Online Availability and NOLA Effects

BULENT DAL | CEO

Considering the fact that 30% of the store customers also shops online in the markets where digitalization is growing, it is important to consider the online availability, its effects and possible solutions. Recently published “Online Availability: A Worldwide Study of Extent, Shopper Reactions, and Implications for Non-Food Online Retail Categories” report indicates that the rate of not online available stock situations doubles out of stock rates in physical stores. The research, which is the most recent and comprehensive research on Retail online availability, was carried out on the basis of non-food products(baby care, home textile, personal care & beauty) within USA, China, France, Germany, Japan and UK.

Online availability; the fulfillment of orders from an e-commerce warehouse, a physical store or open marketplaces, if the product is available for online purchase. Out of Stock (OOS) used for physical store stock-out situations, for online it is called Not Online Available (NOLA). If the product detail page is visible but retailer states out-of-stock or the product is not displayed at the online platform (void); the products considered as Not Online Available.
According to the research, USA has with 15% rate NOLA which doubles  8.3% physical store OOS rate. This rate reaches up to 20% in non-USA countries and 8% of it occurs because of the void. There are two explanations of this situation: the first one is the product is not displayed due to stock availability, the second one is technical problems cause the product not to be displayed. Based on our experiences at Obase, we believe that most of the onsite search engines don’t support smart searches within the product lists according to meanings, categories and themes.

One of the most striking results of the research is that when the product is not available online the shopper’s reactions differentiate from the reaction to physical store out of stock situation.  While the retailer loses more in the physical store, at online this negative effect is reflected on the brand. Online shopper mostly chose to make another online search and buy a substitute product. According to the research conducted by the same team, based on shelf availability in the physical store, 45% of the total loss was reflected on the retailer. Shopper changes the store when the product is not available on the shelf or delays the purchase. According to online availability research results, 30% online shoppers switch to other e-commerce websites. The reactions to NOLA listed in 5 categories: 1. Switch e-commerce website. 2. Switch brand. 3. Switch substitute of the item. 4. Give up to purchase or delay. 5.Purchase from another channel(physical store,etc.).

According to Grocery Manufacturers Association (GMA) which is one of the supporters of the research, the potential sales loss of NOLA in a year is 17 billion USD. This research and report was prepared by the team that previously in 2002 and 2008 prepared the most comprehensive and referred reports in physical store out-of-stock(OOS) for GMA. Daniel Corsten, professor of business and technology at IE Business School and Thomas Gruen, a marketing professor at the New Hampshire University prepared the report.

Online availability has now become an important issue. In order to prevent NOLA, product master data consistency, real-time stock tracking, search engines supporting semantic content search, information systems based on consistency in demand forecasting and solutions are more critical issues to be focused on. As we always emphasize, the most critical solution requirement is the collaboration of a data-driven retailer and supplier.

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