Lost sales rate
Lost sales rate is the estimated sales that did not happen because the product was not on the shelf or in stock, as a share of actual sales plus those estimated lost sales.
Also calledlost sales, stockout cost, kayıp satış oranı
Formula
(Stockout days × Normal daily sales) ÷ (Actual sales + Stockout days × Normal daily sales) × 100- Stockout days
- Days on which saleable stock was zero, by SKU and store.
- Normal daily sales
- Average rate of sale on in-stock, non-promotion days.
- Substitution rate
- Share of customers who switch to a similar product; net loss = loss × (1 − substitution rate).
Calculator
Enter your own figures and the result updates instantly. The defaults are the figures from the worked example below.
Result%20
Worked example
How to read it, and what good looks like
A customer asking for a product that is not on the shelf writes no line into any system, so lost sales have to be estimated. The most practical method is to flag stockout days by SKU and store and multiply by the normal rate of sale. Part of the loss moves to a similar product; that is a margin difference, not a lost sale, and is taken out with the substitution rate. Forecast on a corrected demand series with lost sales added back, not on raw sales; otherwise a stockout is read as falling demand and orders are cut.
International references show how large the loss can be; there is no recent public measurement for Turkey. In the 2002 GMA study by Gruen, Corsten and Bharadwaj, covering more than 71,000 consumers in 29 countries, the global average out-of-stock rate was 8.3%; 31% of shoppers went to another store and 9% did not buy at all. Corsten and Gruen (HBR, 2004) put the cost of stockouts at roughly 4% of sales for grocery retailers. Set the target by weighing lost gross profit against the carrying cost of extra safety stock.
Track the rate weekly by SKU and store; a product with high loss goes first to replenishment and transfer, then to its ordering parameters. In Mindpera, Mind Send reports unmet demand by store and product and pairs a store holding dead stock with a store short of the same item in its transfer proposal. Where stockout days are not recorded at SKU, store and day level, installation builds that grain.
| Context | Value | Note |
|---|---|---|
| Out-of-stock rate, global average (GMA 2002, 29 countries) | 8.3% | Europe 8.6%. Old, international data; not a Turkish measurement. |
| Sales lost to stockouts by grocery retailers (HBR 2004) | About 4% of sales | Corsten and Gruen; international data. |
| Shoppers who go to another store when faced with a stockout (GMA 2002) | 31% | 9% do not buy the item at all. |
Where it misleads
- Stockout days are flagged from the system balance; phantom stock that shows in the system but is not on the shelf hides the loss. Flag separately any product with zero recent sales, positive system stock and a high normal rate of sale.
- Normal rate of sale is averaged over a period that includes stockout days; the rate comes out low and so does the loss.
- Substitution is ignored; the loss is overstated and safety stock is raised more than necessary.
Data you need
- Stock balance and sales by SKU, store and day
- Promotion day flags
- Substitution rate assumption by category
- Unit gross profit
Mindpera products that calculate this KPI
Mind Send
Make your shipments manageable. Depot-to-branch dispatch, branch-to-branch transfer and the initial allocation decision are produced together with the demand forecast.
Mind Stock
Stop treating stock accuracy as something that waits for a count and a month-end close. See movements in and out, expiry dates and profitability on one screen.
Frequently asked questions
- Why is the denominator total demand rather than actual sales?
- The rate measures how much of demand went unmet, and demand is actual sales plus lost sales. Dividing by actual sales overstates the rate: in the example 42 ÷ 168 = 25%, while the correct value is 42 ÷ 210 = 20%. The same corrected demand series also feeds the demand forecast.
- How much do stockouts cost retailers?
- International research shows the loss is large. In the 2002 GMA study by Gruen, Corsten and Bharadwaj, the global out-of-stock average was 8.3% and 31% of shoppers went to another store. Corsten and Gruen (HBR, 2004) estimated that stockouts cost grocery retailers about 4% of sales. There is no recent public measurement for Turkey.