Inventory is money sitting around in a different form
No matter how lean or streamlined your operation is, your business will likely end up with excess inventory at some point. Inventory management demands constant attention and is incredibly vital to your business’ success.
Even the most successful businesses run into problems with inventory annually. The most common problem is excess and slow-moving inventory. This usually occurs during the initial seasons of the year and during the closing seasons of the year when new products are in demand.
Instead of keeping these in stock hoping that you’d eventually sell them, find alternate ways to clear them off and make money out of them.
Re-market and Re-position
When a product isn’t selling, the problem may not necessarily be the product itself. In some instances, the issue may lie in how you’re marketing or positioning your merchandise. Try to refresh your merchandising and marketing efforts when it comes to slow-moving stock.
- Re-position products to a different part of your store
- Redesign your product displays
- Update product images in your online store
While re-marketing a product can pay off, it will require some financial investment and smart implementation. If you have products that you think have potential to be sold with a little push, then it is a good strategy.
Sell to an Inventory liquidator
Inventory liquidators will buy your excess stock and re-sell it, often at a discount. There are certain things to keep in mind if you decide to go with this option. Make sure you know the value of your stock and how much you are asking for payment before entering into any negotiations.
If your inventory is brand sensitive then you need to establish that when negotiating a deal. Even if the buyer pays the highest price, if your brand is in jeopardy or your current sales channels are compromised, then you still end up losing. Also, consider the cost of delivering inventory to the buyer. If you need quick cash, inventory liquidators can be helpful, but be aware of the risks.
In this case, if you’re looking to get rid of your excess stock. A liquidator will buy up what you have for a negotiated discount price.
Discount Items Strategically
The most obvious way to clear out your inventory is to discount old and excess stock. Motivate customers to purchase more than one product or service by offering buy one, get one free discounts.
While sales are a great way to get customers to purchase, it is essential to keep the frequency of sales in mind. If you have back-to-back throughout the year, they may lose their effectiveness and appeal.
If re-marketing doesn’t work, consider lowering prices of excess stock. Start with something small, say 25% and then continue to discount. You can give this a boost by creating an event for your sale.
Sales you can run to make money from excess stock:
- Clearance Sale: This is an opportunity to flush out excess inventory that hasn’t sold in the past 4-6 months. Reach out to your customers through email or social media. If you have your customer’s contact information, this could be the perfect time to send out personalized emails. You can have a clearance section accessible to your customers at all times. This way, bargain hunters can check up deals while you post excess or old inventory whenever you think it’s time to clear the shelf space.
- Flash Sale: Take advantage of the psychological effect of fear of missing out. Flash sales are a great way to convert old inventory into income. Notify your shoppers that the sale is only for a limited time. It’s important to build anticipation. Sending out “teaser” emails a few days prior to along with reminders can increase the success of the sale. Notify shoppers using social media and set up an on-site promotion to create urgency. Here’s everything you need to know about coordinating a flash sale!
- Specific Items Sale: If you find that your sales are not yielding the expected results, try narrowing the focus. Put on a sale that is tailored for a particular type of shopper or product. You can check out companies like PLNDR, to see how they exclusively run sales.
- Seasonal Sales: A change in the season means that your product line is changing as well. This is the best time to market your products to bargain hunters who are actively looking for deals.
Shoppers love discounts and may be more motivated to buy if you restrict your sales to limited time, like 24 hours or a weekend. These events can take a considerable amount of time and planning, but it’s possible to make a profit.
Bundling your Products
Bundling is one of the most popular pricing methods used by retailers. If it makes sense for your store and offerings, consider grouping certain products or services together and selling them for a slightly lower price than if they were sold separately. A study by software advice says, 90% of retailers implement this in their businesses. When you bundle related products with your excess inventory for an irresistible offer, it creates a win-win situation.
Giveaways, Incentives & Rewards
If you find that an item is tough to sell, then try using it as incentive for your customers to buy more. Small rewards and incentives can be powerful when it comes to driving the desired results. For instance, you can use your hard-to-sell bags as a giveaway when they purchase a certain amount of money or if they refer a friend. This tactic works best for low-cost items that are hard to sell.
If you absolutely cannot sell the products or services, you can donate them to non-profit organizations and turn it into a public relations activity or event to raise awareness of your business. Local donation events, charities or donating to a school fundraiser are some other examples of opportunities for your business to be known in the community.
Excess inventory is mostly unavoidable. However, you can use some of the tactics above to clear the shelf of excess inventory and not take a total loss. When handled properly, excess inventory can be an opportunity for sales, customer engagement and tax benefits for your business. Some of these activities like re-marketing or web design may require some additional financing. Luckily there are a lot of retail business funding options available.