No matter how lean or efficient a business is, it will most likely end up with excess stock at some stage. Several reasons could cause this, such as incorrect forecasting, lack of demand, or poor customer communication. Unexpected issues can also hit businesses, causing major inventory problems. Either way, excess stock can be a big issue for businesses as it can cause cash flow problems and create logistical nightmares. Here are five tips to help you get rid of any excess stock that you may be holding.
- Consider liquidation companies
- Remarket products
- Bundling products
- Donate unwanted stock
One of the best ways to get rid of excess inventory is holding sales and discounting items. This tactic is most suited when trying to drum up demand for products that may be outdated or out of season. Businesses can use flash sales strategies alongside this to try and create a sense of urgency around the offer. However, companies need to make sure they don’t overuse this strategy as they can begin to lose their value and effect on customers over time.
Sales/offers frequently attract new customers to a business. The graph shown below indicates how commonly customers sought out discounts/bargains. A company must aim to convert these customers into customers for the future. Offering high levels of customer service and consistent interaction throughout the purchasing process is a common way to achieve this.
Businesses should note that while sales are an excellent way to shift old stock, there is always the risk of losing out on profit. While this is frustrating, it is the reality of the issue at hand. Outdated inventory will continue to lose its value, companies will spend more money on warehousing, and new stock can’t be introduced. These negatives are far worse consequences than selling old stock at a slight loss.
2. Liquidation companies
There are liquidation companies that purchase excess inventory at a cut-price from businesses. These companies tend to be precise with which items they buy, and the price point they are willing to fall below. While this method can bring quick results in freeing up inventory space, the prices offered may not be as high as expected. It is recommended that you research local companies that perform this service. Enquire and compare what prices they are willing to offer you for unwanted goods.
3. Remarket products
It can be a frustrating time when certain products aren’t selling. However, the issue may not be the product itself. The marketing/positioning of the product may be harming how customers are viewing it. For a physical store, this can be as literal as repositioning the products within your store. Freshening up the display may help give a new sense of life in older products that customers view as outdated.
The digital equivalent of this would be refreshing the product image on the website to make the product look more appealing and eye-catching.
The positioning of the product within the market also needs to be considered. What was once a high-end product may have fallen down the pecking order due to seasonality or inferior functionality. The product positioning as “high-end” needs to be reconsidered by the business. The repositioning can help drive the remarketing process and factors such as price.
SEO aspects can also be changed on a business’s website surrounding out-of-demand products. Remarketing a product may lead to keyword changes. For example, if a product becomes discounted, words such as “discount, offer or sale” may become involved to reach a new pool of customers. If a product isn’t selling, a business may need to evaluate the copywriting of its description. Make sure it is optimised for SEO by including the relevant keyword/phrase. But most importantly, make it engaging, informative, and applicable to the target market.
4. Bundling products to get rid of excess stock
The idea of bundling is to take a group of items and sell them together at a lower price than they would be sold individually. Businesses commonly pair excess inventory with in-demand items as a bundle. Customers tend to view this as a good deal if they get an item they want and a discounted product alongside it. The discount given can even be altered as it tends to be overshadowed by the in-demand product. This means your profits won’t take as much of a hit.
A way to improve this method is to try and have products bundled that can be used together or have relevance to one another. This is very situational and tends to be quite an unlikely scenario but should always be considered.
An approach businesses can take is to bundle large amounts of a single product at a heavily discounted price. This helps to move a particular product at a faster rate. This is a good option if the given product takes large amounts of storage space and loses value at a rapid pace.
5. Donate unwanted products
Donating unwanted products can be a great PR opportunity. Businesses can give relevant products to local organisations and charities to try and boost their brand image. Improving your brand image can provide a variety of benefits aside from more sales. For example, customers may become less sensitive to price, dependant on your business; it may open the door for sponsorship/collaboration opportunities. It can also increase customer loyalty and the chance of referrals from current customers. In the long-term, businesses can recoup the financial losses from donating excess stock if they act on the PR opportunity.
How to get rid of excess stock
Businesses need to remove the concept of profit from their minds when getting rid of excess stock. From a financial perspective, it’s all about damage limitation. However, specific methods such as donating, and sales involve long-term benefits for creating future customers. The main aim needs to be focused on freeing up storage space for new stock to be brought in, especially if your industry is seasonal-based.
For more advice surrounding excess stock, take a look at our post discussing common inventory mistakes and how to avoid them.