Apple Watch - Managing "Out of stock"

Apple is credited for a lot of things - the least of which is managing retail operations.

However, that seems to be a key element of product launches with apple these days.

Pre-Orders

Over the period of last 5 years, retailers have embraced online e-commerce in several ways. However, every time they integrated ecommerce with their supply chain, it has caused havoc.

There are several brick and mortar retailers that have horror stories. A lot of them have crossed the path. However, very few have skillfully managed that transition as Apple. 

As always, Apple was not the pioneer here but used it very skilfully.

Apple used pre-orders to gauge demand and fine tune its retail operations and manufacturing to handle demand.

Over a period of time, it has gotten better at it.

Apple Watch - Product options

Apple watch is one of the best product launches I have seen in quite some time. 

It is a new product category. Gauging products by pre-ordering is not easy. Breaking the product into various options helps a lot.

Apple watch is available in 3 varieties, 2 sizes, 5 colours and multiple straps - leading to around 38 options.

Based on the latest data, the lead time for most of options are around 3 weeks. This is approximately the same time that the apple supply chain needs to take it right from manufacturing to the doorstep.

With the various product options, Apple has optimised its input for demand in such a way that its supply chain and retail operations are geared for a demand variation. 

Managing "Out of stock"

Why are these important? 

All of these are important because it is very important to make sure that there are no lost sales because of products going out of stock.

"Out of stock" is a very difficult retail scenario. A lot of retailers tried various forecasting models and a lot of real time inputs to understand and predict demand. 

They plan their capacity and gear their distribution based on forecasted demand. Any retailer knows that their forecasts can be affected by other factors out of their control. 

Hence they also plan buffer and stock more than needed to avoid "Out of stock" situations.

Conclusion

Apple does not worry about "Out of stock" for its existing products. However, for a new product line, it did need to make sure that it can sell a product that still does not have a real use case.

Most of the apple watch purchases are to early adaptors or impulse purchase.

It also needs to make sure that it can get apple watch at the hands of its early adaptors to help sell the apple watch better. 

The way it managed "Out of stock" is very ingenious - though Motorola did try it out with its MotoMaker.