What is a stockout?
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When an item you sell is unavailable because you have no stock left to sell.
A stockout is when a customer wants a product and you have none available to sell. The listing shows as unavailable, or the order has to wait for new stock.
What causes stockouts
- Sales run faster than planned. A promotion, a viral post or a season catches you with less stock than the pace needs.
- A late delivery. The supplier, forwarder or customs takes longer than usual.
- A wrong lead time. You plan with the supplier’s quoted production time and forget freight, customs and receiving. Measure the real number with the lead time calculator.
- No buffer. Without safety stock, any delay or spike becomes a stockout.
- Ordering too late or too little. The reorder happens after the point where the stock would last until delivery.
- Inaccurate counts. The system says there is stock, the shelf says otherwise, and orders you can’t fill get cancelled.
What a stockout costs
- Lost sales. Every day without stock loses that day’s sales. Estimate it as daily units × contribution per unit × days out.
- Wasted ad spend. Ads that keep running on an unavailable product pay for clicks that can’t convert.
- Ranking and visibility. On marketplaces, a listing that goes out of stock can lose its position and need time to recover. The effect varies by marketplace and product.
- Lost customers. A shopper who can’t buy from you buys from a competitor, and may stay there.
- Cancelled orders. If stock was sold that you can’t ship, you refund, apologise and pay the handling cost.
How to prevent a stockout
- Know your real lead time, from order to sellable stock.
- Set safety stock to cover the variation in sales and in supplier delivery. Use the safety stock calculator.
- Set a reorder point per SKU: lead-time demand plus safety stock. Use the reorder point calculator.
- Count stock on order. Include units already on the way, or you will reorder twice or not at all.
- Check fast sellers and seasonal products more often, and plan ahead for the periods you know will be busy.
- Pause ads on products that are about to run out.
Stockout vs overstock
The opposite problem is overstock: too much stock for the demand, which ties up cash and storage. Guarding against stockouts with large buffers on every SKU swaps one problem for the other. Put the buffer where a stockout costs the most. The inventory turnover calculator shows which products are holding the most stock for their sales.
Related terms
- Safety stock
- Lead time
- MOQ: a supplier minimum that can push you toward overstock.
Frequently asked questions
What is a stockout?
A stockout, also written "stock out" or "out of stock", is when a customer wants a product and you have none available to sell. For an online seller, the product shows as unavailable or the order has to wait.
What causes a stockout?
Common causes are sales running faster than forecast, a supplier delivery arriving late, ordering too late or too little, a lead time that is longer than you assumed, and stock counts that don't match what is on the shelf.
How much does a stockout cost?
The direct cost is the sales you lose while the product is unavailable. Indirect costs include ad spend sent to a product you can't sell, lost marketplace ranking, and customers who buy from someone else and may not come back. The size depends on the product, so work it out from the product's daily sales and contribution margin.
How do you prevent stockouts?
Reorder when available stock reaches the reorder point, which covers lead-time demand plus safety stock. Measure real lead times, keep stock counts accurate, and review fast sellers and seasonal products more often.
What is the difference between a stockout and a backorder?
In a stockout, the customer cannot buy the item. In a backorder, you take the order now and ship it when stock arrives. Backorders keep the sale but only if the customer is willing to wait.