock on Your Media Performance
For many marketers focused on grocery pickup, that leaky conversion funnel is being amplified by promoting products that are not in-stock. In fact, up to 20% of shopper marketing budgets can be wasted promoting products in locations where the item isn’t available.
Imagine if you told your CMO that you pay a 20% penalty fee on all your media just for being out-of-stock. That’d be crazy, right? But wasting 20% of your media is just the tip of the iceberg. It has much deeper and lasting consequences to customer loyalty, sales & ROAS than you might think.
Eliminating Media Waste
There’s a relatively simple solution to this: turn off your media when you’re out of stock in a given location. It’s what we call “in-stock media targeting” and it is absolutely critical. Only then can you fix these issues, and when you do, it can be a game changer.
Benefits Hyphen has seen from using in-stock media targeting in our brands’ campaigns:
The impact of in-stock targeting is huge on a campaign by campaign basis, but when applied to all your campaigns for the year it becomes an incredible advantage over your competitors who continue to pay the media “out-of-stock” tax.
Connect In-Stock Data to Media Targeting
A critical step is to automate the connection between your in-stock data and media. The lower the latency, the faster you can be at preventing media waste and relocating media budgets to in-stock store locations.
Option 1 – Site Crawlers
This can be complex to setup and maintain. Without manual maintenance and support, the accuracy of this method can be very poor depending on the retailer.
Option 2 – Manual pulls from retailer reporting portals
The effort and latency can be a key setback of this approach. Between the time it takes to send those weekly reports to your media team and external partners – which is the frequency at which retailers update this data – and for them to make changes to your campaigns, it leaves a lot of missed opportunities on the table while creating a lot of work for everyone.
Option 3 (Recommended) – Direct connection to retail in-stock APIs
Effort and cost to build a custom integration that is accessible across all media platforms can be an overkill which is why we created Hyphen. We built integrations with all the major retails so you don’t have to.
At this point, you have figured out a way to collect in-stock data using one of the options presented above. Now, what? There’s nuance to in-stock media optimization. It can’t merely be an on and off switch. Before you’re out of stock, there is still a lot your media can do to adapt to lower relative in-stock counts. You don’t want to direct throttling down your media too much, too fast, but you also don’t want to wait until you’re totally out of stock to make adjustments.
How much you should adjust your bids down, based on decreasing in-stock quantities, depends on many variables. You need to consider:
1) Sales velocity
2) How quickly your product moves
3) Local demand variables-weather or major events/trends happening
4) Impact your throttling of media has on overall delivery.
The only way to figure this out is to test – or work with someone like Hyphen who has already done the hard work for you. What is that old adage about being part of the solution, not part of the problem?
In addition to the built-in logic of our platform, our team of experts can work to oversee the bidding logic and ensure you’re finding the optimal balance between media delivery and performance.
The best part? You can automate this entire process using Hyphen.
Take the Next Step & See Results
Hyphen, powered by The Stable, ensures you never direct shoppers to out-of-stock items. Thanks to our proprietary TrueStock technology, Hyphen will reduce the manual work that has historically been spent hunting down inventory reports and increase the efficiency of your media dollars by fine-tuning and adjusting your ads based on product availability.
Ready to make your media work smarter not harder? Contact us!