Understanding Stockout Costs
When you run out of stock, the obvious cost is the sale you didn't make. But stockouts have cascading effects that multiply the true cost far beyond the lost transaction.
The Full Cost Formula
True stockout cost includes:
- Lost Revenue - Direct sales you would have made
- Wasted CAC - Customer acquisition cost for visitors who couldn't buy
- Future Lost Revenue - Customers who won't return (est. 30% churn)
- Ranking Damage - Amazon BSR and keyword ranking recovery time
- Operational Costs - Rush shipping, expedited orders, staff time
Industry Benchmarks
| Metric | Poor | Average | Good | Excellent |
|---|---|---|---|---|
| Overall Stockout Rate | >10% | 5-10% | 2-5% | <2% |
| Top Products Stockout | >5% | 2-5% | 0.5-2% | <0.5% |
| Recovery Time | >14 days | 7-14 days | 3-7 days | <3 days |
Preventing Stockouts
The best way to reduce stockout costs is to prevent them entirely with:
- Demand forecasting - Predict what to order
- Safety stock - Buffer against variability
- Reorder alerts - Know when to buy