Intro
A stockout occurs when an SKU that a customer wants is not available. It is a common issue (especially for fashion retailers) that some colors and/or sizes sell better than the rest. When this happens and some SKUs become unavailable while others are still well stocked, that’s called fragmented stock.
In the example of fashion retailers, common sizes of Small, Medium, Large are in higher demand than their Xtra counterparts and can be sold out faster. With timely identification, it is possible to lower the advertising budget for such products. The reduced demand can help you with re-stocking or re-evaluating strategies.
As a result, there will be:
Higher ad budget efficiency (money spent on products that are currently better stocked)
Lower bounced traffic (when customers click on the ad only to find out that their size is out-of-stock)
Improved conversion rates
Ultimately, improved customer satisfaction
Setup
You can identify Fragmented Stock only by having a correct inventory setup:
Product Hierarchy on a minimum of 2 levels
Product Level has lower granularity than Product Level 1 or 2 (this means that all e.g. sizes and colours, have their own ID in the feed)
Check your inventory, ask support or read more in Markets and Assets setting
Define your Stock Out Score % threshold. This indicates that there are e.g. 30% and less variants (size and/or colour) available per product group. On the other hand Stock Out Score 100% tells you that all variants are available.
How to Segment
Best Practice Tips
Fragmented Stock is a helpful indicator on the state of overall inventory. It is always useful to look at the Total spend that goes towards this segment. Higher spend means a larger opportunity to reduce wasted ad spend, and limit or remove the fragmented items.
Be mindful that removing too many products from advertising can cause a disruption to overall account performance.