Figuring out what to do with extra stock is a difficulty that many business owners and e-commerce supervisors experience at some stage. You’re wasting time and money if you’re still keeping all those products in your storage area rather than turning your attention to the items that tend to be most profitable for the upcoming season.
However, it is important to remember that all retailers and e-commerce businesses will, at some point, have more goods than they can sell, and understanding how to get rid of the old items is a necessary component of any commercial activity. Making wise decisions should alleviate the strain associated with having too much inventory.
Figuring out what is causing the excessive inventory is the initial move in controlling the issue. Once you’ve completed this task, you’ll be able to stay away from gathering an excessive amount of extra in the future and get your current more than inventory going quickly.
In this article, we intend to assist you in managing your store inventory effectively both presently and in the future. Having an excessive amount of surplus stock can be a burden financially, preventing customers from making purchases in-store and online, and disrupting money’s in-flow.
It is a very fitting time to be talking about this increasingly popular trend. Since the start of the pandemic, the value of excess inventory has increased significantly higher than the global average. An example of this can be seen in the fashion world, with the extra stock generated from the 2020 Spring/Summer season being in the ballpark of $160 to $185 billion worldwide. That’s over double what was expected and planned for.
Fortunately, there are numerous tactics that can minimize or even cancel out this recurring issue. Learn about everything you need to stay in control of your inventory, from adjusting what you currently have to predicting how much of something you need.
What Is Excess or Surplus Inventory?
In simple terms, surplus inventory is excess stock. Certain firms will carry additional stock deliberately, as a form of ’emergency’ supply in the event that demand is greater than expected. More often than not, too much stock is a consequence of buying too much of something because the forecast of how much was needed was wrong.
On occasion, it is beneficial to get a shipment with a slight surplus of items – for example, if you think you will have an increase in sales during a specific season. Nevertheless, constantly having too much stock can be a significant burden on resources if not controlled.
Inventory costs. Excess stock consumes storage space and funds, and thus businesses can end up having to cover the cost of getting rid of it. Additionally, people who market items that spoil quickly must also be mindful of when they expire.
What Causes Surplus Inventory?
A business might keep an abundance of items for a variety of reasons. At times, wrong forecasting of demand is only due to a lack of proper consideration, however in certain instances, external influences and social indicators may be the cause.
First, let’s talk about forecasting errors. Some of the largest reasons for forecasting mistakes are a not enough planning practices, disregarding patterns that take place on a regular basis, and a shortage of fundamental industry comprehension. In many cases, inadequate inventory organization occurs because companies lack the correct instruments. Fortunate for businesses, there is some exceptional inventory control software accessible presently which follows, organizes, and manages your inventory and sales orders altogether in one spot.
However, as previously indicated, sometimes businesses can wind up with an accumulation of stock due to causes that appear completely beyond their control. Every product has an expected span of use and, over time, the need for it will tend to rise and then decrease. Businesses that have intricate supply chains and numerous sites may have difficulty bringing together their inventory control, resulting in them having much more stock than they can sell. It is critical to differentiate major duties and obligations and use the necessary technology to look after your broad operation.
Finally, when disputes in the political arena (such as Brexit in the UK) have the potential to disturb investor assurance, organizations need to buy in more items than necessary as a safety measure. An overabundance of surplus goods can be damaging to a company’s bottom line.
Why having surplus inventory is bad for business
Why is it a problem to have extra inventory on hand? Surely it’s good to have extra products to sell?
Well, not always.
Unless the extra inventory is being utilized and sold, it will become a burden, consuming up area and money on storage, dropping in value, and blocking up financial capital in products that remain unchanged on shelves. When a company tends to accumulate an excessive amount of inventory, they may have difficulty finding enough storage space in their shop. Stale inventory is keeping retailers from putting the latest collection items out for sale, thus limiting their chances of making a profit.
As older items become less useful (potentially even outdated or ruined), newer items do not receive the prominence and consideration they deserve. This translates to decreased revenue for the period because the abundance of stock has to be marked down in order to get rid of it. In the most dire of situations, certain businesses may have no other choice but to sell their items for less than it cost them to buy, resulting in a deficit. Using multi-channel retail software to manage supply chains is the best way to re-establishing oversight of even the most intricate ones. Retail solutions organize and streamline all of the processes pertaining to retail, such as buying, stock management, distribution, and beyond.
Yet, there are means to keep excess stock from impacting your financial outcome. Utilize it to your advantage by increasing your e-commerce sales.
How to Use Surplus Inventory to Boost Online Sales
It has been demonstrated that having an excessive amount of inventory is not preferable. This is deteriorating your profits and occupying space simultaneously. But there’s no point dwelling on the negatives. We’re here to provide positive, actionable solutions. Let’s consider how we can use our excess stock to increase our e-commerce revenues instead of focusing on the difficulty.
Highlight them on your website.
Call attention to the items you need to move on your website. The most important thing is to draw as much focus as possible to these items. An effective way to boost sales may include advertising on the homepage, indicating products as a limited-time offer, and ensuring they appear in the beginning of search results.
You could even provide shipping at no cost for these specific items. The most effective way to attract potential customers to your surplus inventory on the internet is to combine appealing visuals and enticing advertisements. Keep in mind that your customers are unaware of the struggles you face with these products.
Good website design can shift products. Work towards creating visually appealing color combinations, using superb quality visuals, and crafting original, useful content that will draw people in. Adding new keywords and descriptions alone can work wonders.
If that doesn’t work, why not compose a blog post regarding the matter on your business blog, or set aside a part of your newsletter specifically for them? Accessibility and visibility are the aim of the game. By doing it this way, you can transform all your excess products into attractive items for your clients to buy.
Discount those items (but be strategic about it)
If neither strategy of remarketing or remerchandising is successful, price cuts should be implemented for the surplus inventory. Kat Rosati, the Brand Manager of Apparel Booster, suggests that merchants lower their prices in specific amounts. She recommends beginning with a reduction of thirty percent and then continuing to offer discounts.
You can also really rev up this approach by organizing a sale event. What about hosting a limited-time offer to create a feeling of necessity among your customers? If you have a lot of items that need to be sold, why not organize a large scale event at your store in order to attract customers?
Judy advises throwing a momentous event with a lot of thrills and attractions to bring in customers. The more people that attend an event, the greater the chances of it being successful since it implies to the people present that the deals on offer are incredible and will not be available in the future, which will cause sales to dramatically rise. The emphasis of the sale is more on the experience rather than on the discounted prices.
In addition, she emphasizes that if the approach is executed appropriately, it will result in new customers and increase regular sales in the long run.
Vanessa, of Flourish Boutique, claims that by having quick sales and occasions their stock has been depleted while their clientele has increased.
“We hold massive Overstock Sales twice each year with very appealing discounts to help us make way for newer products,” she explains.
We additionally conduct digital lightning sales where we lower the amount we charge for styles that aren’t selling well (and include a few best-selling items as promotional items). A positive aspect of these sales is that not only does it help us get rid of our stock, but they are also likely to attract new customers to our company and help us grow.
It is evident in Francesca’s clothing boutique that they occasionally run special, limited-time-only sales on selected products.
A note on sales:
Be sure to plan and execute your sale events appropriately. Engaging in such tactics too much can take away the appeal of the events, and cause customers to wait for a reduced price before buying from you.
Be sure to make a habit of gathering data from new customers. Include customers in your loyalty program or mailing list so that you can stay in contact and give them a heads-up when new items arrive in your store that can be more lucrative for you.
Take into account that while cutting prices may be an effective approach to entice purchasers, it may not necessarily be the most suitable tactic for you. If you are in the business of appealing to affluent consumers or need to maintain a particular public image, it might be smart for you not to advertise a huge sale, and instead use another approach for disposing of old merchandise.
Bundle items
Bundling is another standard technique for merchants. According to a research conducted by Software Advice, a company that specializes in web POS systems, the second most prevalent approach used by vendors in all industries is pricing using deals, behind utilizing price reductions. The survey revealed that the vast majority (90%) of those surveyed indicated that they use it in their business.
Think about if it would be beneficial to your store to bundle specific items together and offer them at a discounted rate compared to if they were bought individually. This will enable you to transport goods without suffering a large impact on your profits.
Offering a combination of associated items with your stretched stock as an alluring package is a beneficial situation for your business, infers Ashley Orndorff, director of marketing for ParadoxLabs – as Your average order amount rises, and you have the opportunity to empty out leftover inventory.
The Vitamin Shoppe in N. Little Rock is doing just that. The team determined to execute a promotional package in January 2022. Customers who bought a certain kind of pre-workout powder can get an extra item, either an intra-workout supplement or protein powder, for half price.
This promotion is exemplary due to the fact that the items in the package are all highly related. Those looking for items to use before working out may be interested in other nutritional supplements which can improve their performance. The timing of this offer couldn’t be better, due to the spike in people striving to improve their fitness at the start of the year. Therefore, this bundle could be a very successful marketing tool.
Depending on what you’re trying to sell, there some ways to bundle products. Try the following methods:
Buy multiple copies of the same thing together – This tactic is ideal for selling items in the small to medium size range. Offer a bundle of identical products for sale. For illustration, if you want to shift items that come in various shades, group them together and observe if they move more rapidly.
In the pricing report created by Software Advice, they illustrate the way in which DoitWiser, an online store, strategies its packaging. If you buy three or more water bottles from DoitWiser, the price per item drops from $19.75 to $18.76.
Do the extra items in your inventory coordinate with any other products you have in your store? You can increase the worth of both items (and potentially get rid of them faster) by pairing them together.
Vanessa claimed that putting together this sort of product combination aids in liquidating surplus inventory in her stores. If the boot socks are not being bought quickly enough, we will offer a promotion where you get a free pair of boot socks with your purchase of any shoes.
If you have an item that is not selling as quickly as you desire, try combining it with something that has a quicker turnover rate.
T-We Tea, a seller of home-brewed teas and related items located in San Francisco, was able to create success with its offerings. They realized that the items that had a lower profit margin (tea accessories) were being sold quicker than those with a higher margin (the teas that were made in-house), so they decided to lump them together and sell them at a reduced cost. Consequently, they were able to speed up delivery of items while maximizing their earnings simultaneously.
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