Businesses share a common issue: too much inventory. Dealing with excess inventory or overstock requires extra space and can be expensive. This scenario happens when you don’t have a good strategy to sell overstock inventory.
A certain level of creativity is required if retailers are to turn their overstocked inventory into a profit.
Inventory that hasn’t been sold for any reason is overstock inventory. Maybe you underestimated a product’s demand, or poor manufacturing quality caused a wave of returns. And these things do happen.
Inventory management can be challenging. To keep your inventory under control and expenses low, you must order things in advance and respond swiftly to market fluctuations. Finding strategies to eliminate excess inventory is not only cost-effective but also essential. An overstocked inventory can be a significant burden because profit declines and rising costs of storage and upkeep. In addition, a shortage of space prevents the introduction of new goods.
It has become a bigger problem in recent years due to changes in customer demand. The COVID-19 pandemic brought about a surge in demand for specific products. And the geopolitical conflict in Europe has caused massive shortages in others.
These twin events have resulted in retailers ordering larger quantities of stock to keep up with the demand. As supply chain issues continue, there’s a possibility that all these items will arrive after the need has died down.
Retailers are feeling the effects of the bullwhip effect. This unfortunate scenario occurs when companies rush to fill inventory gaps by ordering goods in large quantities only to see demand wane.
Why You Need to Sell Overstock Inventory
Too much inventory is an indicator of subpar product management. You could be overspending on your item procurement.
Not being able to sell overstock inventory can lead to issues. Like additional interest on maxed-out credit cards, storing excess inventory results in high additional carrying costs.
You’ll pay for continuous facility maintenance, additional security, personnel, and product storage. Not to mention the insurance fees needed to safeguard the idle inventory. Be aware that stock becomes more expensive to keep the slower it moves. Your profit margins will eventually surpass the holding costs plus the cost of goods sold (COGS) for the obsolete or old inventory.
The worst-case scenario is your storage space may be at full capacity, leaving no room for the newer stock to arrive. Having more items in storage also increases the exposure to threats like theft or natural disasters.
And the sad reality is that cash you can use to expand your business is locked up by overstock inventory.
The more capital you can have at any given time is essential since it can provide real business protection. The same can’t be said about a full warehouse.
Capital is more adaptable than surplus inventory. You can’t use it to purchase advertising space or marketing campaigns. You can’t also use your excess inventory to pay employee wages or as a payment for new inventory. Over 32% of small business owners reported a lack of capital as the main reason their businesses failed.
Of course, having a low inventory isn’t a good idea. Like stagnant shelves, empty shelves provide your clients with nothing new. If you order what you need and be proactive in eliminating stale inventory, you’ll have the right amount of stock.
Four Ways To Sell Overstock Inventory
The good news is that overstock inventory doesn’t result in a loss immediately. There are ways to still benefit from it. While it’s preferable only to stock a little, there are many reasons businesses are stuck with excess inventory.
Here are four practical strategies to help sell overstock inventory and possibly earn back the money.
1. Remarket Your Items
It might not always be the product’s fault when it’s not selling. Sometimes, the problem may be how you’re positioning or selling the product. When it comes to your sluggish or outdated inventory, try to renew your marketing and merchandising efforts.
Reevaluate your marketing plan. There are steps you can take to make older items look more appealing. And you can apply these whether you’re selling overstock inventory online or in a physical store.
Changes to your marketing strategy, such as the benefits you emphasize, the target market, or the keywords used, may increase your sales. Take brand-new photos of your goods. Be creative with how models use it or showcase them in various settings. You can also change the product’s location in your store or online to catch shoppers’ attention quickly.
If making these adjustments helps you get rid of your excess inventory, you might want to think about changing your marketing approach. It’s best to formulate a new strategy from scratch to establish a unified brand.
Using data from your market research, you can uncover strategies to change your selling angle to move more inventory.
2. Sales and Discounts
Holding a sale is a tried-and-true strategy for boosting consumer demand and eliminating excess inventory. Several merchants intelligently incorporate post-holiday deals into their marketing schedules to get rid of seasonal leftovers.
Other merchants will conduct “flash sales” in the meantime. These sales come as a pleasant surprise to the buyer. It’s an excellent way to eliminate excess inventory before it turns into dead stock or incurs high holding costs.
Take note that these sales have an amazing appeal to buyers. Send out emails, letters, store signs, or any other marketing materials. Let your customers know you’ll have a one-day-only sale. Customers will spend on discounted goods because of the urgency of the sales.
Encourage clients to purchase multiple pieces at a discount if they have a severe surplus inventory issue. The more goods are purchased, the larger the discount becomes.
Bulk discounts may entice customers to make larger purchases than intended; a great strategy to sell overstock inventory.
3. Bundle Promos
Another favorite price strategy employed by retailers is bundling. Bundling sells several things for a bit less than if offered separately. Doing this enables you to maintain your margins and profits while discounting inventory.
Bundling slow-moving inventory with in-demand items is another great tactic for making goods appear more appealing. Customers who want to buy a hot item will see a bundle as a bargain and will likely take advantage of it. Additionally, consider combining high-margin and low-margin products. This way, you can charge a more attractive price for the bundle. You can market this as selling complementary items. For example, you can bundle socks that aren’t selling well with some of your best-selling shoes.
You don’t always have to combine your extra inventory with complementary goods. Sometimes all it takes to convince someone to buy something is to simply point out a deal. Upselling a slow-moving item at a reduced price to paying customers will land you more sales.
4. Giveaways & Freebies
Giveaways of overstock merchandise can influence your customers to purchase additional goods. Excess inventory might be distributed as a “thank you” for purchases. Freebies at the checkout can move out-of-date merchandise and reduce the likelihood of abandoned carts.
Doing this means you won’t get your money back for the excess goods. But you will build customer loyalty. Additionally, if you openly promote a “gift with every purchase” promotion, you may persuade window shoppers and browsers to purchase. It’s hard to say no to gifts, after all.
How to Avoid Having to Sell Overstock Inventory
But doing these doesn’t guarantee you’ll be able to move your goods to the right people, at the right time. You might end up having to discard that dead stock.
Therefore, starting with as little as possible is the best way to avoid excess inventory.
Consider your clients’ preferences when placing product orders. It ensures you’re ordering the right products to sell. You can learn what sells more by observing consumer behavior and directly engaging with them.
To predict future customer demand, compare historical sales data with current inventory trends. You can do this easily by implementing warehouse management software in your logistics. This software can monitor KPIs like stock turn and sell-through. You can accurately estimate demand and prevent overstocking by understanding how quickly items move.
You won’t have access to historical data when forecasting demand for new products. So it can be challenging to choose the number for an initial order without ending up with too much inventory.
Be cautious even if you are confident that your clients want new items based on surveys and sales research. Avoid going all-in when you’re going off on one or a few assumptions. Test out things in smaller batches to gauge actual customer interest.
Once you’ve established a demand for the new product, you can confidently place additional orders without taking on too much stock.
The reality is, one way or another, Inventory overflow occurs. Almost every organization will have to deal with it and figure out how to get rid of it. The challenge is doing so without suffering a financial setback. Just keeping these items becomes an expensive burden on your company.
Be creative and plan when attempting to sell overstock inventory to customers. Even if you can’t sell it, there are many valuable ways to utilize excess inventory.