Are you one of the many retailers currently dealing with excess inventory? Is your product facing liquidity constraints? Have profit margins been reduced due to hesitancy in trying new products? Has difficulty in handling products led to an increase in warehouse costs?
This article aims to guide you on how to liquidate these products, freeing up your cash flow and clearing valuable space in your inventory. One of the most frequently asked questions in the retail community, as seen in comments from retailers, is: What is the best way to liquidate inventory?
After selling for a certain period, you’ll inevitably encounter unsold inventory that needs to be dealt with. Whether it’s products rendered unviable due to price competition, inaccuracies in market predictions, over-purchased or over-produced goods, or simply the need for immediate cash flow—disposing of these surplus items becomes essential. According to a McKinsey study, retailers in the United States alone hold unsold goods worth over $740 billion. Therefore, understanding and effectively revitalizing excess inventory is crucial for retail businesses. I’ll quickly guide you through these 5 effective methods in the following paragraphs.
Understanding Excess Inventory:
Excess inventory occurs when a business or retailer holds more stock than the actual demand or sales capacity. You’ll recognize inventory turning into excess when it nears the end of its product lifecycle, and your business is unable to sell it as originally intended.
Excess inventory poses a burden and can lead to various challenges for your business, including:
- Holding costs for excessive inventory.
- Erosion of profits due to surplus stock.
- Excess stock becoming outdated or expired.
- Reduced storage capacity due to an overabundance of inventory.
Therefore, the following 5 methods outlined below will help you overcome inventory challenges and achieve your goals:
1. Fresh Look, New Energy, New Transformations
Another excellent method to transfer inventory online is through marketing updates. Even those challenging-to-sell items can be revitalized under the “new attire” magic. For instance, you can capture product photos related to the upcoming season. Another approach is to try an unexplored perspective, such as a perspective lens, allowing you to showcase your product through comparisons with other common items (having compact toys or trinkets, for instance, can enhance their value, serving as a great selling point). Providing background information and clever displays not only captures customer attention but also motivates them to make purchases.
If you haven’t explored video yet, consider this: 55% of shoppers, according to Meta’s Holiday Marketing Guide, make gift purchases based on online videos. Instagram Live is another useful way to help buyers get a closer look at your products. Don’t underestimate the power of well-crafted email marketing campaigns. With enticing SEO-optimized content, perfect offers, and killer CTAs, your customers will immediately purchase all your excess inventory. More and more retailers are finding success by embracing these strategies to unleash their inventory.
2. Discount Sales, but with Finesse
In today’s economic environment, everyone is looking for deals. According to a RetailMeNot study in 2022, 78% of consumers believe coupons or discounts add value to their purchases, 66% feel smarter when using them, and 59% use coupons regularly. When deciding whether to display discounts in percentage or dollar amounts, consider the “100 Rule” proposed by marketing professor and author of “Contagious: Why Things Catch On,” Jonah Berger:
- Items under $100 can benefit from percentage discounts: A 10% discount on a $50 French press is more appealing than a $5 discount, even if both yield the same net profit.
- Items over $100 can benefit from a $1 discount, accelerating turnover: An $80 discount on a $400 jacket feels more lucrative than a 20% discount.
When in doubt, a touch of personalization goes a long way. According to a HubSpot survey, shoppers want to feel listened to, appreciated, and valued. Google reports that when people perceive a highly personalized shopping experience, they are 40% more likely to spend more than planned.
Applying discounts with finesse can help you quickly sell your inventory products.
3. Bundle Up for Sales
When products seem stagnant, it’s often because your customers can’t envision how they’ll use it or perceive it as not worth purchasing individually. Bundle sales provide context, assuring customers they are getting a great deal. By taking a set of products and selling them at a slightly lower price than if purchased individually, you can maintain sales profit and margin.
- Pair fast-moving products with slower-moving ones.
- Bundle multiple identical products.
- Pair surplus items with low-cost items that can enhance perceived value.
- Sell complementary products together (e.g., pairing your best-selling pencil sharpener with pencils and erasers, and so on).
4. Return Inventory to Your Suppliers
Another option for selling inventory is collaborating with your suppliers, allowing them to buy back products from you at the original wholesale price, either free of charge or at a discounted rate. While not a common method, it’s worth trying, especially if you have a strong relationship with your suppliers.
Clear from various points, the role of a good supplier is crucial in the retail business. WAVF is a platform connecting brands and retailers, offering low MOQ wholesale with 60 days free to try new products. If interested, feel free to contact.
5. What If I Can’t Complete All Sales?
For items that are particularly challenging to sell, donating them can be a viable option. It not only clears inventory resources but also improves your brand image, especially when the chosen charity aligns with your and shoppers’ values. (It also comes with a nice tax deduction.)
According to Section 170(e)(3) of the Internal Revenue Code, your registered business can receive federal income tax deductions exceeding the cost, clearing warehouse space, avoiding liquidation nightmares, and simultaneously assisting schools and nonprofit organizations.
The National Association for the Exchange of Industrial Resources (NAEIR) accepts donations of new products, surplus inventory, or discontinued products, such as school and office supplies, toys, etc. It redistributes these items to schools and nonprofits nationwide, and donating companies can receive an enhanced income tax deduction of up to twice the cost of the goods. NAEIR also provides paperwork assistance during tax filing.
What Causes Inventory Overstock?
There are various reasons why businesses may end up with excess inventory. Here are some typical ones:
- Inaccurate Forecasting and Predictions: If a company struggles to accurately forecast product demand, it may overcompensate and ultimately lead to an excess of inventory. Accurate forecasting should take into account factors such as market data and sales history.
- Incomplete Inventory Management Systems: The team responsible for inventory management is tasked with ordering and purchasing products and materials while coordinating with other teams. If the system encounters glitches or becomes disorganized, it can easily result in an overabundance of inventory.
- Unreliable Suppliers: If suppliers prove to be unreliable, a company might overcompensate to avoid stockouts, ultimately resulting in excess inventory. For example, frequent delivery delays or product shortages may lead to excessive purchasing or early ordering, contributing to surplus inventory.
- Extended Delivery Times: Individuals involved in supply chain distribution, whether suppliers or manufacturers, may provide extended delivery times, making it challenging to predict order quantities. In such cases, there might be a tendency to retain more inventory as a precaution.
- Fluctuating Demand: Managing the right amount of inventory can be challenging when product demand fluctuates monthly. This could lead to stocking more than necessary for safety, rather than taking on the risk of not having enough.
- Changes in Market Demand: With the arrival of new products, the demand for existing ones may decrease. For instance, the popularity of smartphones might cause a decline in the sales of traditional watches as people begin checking the time on their phones. Selling trendy products might see a replacement in trends, or economic shifts could alter customer preferences.
While there are effective methods to address these issues, inventory digestion remains a time-consuming task. The wisest approach is to proactively reduce the likelihood and quantity of excess inventory before issues arise. If you share a similar perspective, consider spending two minutes exploring WAVF Wholesale. The platform was founded with the mission of alleviating inventory management challenges for small and medium-sized retail businesses.
About WAVF Wholesale
FIND YOUR NEXT BEST SELLER!
Navigating the challenges of running a small business, particularly the intricate process of finding the right products, is a formidable task. This journey is not only crucial for the success of the business but is often rife with trial and error. At WAVF, we understand the unique hardships faced by small businesses, and our mission is to alleviate these challenges.
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Our automated online platform allows you to seamlessly browse through a wide range of product categories. You can conveniently place orders and complete transactions online, Register and subscribe to WAVF to receive timely updates on market trends for your chosen product categories. This will help you stay ahead of your competitors in information acquisition.
- Minimum purchase starts at $100.
WAVF excels in catering to the wholesale needs of small and medium-sized businesses, offering specialized services. Experience the convenience of placing wholesale orders with a minimal requirement of just $100.
Reducing inventory levels has not only increased supply chain flexibility and stability but also enhanced the operational efficiency of your retail business.
- Featured Best Sellers, offering a selection of certified products.
The WAVF platform brings together top products from diverse brands, certified with FCC, CPC, CCC, and other accreditations. Our website organizes products by sales volume, facilitating the swift identification of bestsellers.
We offer competitively priced, high-quality product supply. WAVF’s comprehensive data analysis system quickly informs you of current category prices on major platforms like Amazon and Walmart, facilitating intuitive comparisons. This ensures that your retail business can achieve substantial profits.
Sales are assured, and we consistently introduce new products to adapt to market dynamics, ensuring a sustainable wholesale inventory that aligns with your satisfaction.
- 60-day credit terms available.
With 60-day payment terms, WAVF covers the upfront cost of your order. When you order using this payment option, you won’t be charged for your items until 60 days after the date you placed the order.
When you thoroughly understand and assess through data, the retail industry still presents abundant opportunities in 2024. WAVF strives to be more than just a supplier; we aspire to be your reliable ally in overcoming the hurdles that often accompany entrepreneurship. By providing a one-stop shop for all your logistics needs, we aim to empower small businesses with the resources they need to thrive in a competitive market.
Your next steps：wavf.com