What is a stockout?
A stockout happens when an item a customer wants is not available to sell. It is the event that safety stock and reorder points exist to prevent.
Common causes of stockouts
- Demand higher than forecast, such as an unplanned promotion or a sudden burst of attention.
- A supplier delivery that arrives late or short.
- Reorder points set by habit rather than from demand and lead time.
- Stock records that do not match what is on the shelf.
The real stockout cost
The lost sale is only the start. Customers who cannot buy may switch brands for good, marketplaces can push listings that go out of stock down their rankings, and rush orders to recover cost more than planned ones. The stockout rate, the share of order lines or days an item was unavailable, is worth tracking for the items that matter most.
Stockout vs backorder
In a stockout the sale is usually lost. A backorder means the customer agrees to wait and the order is filled when stock arrives. Backorders keep the revenue but test patience, and too many of them feel like a stockout to the customer anyway.
How to prevent stockouts
Set safety stock from a chosen service level, reorder at a point that covers demand over the real lead time, and watch which items will run out first. Smart Inventory Forecasting’s stockout radar ranks what runs dry first, with projected stockout dates, so the next purchase order starts with the items that will hurt.
Last reviewed 2026-11-01.