Overselling: What Are the Risks for Your Online Store?
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We’ve talked, in other articles, about upselling. About reselling, about omnichannel selling – even selling internationally. But there’s one thing we haven’t yet dealt with…
Overselling is the term for when your ecommerce store sells more stock than it actually has. You’ve listed the product on your website, it’s been purchased and paid for, but – when it’s time to pick, pack, and ship that item off to your customer – you realize you’re fresh out.
While it’s easy to see the silver lining of overselling (you’re able to sell the stock in the first place, which is good news!) it can cause serious harm to your business’ bottom line and reputation. Below, we’re diving deep into overselling’s risks and causes – and how you can prevent your ecommerce store from falling into the overselling trap.
The Risks of Overselling
Before we list the specific risks of overselling for your ecommerce store, we want you first to sit back, close your eyes, and picture the following scenario.
You’re at the airport, waiting patiently to board a plane. You’re heading back home, interstate, for Christmas – to catch up with family and friends. You join the queue, board the plane, take your seat, and start getting comfortable.
Then, disaster strikes. You’re told, by an apologetic flight attendant, that the flight has been overbooked – you need to leave the plane, and catch an alternate flight the next day.
The airline has oversold the flight. And, despite having paid good money for your ticket, arrived at the airport on time, and gone through customs, you’ve been immensely inconvenienced.
What are the practical realities of that – for you, as a customer? Frustration? Anger? Would you buy air passage through that company again? Not likely.
With that in mind, consider the risks of overselling for the brand:
- The damage to your reputation: dissatisfied customers leave bad reviews – and, often, a long-lasting impact on your brand’s image and reputation.
- The difficulty of acquiring new customers: when you oversell and frustrate your customers, they’ll tell their friends; who’ll tell their friends. They may even leave reviews online. Soon enough, you’ll be finding it hard to attract customers to your online store, let alone retain them in order for your business to thrive.
- The impact on customer loyalty: no matter how hard you’ve worked to gain, nurture and hold onto your clients, one instance of overselling can destroy that trust – and once it’s gone, it’s very hard to win back.
- The loss of revenue: the compound damage of all that loss of reputation, customer loyalty, and churn eats into your sales, your revenue – and your bottom line.
The Causes of Overselling
Before we can understand how to prevent overselling, we first need to understand what causes it. So let’s drill down into the four key factors that lead to overselling.
Lack of Inventory Management
Overselling only happens when you lose track of your ecommerce store’s inventory. (After all, no ethical business willingly sells stock they don’t have!)
When you first start out, managing your ecommerce inventory is simple – especially if it’s just you packing boxes from your basement. But as your business, and its customer base, grows, you’ll need a better way of optimizing your inventory – and ensuring stock levels on your online store are an exact reflection of what’s in your warehouse.
Inaccurate Product Information
Another cause of overselling? Inaccurate product information.
If a product says, on the website, that it’s in stock – only for that to be a mistake, and for the product, in reality, to be out of stock – overselling happens. This is often a result of a failure to update product information in a timely manner – which, in turn, is typically due to a business being understaffed and overworked.
Misleading or mislabeled products may cause your warehouse staff to select the wrong product at the picking and packing stage – only for the customer to then return it, dissatisfied.
Overzealous Sales Tactics
Sometimes, overselling isn’t a mistake – and instead is the last resort of overworked (or overzealous) salespeople.
High-performance, high-pressure sales environments – particularly ones that prioritize sales over customer satisfaction, and offer big incentives to top sellers – can be fertile breeding grounds for overselling.
In these cases, overselling becomes part of a culture of workplace toxicity, in which sellers – chasing bonuses and lofty sales targets, with little training around ethical sales practices – oversell to meet their quotas. (Despite, of course, there not being any actual stock to sell!)
Poor Order Processing and Fulfillment
Another cause of overselling comes when there’s a leak in the funnel at the order processing and fulfillment stage.
It’s almost always caused by one of two things (or both!):
- Inefficient order processing systems and infrastructure
- Poor communication between the teams responsible for processing and fulfillment
When this combination of human and digital error strikes, it often results in a failure to communicate correct delivery dates – and delays – to the customer. And ends up in under-delivering, overpromising – and overselling!
Strategies for Preventing Overselling
Now, let’s answer that million-dollar question. How can your ecommerce business prevent overselling – and all the damaging impact it can have on your reputation and revenue?
Accurate Inventory Management
The first step to preventing overselling? Getting a better handle on your inventory.
If you store all your own stock – in an ecommerce warehouse, for instance – the best way to prevent inventory-management-related overselling is to use dedicated software.
These online tools automate the management of your inventory: helping you fulfill orders, know exactly how much stock to order, and understand exactly which items are selling well. All while taking human error right out of the bargain – and providing real-time insights into that side of your business.
Inventory management tools also provide automatic notifications when your stock levels reach a certain threshold. And, by regularly auditing your inventory to identify discrepancies, they help consign overselling to history.
Some of the inventory management tools we recommend are:
Don’t want to store your own inventory? We get that. Check out our guide on how to start an online store without inventory for more – or discover whether dropshipping might be more up your alley.
Clear and Transparent Product Information
Our next strategy for preventing overselling? Provide accurate, detailed product descriptions on your ecommerce site.
- Ensuring product information is consistent across all platforms
- Ensuring stock level and item availability is always visible
- Communicating clearly – and honestly – with customers about when they’ll receive their order, and whether they can expect delays
Looking for tips around how to write better product descriptions? We have 10 of them!
Training Sales Staff
Remember the example of that overzealous sales team we gave earlier? You don’t want that team to be your team – which means that proper education around ethical selling practices is essential.
You can introduce this through external training, but don’t let it be a “one and done” kind of thing – embed it into the culture, and create guidelines to guide staff on an ongoing basis.
Ensure that your ecommerce store has visible values, so your staff know what your business and brand stand for (beyond profits). Demonstrate – to them, first and foremost, but also to your wider audience – that customer satisfaction, not profits, comes first.
And instead of incentivizing sales, offer rewards and bonuses for five-star reviews, or glowing testimonials. In the long run, these will be more valuable to the health of your brand and bottom line anyway!
Efficient Order Processing and Fulfillment
Our final strategy for curtailing overselling’s negative impact on your business? Efficient order processing and fulfillment.
As we specified earlier, this issue is a result of two factors – poor digital order fulfillment infrastructure, and lackluster communication between teams. So it calls for a two-pronged approach.
The first? Automated order processing systems. By seamlessly slotting into your picking, packing, and shipping processes, these savvy software solutions:
- Share order data
- Check stock availability
- Track order delivery
Automated order processing systems such as monday.com enable you to quickly, clearly communicate delivery times and delays to your customers. They also allow you to continually monitor your order fulfillment processes: optimizing them for speed and efficiency, and identifying any potential bottlenecks or issues there.
As for improving the communication between your fulfillment teams, this can also be done through an order processing tool. Staff can see stock levels, understand which responsibilities belong to which team members, and enjoy an instant, at-a-glance picture of delivery schedules, pending orders, and expected delays. Easy!
Selling is good. Upselling is even better. Overselling, though? That’s not on.
To avoid getting caught out by overselling – accidentally or otherwise – your business needs to be prepared. Fortunately, you can start now, by implementing our top four strategies to prevent overselling:
- Accurate inventory management
- Clear and transparent product information
- Training sales staff
- Efficient order processing and fulfillment
You already know what overselling is, and what you can do to prevent its risks from impacting negatively on your business – so that’s half the battle! But ultimately, there’s no need to fret. Providing you head into each transaction with an honest heart and good intentions – and that you have a handle on your ecommerce store’s internal processes – you’ll be just fine.
So go sell!
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