February 01, 2007

Customer Service: Do You Pull An Item Off The Website If It Is Sold Out?

The esteemed Becky Carroll at Customers Rock! describes an experience she had at Coldwater Creek.

An element of her discussion is interesting to me. What you do with online items that are sold out? In Becky's case, she clicked on sale items, only to be told that the item was not available. Other items were placed in her shopping cart, only to later disappear, because they were also sold out.

Becky describes a common problem in multichannel retailing. What she experienced, as a customer, is not optimal.

Now let's put yourself in the place of an employee at Coldwater Creek. You purchase 10,000 units of this dress. You publish the item in a catalog, you pay Google additional money for the keyword "Dresses", and oh oh, sales go crazy. Within a week, you sell out of most of the skus.

If you pull the item down from the website, you won't know how many units you 'could' have sold. Keeping the item online allows you to count the fact that you might have sold 19,000 units. Next year, you have a much better idea about how many items you need to purchase. For this reason, many employees at multichannel retailers want to keep recording the 'demand' for these items.

So --- my question for you, the loyal reader, is this: Do you disappoint 9,000 customers like Becky by leaving items online when they are sold out, or do you give Becky a better shopping experience today, but fail to purchase enough items for next year (or purchase too many), disappointing next year's customers and hurting next year's profit and loss statement? If your job security is based on correctly forecasting the right number of units, you'll want to keep those items online, so you can correct your error from this year.

I don't think there is a right or wrong answer. I do want to hear your thoughts, because it is a dilly of a pickle.

By the way, if you want a thankless job, go work for a multichannel retailer as an inventory manager. It's not a lot of fun to be wrong every single time you forecast sales.

6 comments:

  1. Anonymous6:58 AM

    This is one of those down-in-the-details questions that really illustrates the challenges of the real-time web world against the (relatively) leisurely pace of the paper-and-snail-mail world that some of us grew up in.

    My opinion would be to maintain the sold-out items on the web site, for the reason noted (better ability to gauge demand this year and thus improve customer service next year). That said, I also think it's important for the web merchant to offer an explanation of this issue to the customer when they do attempt to order a sold-out item. There are two potential levels of customer frustration in this experience: first, that the thing they want to buy is not available, and secondly -- and perhaps more dangerously -- frustration at the merchant for maintaining an unavailable item on the web site.

    The temptation is to eliminate the second frustration simply by removing the unavailable item. However, I also think that the frustration can be eliminated with a short (one to three sentence) explanation of the reason why the unavailable item is still presented. I think in this case the customer can be educated, and the merchant has an opportunity here to convey to the customer that they continually strive to improve the quality of their inventory forecasts.

    A very old school catalog art director I once worked with had a saying that "When you educate your customer you make them your friend." Despite the rise of the Google hegemon, I still think that's a worthwhile business philosophy for a direct to consumer business.

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  2. Kevin, thanks for taking on this sticky situation. I think there are actually two issues here. One is letting the customer know an item they are interested in is sold out. Coldwater Creek does that; as an item is clicked on, the customer sees a screen that indicates the item is no longer available. I can completely understand the need for this type of tracking, although it is not a great customer experience. But it is one I could live with.

    The real concern I had was items being removed from my shopping cart. When an item is placed in the cart, there is an intention to purchase that item. To have it removed "from my arms" as I am shopping is inexcusable, from a customer perspective. No one would ever do this in the store!

    I understand the pressures of forecasting. However, what is happening here is a diminishing of trust in the brand. And it wasn't just me - customers were ranting about it in other forums. No amount of dresses being sold next year can make up for lost trust. If Coldwater Creek continues to frustrate existing customers through their website, they may find they have plenty of dresses left to sell in the future.

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  3. If there's one thing both of you agree upon, it is that Coldwater Creek needs to improve the customer experience --- via education and by not pulling items from the shopping cart!

    Now if either of you could work at Coldwater Creek for a month, and thumb-wrestle with the IT folks who maintain the website, folks who have 200 different priorities. Maybe they can move your suggestions up to number 173 in importance.

    The latter comment --- about IT resources (it's not the fault of the people, businesses simply cannot profitably allocate enough resources to IT), is where things really hit home. I'm certain somebody at Coldwater Creek would like to do what you request. Unfortunately, what you request is technology-based, so a small number of people need it prioritized among all other problems they have to work on.

    That is a huge downside to our beloved e-commerce channel.

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  4. Anonymous2:08 AM

    Actually item removed from cart as you shop is not as easy to fix as it sounds nor is this automatically an IT fix. Remember there are several people(in some cases, several hundred) browsing an online store. Often a customer clicks to add item to their cart and continued shopping or takes a break before coming back. In the meantime the other people online also add it to their cart...but inventory is only updated once the item is checked out.
    Tis a business decision---do you remove item when someone adds to their cart and take chance they don't buy, losing potential sale, or do you like most companies wait until actually checked out to adjust inventory?
    Two ways I've seen websites handle this---one is that some sites tell you when there are less than say 10 available, giving customer heads up to act fast.
    The second option is to temporarily adjust inventory when item is added to cart,but place timelimit on cart(and note to customer).
    Again, these are business decision more than "IT fixes".
    And Kevin, coming from IT field, priority is whatever the immediate boss says it is! If business decision is to do one or the other options, it will be done.

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  5. The latest comment is a good one, and illustrates the responsibility of business leaders to give Becky a good customer experience. IT programs what the business leaders want programmed.

    A few additional points. Becky noted that she was shopping sale items. In my career, Becky's problems have most frequently occured when sale items are selling quickly. I recall issues at Eddie Bauer, back in the days of catalog, where items were sold out before all the catalogs were actually mailed. Some customers received their catalog, called for merchandise a few minutes later, and found the items were sold out.

    The big difference between the old days (catalog) and today (online) is "humans". On the telephone, humans talked the customer down off the ledge. Today, a website has to play the role of a human being, and that simply can't be done in as warm a way.

    Good comments, folks!!

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  6. Giving the customer a good experience should take priority over knowing what demand would have been. It should be possible to get a pretty good estimate of lost sales by looking at how quickly an item sold out and knowing the usual demand curves. In any event, if we're specifically talking about fashion items, I'm not sure this year's demand is really all that predictive of next year's demand anyway--so you'd be annoying customers for little reason.

    If you're really going to worry about measuring 'true' demand, you also need to adjust the sales of items purchased as a substitute because the first choice wasn't available.

    It's ok to show out-of-stock items so long as you indicate they're not available. This helps educate customers that this is the kind of item they should expect to find here. When possible, it also makes sense to show when the item is expected to become available again (and maybe offer to send an alert).

    Indicating that 10 or fewer remain in stock is excellent, both to prevent disappointment and to incent customers to act fast.

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