What to Do With Leftover Inventory
October 22, 2018
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What’s better than holiday season retail sales? Boxing day sales. But it’s not the floods of other aggressive shoppers that make post-holiday deal-hunting so exciting, it’s the joy of knowing businesses are desperate to evacuate their outdated inventory. What a rush! It’s a wonderful time of year.
What to Do With Leftover Inventory
What happens when demand doesn’t meet supply? Forecasting can be a nightmare, whether overstocking or understocking. We hope you oversell and have the most success this year, but sometimes even the most accurate forecasters take a hit. If this is the case, you may have some excess inventory that you need to take care of. If you’re having trouble planning for the holiday season, click here for more on visitor forecasting.
What happens when demand doesn’t meet supply? Forecasting can be a nightmare, whether overstocking or understocking.
When preparing for seasonal sales, bulk purchases are a saving grace and can save SMBs some money. When suppliers get bulk orders, they usually offer a discount. I mean, think about what’s being saved in terms of shipping, packaging, etc. It’s a big relief for suppliers. This might even be a factor of overstocking. It’s like when your grandma goes to Costco and, thinking only of you, buys 200 boxes of KD because they were on sale, in bulk. How could she not? Love you, gram, but literally no one can handle that much mac’.
Why Might You Need to Attend to and Sell Excess Inventory?
First, it can take up physical space you might need for the next season, and it makes you look outdated. Once the holidays are over, most people want to look forward to the next big event. Christmas, at that point is so last year. There are only two reasons for Santa and Rudolph to be cruising around your store at the end of May. You’re either a liquidator or a bad planner. But if you’re the latter, you can sell excess inventory to the former.
Consistently being overstocked is an issue of preparation and product management. If you’re seeing a lot of overflow into the next season, you’re probably going to start feeling its weight after a while
Second, consistently being overstocked is an issue of preparation and product management. If you’re seeing a lot of overflow into the next season, you’re probably going to start feeling its weight after a while. You should start planning, maybe look into KPIs (key performance indicators) from the previous year. Hindsight is 20/20.
But hey, it’s not all bad. Having left-over stock can have many advantages. You’ll have a head start on next year, if you plan on stowing your stock away. At that point, your product will already have been marketed by the prior-year of buyers. Free advertising?
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How to Sell Overstock Inventory
One option for selling excess inventory is to remarket it. If you’re a crafty business owner and your product isn’t seasonal, you have an advantage here. You can remarket it a million times. It’s all in the marketing. If your product is seasonal, you might be feeling some pressure to sell. But there will always be consumers late to the party. Why would anyone need pumpkin carvers six weeks after Halloween? Stop judging me.
2. Have a Sale!
If you notice you’re not getting the traffic you expected this season, plan a sale and advertise well. Whether a clearance sale, flash sale, or seasonal sale, you’ll be sure to see a dent in your stock.
3. Sell Online
Having the product in supply is a plus when selling online. Amazon and eBay give your business a global, year-round reach. Online shopping is so convenient and hard to resist for consumers, especially when there is a sale. If you’re already making use of your online presence, take a look at some holiday marketing tips to consider to give your promotions a bit of a boost.
Online shopping is so convenient and hard to resist for consumers, especially when there is a sale.
During the holidays, there are sales before, during, and after season. When will it be too late to sell to consumers? If you happen to find out, as many retailers do, then you’re left with a few options.
Now, if you’re looking to clear house, you may consider selling to a liquidator, which many companies do. Selling to a liquidator gets rid of your overstock in bulk for a discounted price. There will usually be an interested buyer to take out of season products off your hands. The liquidator will then sell these products at a discounted price. You should do this before you have to write any product off as too much of a loss. Look into B2B bulk marketplaces. Many companies survive solely on liquidation, and this could be a great business opportunity in terms of building connections. It’s good for liquidators, consumers, and you.
Finally, if you’re in a corner, surrounded by disappointed boxes of sad, rejected products, consider generosity. Kind of. You can donate your excess inventory to a charity and get a tax deduction. The National Association for the Exchange of Industrial Resources (NAEIR) kindly accepts and relocates donations of new, leftover, or discontinued stock to schools and nonprofit groups. Check out the NAEIR for more information on donor benefits.
Things to Consider when Dealing with Excess Inventory
If you do plan to hold on to leftover inventory, you may have concerns about carrying costs that could certainly affect your year. Carrying costs refer to fees like “storing and preserving goods for specific time periods (warehouse rentals, infrastructure, equipment, salaries, utilities), insurance premiums, losses resulting from depreciation, market fluctuations, damage, pilferage, shrinkage and decay.” Pilferage. Okay.
Along with those additional costs, you should be concerned about maintaining the quality of your product over time. In this case, you should be considering product life-cycle. With product life-cycle management, you can see the product’s introduction to the market, growth, maturity, but most importantly it’s decline over time. By studying a product’s life-cycle, you can understand your seasonal trends and compare them to your competitors.
More so than things just going out of style, products get replaced.
I mean, what iPhone are we at now? It doesn’t have a headphone jack, and my charger doesn’t fit. Things, especially tech. become obsolete very quickly. This presents a pro and a con for keeping products stocked. While other companies have replaced all their inventory with the new-and-improved, your best move could be to have a little stash of stock available from past seasons. It will just be slow to move.
Lastly, you should be tracking obsolete products in order to understand their cost and ultimately your loss. This might be motivation for better planning in the future, at the very least. Check out our QuickBooks integration and guide for help with tracking obsolete products.
As the holidays approach, you need to plan for the best and the worst. If you find yourself getting swamped by excess inventory, you’re not alone. Use these ideas to sell excess stock.