Another Target Missoni Reminder: When It Comes To Out-Of-Stocks, You Can't Win

After everything else that happened to Target in the wake of its catastrophically successful Missoni sale on September 13, here's one more thing to add insult to injury: Customers are now complaining about their online orders being delayed or canceled—and then seeing the merchandise they couldn't get showing up again on Target.com. But it's hard to blame this problem on Target's new E-Commerce site—the same thing happened to Target and other E-tailers last Black Friday, when Target.com was still being run by Amazon.

The "now it's out-of-stock, now it's back in stock" problem isn't new to either in-store or E-Commerce, and it's one that retailers usually try to handle as quietly as possible with ever-smarter inventory systems. But that will probably never work, because real-time inventory stops working very well when an item is about to go out of stock. Unfortunately, giving online customers more information about a looming out-of-stock situation could actually encourage them to buy less—and may not keep them any happier.

In Target's case, the retailer is keeping details to a minimum on the new Missoni problem, as it has all the way through the troubled promotion. (It's a little odd to call it that—yes, there's been plenty of trouble. But any time a retailer sells that much merchandise that fast, it feels very strange calling it "troubled.") The chain just says the "unprecedented demand" affected the shipment of "select guest orders."

That probably means some orders were spiked. Target's fulfillment rules say that orders have to be shipped within a certain time. If there's no product to ship, the order has to be canceled. Like much of the design for Target's new site, that's eminently logical. But when it runs afoul of what customers expect—as much of the new Target.com does—there's bound to be trouble.

And it has to be galling to customers whose orders were canceled to check back a week after Missoni Tuesday to find that many of those same products (more than one-quarter of the Missoni items, according to a check of the Web site) were back in stock.

That's a problem Target and every other E-tailer would like to solve. But real-time inventory won't do it. When there's plenty of stock, closely monitoring inventory to avoid canceling orders is unnecessary—there's enough for everyone.

And when an item is nearly out of stock, a close watch on inventory doesn't help.And when an item is nearly out of stock, a close watch on inventory doesn't help. Customers abandon shopping carts or remove items from their carts, and there's no way to know how long it will take for a customer to go from selecting an item to checking out. As a result, items are likely to flicker between in-stock and out-of-stock until they're all definitely, for-certain gone.

How can you handle that? There's the brute-force method: Wait until the customer checks out and then, if the item is truly sold-out, make the item disappear from the shopping cart. That's one of the things some customers complained about on Missoni Tuesday.

Alternatively, you could count items out of inventory as soon as it's in a basket. That way merchandise will appear to be out of stock sooner, but come back in-stock as customers decide to remove items from their shopping carts or simply abandon them. That way there's no checkout-time surprises. But customers who repeatedly refresh or revisit an item's page will see it go out of stock, then back in, then out, then in again.

Or you could try to manage those almost-out-of-stocks statistically, hoping that a certain percentage of items in shopping carts will be abandoned. That's essentially why airlines oversell flights. That works well, doesn't it?

Another approach is providing more information for customers while they're shopping, warning them that some item in their cart is nearing out-of-stock status and might not be available at checkout time. That will get rid of the unpleasant surprise from evaporating items.

But it's also likely to make customers cut their online shopping trip short, so they won't risk losing the almost-gone item. The longer a customer stays in the store, the more likely he or she is to buy more. Rushing customers doesn't help on that front.

Worse still, all that extra information keeps reminding customers that in an online store they don't really have items in their shopping cart. The cart isn't real, the merchandise isn't real and, until it's delivered, they can't really trust that they've bought anything.

That's exactly the opposite of the direction you want to lead customers. You want them to feel like in-store, online and mobile commerce are all pretty much the same. Anything that points up the differences isn't something you want.

You can't win, at least when supplies of an item are running low. They're all problematic choices. And the irony is that the better the inventory system an online store has, the more problems those choices are bound to cause.

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