Stockout
Definition
When a product runs out and you cannot fill orders for it.
Want a deeper explanation?
Formula
Estimated Lost Sales = Days Out of Stock × Average Daily Units Sold × PriceStockouts cost more than the missed sales. On Amazon they can hurt ranking for weeks, and ad spend on out-of-stock items is wasted.
They often happen while the business has plenty of inventory, just in the wrong products. Watch for: repeat stockouts on best sellers while slow movers fill the warehouse, which is a buying problem, not a cash problem.
Example
A best seller averaging 50 units a day at $35 is out of stock for 12 days, costing roughly $21,000 in lost sales, before any ranking damage.