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Ten Ways to Deal with Excess Inventory

This will allow you to move merchandise without having to take such a big hit on your profits. If remarketing or remerchandising doesn’t work, consider lowering prices for of excess stock. Kat Rosati, Brand Manager at Apparel Booster, advises retailers to discount prices at certain increments. “Start off with something small, say 30% and then continue to discount,” she says. Competitors might be your friends when it comes to sharinginventory and supplies. The items taking up space in your warehouse could be exactly what another company needs right now.

  • Your ongoing inventory count can help you make the right decision on how much of a particular product to buy.
  • Some may sell better than others, thus increasing your margin and allowing you to take sacrifices elsewhere.Prioritize and protect long term and bestseller SKUs.
  • In this article, we want to help you get a handle on your store inventory now and for the future.
  • But actually, the best case scenario is to make a positive decision to shift the excess stock at a time that works for you.
  • Highlight one product, or several slow-moving products, for a month.
  • Check with your manufacturer to see if this option is available for you, as well as if this works for your specific product.

Instead, seek out the best deal with the smallest quantity your business must have in stock. Conduct analytical research on browsing patterns which could lead to actionable logistics insights such as increasing efficiency in the marketing or inventory processes. For ‘REGULAR’ demand patterns, with a high level of certainty and consistency, you don’t need to carry any stock to cover for variability in demand – because there isn’t any. Products with high demand go to my own warehouse, and products with low demand are sold through drop shipping. So the single most effective way to deal with this huge financial burden is to use technology to accurately track what they have in inventory and how much it is costing them. Trying not to upset their customers by running out of inventory – they end up stocking anything and everything in an effort to meet the needs of their customers.

What is the best eCommerce solution for my grocery store?

Notify customers about your sales via social media and your mailing lists to entice them with the discounts. This is a good way to get rid of stock at full price in a brick-and-mortar store. Put the items you want to get rid of in a window display, so people passing by or coming to your store see it right away. Place additional stock of the item in customers’ line of sight when they first walk in your store. Finally, display more of the slow-selling items near the point of sale for one last exposure before customers check out. To avoid losing money, make sure that the cost of goods from a dropshipping supplier doesn’t cut your profits. Gooten, for example, is a dropshipping supplier that offers competitive prices on its products.

  • You still can whip your inventory back into shape before it devours your profits.
  • Aldi buys overstock from Trader Joe’s and other outlets as secondhand produce, and restaurants buy meat that’s still good but doesn’t look as bright red as customers expect.
  • You’ll free up space on your shelves and contribute to a good cause at the same time.
  • When the month ends, pick one or two names to win a prize, such as a gift card, free range time, waived league fees, or a free bow-tuneup.
  • Establishing a par level for each product is just the first step.
  • It’s always good to be prepared to handle an unforeseen event.

Giving a product to an influencer is a creative way to get rid of excess inventory while still benefiting your business. If you have a lot of excess inventory, you may decide to use multiple methods of unloading it.

Sell Online

So the best strategy is to always keep your inventory levels optimal and not overstock it with excess products. The more inventory you keep, the more likely you’re to losing it due to excess demand variations. Products depreciate over time and lose their initial value. So not only you spend a lot of money on holding the overstock inventory, but you eventually sell it cheap. Usually, companies sell the products at prices below the amount they paid. They end up lowering the profit margin and lose revenue.

Ten Ways to Deal with Excess Inventory

If your product offering is very diversified, it does not necessarily mean you will get high sales. Often, it is better to reduce the number of products you sell, as it will be easier to optimize inventory and maximize value delivery for your top products. For low selling items , you might seek a lower service level, to lower your stock on a wide range of products.

How to manage inventory? : Problems of excess inventory

In such cases, it’s essential to demarcate key roles and responsibilities and utilize the appropriate tech to oversee your large operation. If you decide to liquidate the unsold inventory, you could call in inventory liquidators specialized in your field. If all else fails, you could always either liquidate or scrap or recycle unsold inventory. If someone else is willing to carry your product for you, you don’t have to worry about storing it yourself. Of course, the bundling would need to make sense and so the two products should be related. For example, a camera & camera bag complement so well that it makes sense to buy the bundle. The Best Credit Card Processors of 2022 Which credit card processor is right for your business…

  • Without that clarity, sellers risk lowering their profits by accidentally under- or overstocking.
  • The inventory turnover rate is a huge factor in determining the amount of a particular product to keep on your shelves.
  • You must stock enough items to meet customer demands but not so much that you must eventually sell it at no profit.
  • You also need to consider seasonality like month-end spikes or holiday sales.
  • The easiest way is to access your Inventory Dashboard to manage your inventory and measure inventory health in your Seller Central account.
  • The longer your inventory sits on the shelf, the more they lose value, and the more they cost you to hold.

The product may wind up in secondary markets competing against a company’s efforts to sell current stock. When price comparisons are just a click away, you can bet that many customers and potential customers will choose the cheaper option. Many inventory management software options are also built to track when your stock reaches low levels. Our platform offers a low-stock-report for every user to show which items need to be replenished. Sellers can create unique low thresholds for every product to reflect each par level. Overstocking or surplus inventory is a recurring situation in the retail industry. However, there are several ways to get rid of it without jeopardizing your business.

How Skubanas inventory management system helps businesses reduce excess stock

You could also identify cross-merchandising opportunities. If a particular product is slow-moving, it may help to display with a matching or complemantary product. In most cases, you won’t be able to recover all your costs. But at least you can stem the bleeding from carrying costs and halt the inevitable decline in value faced by aging inventory. The culprit may be purchasing too much or overly optimistic forecasting. But unforeseen shifts in the marketplace or technology may also result in overstock.

  • This should be one of your first choices before resorting to putting items on sale and taking a loss in profit.
  • These products are the heart of your sales and replenishment and have the most impact on your inventory count cycle.
  • Category A items are the most profitable and have the highest sales volume.
  • Notify your raw-materials suppliers of seasonal demand changes.
  • The costs include not just the material to produce the goods but also the labor and overhead.
  • A great way to sell your excess inventory is to bundle slow-moving items with another popular product you have in stock.

People who want to purchase pre-workout items are likely interested in other supplements that can enhance their performance. This, combined with the fact that many people decide to implement fitness resolutions during the beginning of the year, make this a timely and effective promotional bundle. If it makes sense for your store, consider grouping certain products together and selling them for a slightly lower price than if bought separately.

The problem with excess inventory

This ‘LOW’ stock level cushions the difference between the variability in demand volumes and the consistent production volumes. However, depending on the type of business it may or may not be possible. For example, if you have an assembling business, introducing JIT can bring your inventory storage costs down to nil. However, to set up the system you need some really reliable suppliers and efficient management. Just order the materials before the products are to be delivered. This will reduce the overall inventory management costs, as you will no longer have to rent large warehouses and guard them.

Consider eBay or Groupon Goods, which is helpful when selling items that tie up lots of cash. It’s better to break even or suffer small losses than to stock eternal dust collectors. Some companies, like Toyota and Dell, have perfected this inventory management technique, but when first starting out, it is best to be cautious. Slowly incorporate the method into your inventory control in case any supplier issues occur, and recheck your demand forecasting to ensure that your small inventory is sufficient. The simplest way to centralize your inventory is to use a multichannel management software, like ours. With an Excel-like bulk editor, our platform lets you easily manage stock levels across all of your warehouses and channels. Then, your inventory is adjusted automatically within minutes of every sale so that you don’t accidentally oversell.

When you understock across your inventory, the likelihood that you’ll run out of stock while simultaneously selling your last items on multiple channels increases. Overselling can jeopardize your selling privileges on the major marketplaces. You can’t complete the maximum number of orders based on demand. You never achieve potential profit levels because you don’t have enough stock to fulfill the maximum number of sales. Reaching out to customers who bought similar products in the past and offering them discounts can move your redundant inventory.

And naturally, the last thing you want to do is to sell food that is spoiled. You want to hold inventory levels of such products low for better profitability in the long-run. Before discussing the strategies that help you sell excess inventory, let’s talk about the situations that cause a business to end up with excess merchandise.

Ten Ways to Deal with Excess Inventory

Another retailer that’s doing this well is the apparel store William B + Friends, which recently ran a promotion where they gave away free earrings to shoppers who buy 3 items or more. It’s the second most popular pricing method for retailers across all sectors , according to a study by Software Advice, a research firm for web POS systems. According to their survey, 90% of respondents said they implement it in their businesses. Additionally, make it a point to collect new customer information. Add them to your loyalty program or email list so you can reach out and alert them when you have new items in your store. We can see this in action in the clothing boutique Francesca’s, which occasionally holds flash sales featuring select products. Plus, “if done right, you are gaining new customers to help regular sales into the future,” she adds.

This is a good option if you have multiple brick-and-mortar locations. Determine where the inventory Ten Ways to Deal with Excess Inventory is selling most slowly and move it to a different location where it is selling more quickly.

What is extra inventory called?

Excess Inventory Definition

And that's exactly what excess inventory is. Excess inventory refers to those products that companies keep for a very long time, failing to sell them in a timely manner. In the course of time, this inventory becomes an obsolete stock that carries no value.

Schedule points during your busiest seasons, where you plan to reorder goods early enough to avoid running out of inventory. Following these practices will enable you to regularly set correct par levels that keep your inventory at a healthy amount. You need to manage your inventory in one centralized place. By monitoring your stock from a single point, you can quickly determine when you need to replenish your inventory to fulfill orders across all channels.

All merchandise, particularly seasonal goods, will hit peak value just before hitting peak sales. If you’ve been slow with the markdown pencil, it may be slowing your turnover and tying up your cash. Whether this is in a physical store or on your website, add your slow sellers as a related product underneath. This way, they get seen more often and customers are tempted to add as ‘extras’ to their purchase. This means more space and attention can be given to better selling items. But it also takes some pressure off when trying to forecast how much stock to purchase in the first place.

Ten Ways to Deal with Excess Inventory

It may even have a totally separate identity from your established operation. Try Veeqo for free, and explore all the tools and services you need to manage inventory and ship to customers.

This strategy involves refilling your stock of raw materials just in time for you to complete your orders on schedule. Once you’ve determined a ballpark number and timing for your inventory orders, you can use one of the strategies below to keep your average inventory at safe levels. The cost of goods sold is the amount it costs to produce the goods you sell. The costs include not just the material to produce the goods but also the labor and overhead. Since you’ve read through the five devastating reasons not to overstock your inventory, but you know you need to have stock on hand, you may feel like you’re dealing with quite a conundrum. To see any improvement in your cash flow, you will have to sell your inventory. Some might make the mistake of holding onto excess inventory, thinking that more is always better.


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