Stockouts cost the average retailer 4.1% of sales. Overstock takes another 3.2%.
Inventory distortion is a $1.7 trillion problem: 6.2% of all retail sales, every year. Roughly two thirds of it is inventory that wasn't there; the rest is inventory that was there and shouldn't have been.
What that is, on a typical mid-market turnover.
The averages applied to one turnover. Yours will differ, which is exactly the conversation to have on your own data.
About R20.5m a year to stockouts.About $1.03m a year to stockouts.
Overstock another R16m. Roughly R36m gone to inventory you didn't have, and inventory you couldn't sell.Overstock another $800k. Roughly $1.8m gone to inventory you didn't have, and inventory you couldn't sell.
Averages from IHL Group. The better number is the one below: your own safety stock, as working capital.
Everybody knows the number. Almost nobody can see it happening in time to stop it.
The systems that could see it cost six figures and take a year to install. The ones you can afford can't think, so safety stock stands in for computation, and the bill for that is the 3.2%.
And the two losses hide each other. A line out of stock for six weeks looks exactly like a slow seller, so the next order is cut, so it stocks out again. The report says demand fell. Most systems can't tell the two apart, so they fix neither.
Safety stock is an insurance premium. Here is the price list.
Safety stock scales with the service-level z-score, and the curve is not straight. Moving a line from 95% to 99% availability adds 41% to its safety stock. Moving it back releases 29%. The last half a point costs more than the first four.
A static safety-stock number is a fixed premium against a variable risk. The lines that genuinely need cover do not get enough of it; the lines that do not need it get far too much.
Standard normal-demand safety-stock model. The z-ratios are textbook, not a RetailPulse output.
| Availability target | z-score | Safety stock index |
|---|
What is 29% of the safety stock on that share worth to you in cash?
Your numbers, in your currency. Nothing you type here leaves this page.
Standard safety-stock arithmetic. Your numbers, not ours, and no claim about what we'd save you. Safety stock ∝ z(target); released = capital × (1 − z(would do) ÷ z(current)).
Live in 48 hours, not next winter.
Enterprise planning suites: $60,000–$180,000 a year, six to twelve months to go live, and a services line quoted on time and materials.
RetailPulse: a fraction of that, live within 48 hours of the box being plugged in, on an appliance in your building. We quote implementation as a fixed number, because we know what it takes.
There is no rate card here, on purpose. The number depends on your estate, and we would rather show you the product on your own data first and talk about price at the end, as a relief rather than a pitch.
| Enterprise suite | Cheap inventory tool | RetailPulse | |
|---|---|---|---|
| Time to live | 6–12 months | Days | 48 hours |
| Annual cost | $60k–$180k | Low | A fraction of enterprise |
| Plans the shelf and works the shelf | Some of it | No | Yes |
| Explains every recommendation | Rarely | No | In a sentence |
| Runs on | Their cloud | Their cloud | An appliance in your building |
| Bill when you grow | Grows | Grows | The price is the price |
Add SKUs, add stores, add users. The price is the price.
Everyone else charges you more for succeeding, because their costs scale with your growth: per SKU, per warehouse, per user, per rand of inventory. Ours don't. It runs in your building.
That removes the most common source of mid-market renewal friction: the bill that crept up 40% because you opened four stores.