Here are the 13 ways in which you can get rid of excess inventory:
- Rebrand, refresh, repackage
- Retarget to a new audience
- Bundle with another product (that sells)
- Offer on consignment to resellers
- Make a Special Offer
- Offer discounts
- Include in Special Sales
- Offer to employees
- Offer as Freebies / Incentives
- Return it (or at least try to)
- Sell Online
- Donate it
- Liquidate / Scrap / Recycle
Like with many businesses, there’ll be times when you’ll have surplus inventory and there will be times when you won’t have enough.
The reasons for overstocking or understocking are often very related and can be traced back to a few root causes like poor customer demand forecasting, unexpected surges or drops in sales and inadequate inventory management.
If you’re wondering how to get rid of excess inventory, then this article is for you.
How to Get Rid of Excess Inventory
As part of your Inventory Management processes, you’ve probably already calculated the cost of your excess inventory and fully understood its impact on your business.
So, now let’s review the 13 ways in which you can manage this excess inventory.
1. Rebrand, Refresh, Re-package
Just because a product isn’t selling fast enough, that doesn’t automatically mean something’s wrong with it. It could simply be a matter of marketing.
If you have a store and carry consumer products, you could take the product and make it look more attractive.
You could display it in a different part of the store where it is more likely to be discovered.
You could put it next to faster-moving products, making it easier for customers to just pick it up.
You could add attractive signage and generally improve the product’s visual appeal.
2. Retarget to a new audience
A simple reason why a product is spending too much time in inventory could be that you’re trying to sell it to the wrong type of customer.
Could these products be more attractive to another type of customer?
Assuming you attract different types of customers, try making your slower-moving products available to new types of customers.
3. Bundle with another product (that sells)
You’ll have products that sell well.
And then you’ll have products that sit in your inventory forever, that just don’t move fast enough.
Why not combine the two? Customers who intend to purchase your fast-moving products will likely not mind paying a bit more if they are getting another product bundled in.
Such a strategy of bundling two or more products together into a single unit to maximize revenue and sell slow-moving products is called Block Pricing.
Of course, the bundling would need to make sense and so the two products should be related.
Let’s say that you carry a men’s deodorant product that isn’t selling very well. But you have an after-shave cologne that’s doing very well. Why not combine the two into a package?
Men can be very loyal to their after-shave and would buy it even if it were to cost a bit more. And if they use and like the deodorant, you may have just created a new customer for the deodorant.
4. Offer on consignment to resellers
If you can’t sell your products well enough, why not try to sell them through someone else?
It’s possible that another business – perhaps even a competitor – caters to the exact same customer type that you are trying to reach with your product and at a good commission they would be willing to carry your product.
To make it worth their while, you could offer it on consignment.
In any case, your excess stock is sitting in your warehouse or your store. Why not let it sit in someone else’s store instead?
It won’t have any impact on your cash flow as you’ve probably already paid for the extra inventory. But it could hurt your profit margin as you will pay a commission to your reseller.
But, you could create a new channel and acquire new customers whom you otherwise would never have reached.
In addition to the possibility of successfully selling your product, there is an added benefit that comes from going through resellers: Reduced storage costs because of less warehouse space!
If someone else is willing to carry your product for you, you don’t have to worry about storing it yourself.
5. Make a Special Offer
Sometimes the best way to get slow moving products to start moving faster is to make special offers on them.
For instance, you could offer a BOGO promotion – Buy One Get One.
Or you could offer free shipping. Surveys show that most people do like paying shipping fees and so offering free shipping could be a way to get your excess stock out of the door.
6. Offer discounts
Another classic way to get a product to move is to offer a discount.
This could be a percentage discount – eg. “10% off till the end of the month”. Or it could be a Tiered Discount – “10% off of the first purchased product, and 20% off of the second product”.
The discount could also be linked to another product. For instance, if a customer buys another product, you could offer a 30% discount on the slow-moving product from your excess stock.
You’ll always have customers who really want your product but feel that the price is a tad too high. Even a small discount can convert these fence-sitters into paying customers.
Then there are customers who only buy a product when it is offered at a discount. Such customers aren’t always picky about whether they need the product or not. They just like buying at a discount.
7. Include in Special Sales
Add your surplus inventory products to special sales like Clearance Sales, Flash Sales and Seasonal Sales.
Customers may not react to discounted pricing or special offers linked directly to the excess inventory, but they may inadvertently pick these products up when they are part of a larger sale that is either linked to a season (eg the holidays) or that is applicable to many or all products that you sell.
8. Offer to employees
If you sell products that can be used by your employees, let your employees have them at discounted prices.
This doesn’t need to be limited to products from excess inventory. You can offer them all products at special prices.
Not only is this good for employee morale but your employees can automatically become your brand ambassadors.
And you can get a nice way to offload overstocked products to someone who might actually appreciate them.
9. Offer as Freebies / Incentives
From time to time, you’ll have reasons to give some products away for free. This could be at events, meetings, trade shows, etc.
Why not take some of your excess inventory and give it away as freebies?
Or give it away as an incentive in exchange for something of value – an email address, a product review, filling out a feedback form, etc.
Of course, this strategy to get rid of excess inventory works best for consumer products. But it can also work for services – eg. You could offer free consulting hours in exchange for something else of value to you.
10. Return it (or at least try to)
If you’re really unable to sell a product and if you have acquired it from the supplier, is there any chance you could return it to your supplier?
Maybe your supplier has other customers who are asking for this product and instead of manufacturing new units, your supplier could just take the excess back from you and give it to their other customer.
Sure, you may not get full price for what you return, but even if you get a large portion of your money back, at least your money will no longer be stuck in excess inventory.
11. Sell Online
If you are unable to sell certain products through a physical store, maybe you should try selling them online.
On the Internet, you could reach a much larger customer base and in it you could find enough customers who would be interested in your excess merchandise.
If you don’t already have an eCommerce store trying to create one on Amazon, eBay or Etsy. It can be a quick way to start selling your products to a much larger audience.
12. Donate it
If you carry products which could be beneficial to those less fortunate than us, maybe you could simply donate your surplus stock.
For instance, if you carry heavy winter jackets from last year’s fashion which no one wants to buy this year, you could consider donating these.
13. Liquidate / Scrap / Recycle
If all else fails, you could always either liquidate or scrap or recycle unsold inventory.
If you have obsolete inventory, this might be your only option.
If you manufacture your own products, maybe you could salvage parts and raw materials from the unsellable inventory and use this in other products or sell as scrap and recover some of your investment.
If you decide to liquidate the unsold inventory, you could call in inventory liquidators specialized in your field.
Summary
Excess Inventory can be traced back to different root causes. Before you can address the problems caused by excess inventory, you’ll need to understand these root causes.
Almost always, you’ll need to improve your inventory management processes. If you’re not using an inventory management system, this is the time to consider acquiring one.
If you do not know the cost of holding excess inventory, you need to calculate it first. If this inventory cost is not excessive then perhaps you don’t need to do anything at all.
However, if you wish to get rid of your excess inventory there are numerous tactics and strategies that you can deploy.
