What's the most common reason that small retailers run into stockouts? What's the disconnect between the inventory they have and what consumers are buying?

The issue often stems from visibility problems, not necessarily demand. A product sells faster than expected; the reorder point was set months ago, and nobody catches it until the shelf is empty. We saw this trend among the product businesses we support. 59% of stockouts hit products that had already run out earlier in the same year.

The disconnect usually comes down to tracking sales in one place and inventory in another. Small retailers need to move fast, which often means yesterday’s reorder point is outdated by the time this week’s orders come in.

Aside from lost revenue, what are the biggest risks for independent retailers if their products are out of stock? 

Visible revenue only tells part of the story. The bigger risk is the potential loss of repeat business. A customer who can’t get what they want once may pick a substitute item. If it happens twice, they start shopping somewhere else out of habit.

AI shopping amplifies the issue. If a shopping agent reads your product as unavailable at the moment someone is querying, a retailer can lose the chance to be considered. It’s an entirely different kind of invisibility than retailers are used to planning for.

Why do you think a lot of retail business owners underestimate the cost of stockouts?

Traditionally, the cost of stockouts has been difficult to visualize in one place. This blind spot adds up and can disproportionately affect smaller brands. It builds up a few days at a time, spread across dozens of SKUs, so it never lands as a single figure anyone can react to, and is why they’re so easy to leave unmanaged.

You can't expect a small business owner to act on a number if they don’t have it in the first place. Investing in an inventory tool that proactively flags this kind of risk can mean the difference between a loss-making business and a profit-making business.

How are new technology and AI changing how retailers should think about their inventory management and out-of-stocks?

In a physical store or on your own website, a shopper who hits a stockout might wait a day or browse for something similar. AI shopping tools don’t work that way. They check availability in real time and only surface what is ready to buy in that moment. If your stock status is wrong, you're just not visible.

This raises the standard for inventory accuracy. Retailers need one number, applied consistently across every channel and location, that is updated in real time. 

Is a stockout ever actually a good thing, or a deliberate strategy, such as scarcity marketing?

Deliberate scarcity is real and can work. Think of limited drops, seasonal releases—anything where a brand wants a product to feel exclusive and has built an entire campaign launch around it. Leveraging this tactic means the retailer knows exactly which SKU is going out of stock, for how long and has planned for it in advance. 

Viral stockouts can also play into this. A product may blow up on TikTok or through an influencer moment, sell through in days and the retailer ends up with a stockout that could look a lot like scarcity marketing from the outside. There are pros and cons. Nobody planned for the spike in demand, but it happened and potentially brought in new customers and gave this brand a level of visibility it didn’t have before. The common thread is control. Retailers can prepare their systems to be more adaptable, to handle the moments of high demand. Or they can stay stuck reacting to it after the fact. 

What is the No. 1 piece of advice you'd give a small business owner in retail to prevent stockouts and manage their inventory as best they can?

Most small retailers are not short on effort; they are short on a single version of the truth. Stock sits in a spreadsheet, sales happen in the store and on the website and the two only meet when someone finds time to reconcile them. That gap is where stockouts come from.

My practical advice is this: Put stock, sales and incoming purchase orders in one system that updates in real time. Set reorder points based on how fast things actually sell rather than a number you picked last year. Then let the system tell you what to reorder instead of checking manually, and start with your top sellers, because that is where the most money and long-term value is.