xcess inventory refers to stock that exceeds your projected demand, a common challenge faced by B2B wholesalers and retailers across the globe. They are those lingering items taking up valuable warehouse space, eating into your cash flow, and casting a shadow over your profit margins. In e-commerce, reinventing how you tackle surplus and sell excess inventory is a compelling necessity; not only because too little of it can prevent sales, but too much inventory can eat into profits.
With ever-changing trends and buyer preferences, inventory management is paramount for a successful online business. But fear not! Here’s the good news: excess inventory doesn’t have to be a dead end. You can transform that surplus stock into a wellspring of opportunity with a strategic approach and a touch of creativity.
This article will equip you with 5 actionable hacks to help you reinvent and sell your excess inventory, freeing up space, boosting your bottom line, and strengthening your brand.
Before we delve into the strategies, let’s first solidify our understanding of the issue:
What causes excess inventory?
Stock can exceed your projected demand due to various reasons, such as:
• Miscalculations in sales forecasting: Even the most sophisticated forecasting models can miss the mark. Utilizing tools like exponential smoothing or incorporating automated machine learning techniques can enhance your forecasting accuracy and minimize excess inventory.
• Seasonal fluctuations: Products with high seasonality, like holiday decorations or summer/winter clothing lines, can see a significant drop in demand outside their peak season.
• Changes in market trends: Rapidly evolving markets, consumer preferences, or technological advancements can render certain products obsolete, leading to excess stock. Staying informed about emerging global trends through industry publications, reliable resources, and attending trade shows allows you to anticipate market shifts and adjust your inventory accordingly.
• Discontinued lines or product upgrades: When you phase out specific product lines or introduce updated versions, the previous models can become excess inventory.
How does excess inventory hamper your business?
The impact goes beyond occupying space. Here are some key ways in which it can negatively affect your B2B business:
• Reduced cash flow: Excess inventory ties up your capital, limiting your ability to invest in new products or marketing initiatives.
• Storage costs: Warehousing excess inventory incurs storage fees, adding unnecessary expenses to your operation.
• Product degradation: Over time, some products can deteriorate in quality or become outdated, leading to write-downs or wasted resources.
Shein, the most popular retail brand in all likelihood, has been under the radar of many environmental campaigners for their excess inventory management practices. Turns out, the fast fashion giant is among the prime contributors of waste siphoned off to other countries. The company, which aims to target revenue of $58.5 billion in 2025, discards around 15 million new garments per week onto the second-hand markets of countries like Ghana, Kenya and Tanzania. Addressing these grave numbers, Shein revealed its strategic initiative to partner with the U.S.-based technology company Queen of Raw. With this association, Shein pledges to salvage excess materials from brands and incorporate them into its own supply chain, supposedly marching towards a fully circular supply chain by 2050.
A proactive approach to minimizing excess inventory
Preventing excess inventory is an ideal scenario. Here are some proactive measures you can implement:
• Keyword research and data analytics: Utilize keyword research tools and analyze historical sales data to understand customer demand trends. This data can help you make informed purchasing decisions and avoid overstocking.
• Competitor market analysis: Understand your competitors’ product offerings and sales strategies. This can provide valuable insights into market saturation and potential gaps you can fill. Identify opportunities to differentiate your products with strategically sourced inventory.
• Implementing pre-order systems: Specifically for seasonal items, this can help gauge customer interest and prevent overstocking.
• Strategic sourcing for holidays: Implement a data-driven sourcing strategy that takes into account past sales figures, current market trends, and projected demand. Partner with reputable suppliers who offer flexible order quantities to minimize the risk of overstocking for specific holidays.
• Offering generous trade-in programs: For discontinued products, this can incentivize customers to upgrade and help reduce excess inventory.
5 strategic hacks
Now, let us examine the 5 strategic hacks you can leverage to sell your excess inventory and unlock its hidden value
1. Run a sale, but make it smart: Generic discounts rarely yield optimal results. Here is how to make your sales campaigns more effective:
• Targeted discounts: Refrain from blanket discounts across your excess inventory. Analyze your surplus stock and offer targeted discounts that incentivize specific customer segments. For example, offer deeper discounts on older inventory or less popular items to clear stock faster.
Also read: Top 7 winning holiday discount strategies
• Flash sales and clearance events: Create a sense of urgency with limited-time flash sales or clearance events. Promote them strategically across your communication channels, including email marketing campaigns, social media posts, and notifications on your platform.
• Tiered discounting: Encourage bulk purchases of excess inventory by offering tiered discounts. For instance, offer a 10% discount for buying 5 units of a product and a 15% discount for buying 10 or more units. This incentivizes larger purchases and helps you move a significant volume of excess stock.
To avoid inventory buildup, the popular retail chain Zara utilizes a model that combines in-house production, high variety, and limited availability. This allows them to quickly design and launch a vast array of fashion products, creating a sense of urgency (fear of missing out, or FOMO) among consumers. By limiting each product line to a lifespan of 2-4 weeks, Zara ensures they can sell out their inventory within this timeframe, minimizing the risk of holding excess stock.
2. Breathe new life into visuals: High-quality visuals are essential for capturing buyer attention. Here’s how to enhance your product presentations:
• Professional product photography: Invest in professional product photography showcasing your excess inventory in its best light. Ensure high-resolution images with clear backgrounds and multiple angles to give buyers a comprehensive view of the products.
• Creative content marketing: Develop engaging content marketing campaigns featuring your excess inventory. This could involve showcasing alternative uses for the product, highlighting unique product features in blog posts, or creating short video demonstrations.
• Virtual reality (VR) tours: If you can afford it, consider incorporating virtual reality tours of your warehouse into your B2B platform. This allows potential buyers to explore your product offerings, including excess inventory, in a more immersive way. According to this Forbes article, companies worldwide are investing in the benefits of VR tours for items that are difficult to showcase effectively through traditional photography.
3. Bundle it up: Bundling excess inventory with other products can be a powerful sales strategy. Here are some effective bundling techniques:
• Complementary product bundling: Combine your excess inventory with complementary products to create attractive bundles. This can help move slow-moving items by associating them with more popular choices. For example, group excess cushions with complementary throws or accent rugs in similar color palettes. This provides retailers with a complete living space refresh package for their customers, potentially boosting sales of multiple items.
• Themed bundles: Curate themed bundles based on specific customer needs or seasonal trends. Offer bundled packages for office supplies themed around back-to-college season, or create holiday gift basket bundles featuring a mix of popular items and strategically incorporated excess inventory.
• Customizable bundles: Allow your B2B buyers to customize their bundles by offering a selection of excess inventory items at discounted prices when purchased together. This provides greater flexibility for your customers and can incentivize them to buy more products, including your excess inventory.
4. Curate a collection under an in-house seller name: Consider private labeling your excess inventory as a creative approach to moving surplus stock. Here is how to implement this strategy effectively:
• Private label strategy: If feasible, create a separate brand name specifically for your excess inventory. This allows you to differentiate it from your regular product offerings while still maintaining control over distribution and pricing. Consider catchy and memorable names that don’t directly link back to your main brand but still convey product quality or value.
• Curated collections: You may also develop curated collections featuring the excess inventory under the new brand name. Highlight these collections on your B2B platform with compelling descriptions, high-quality visuals, and clear pricing information.
• Limited-edition offerings: Position your excess inventory as limited-edition collections to create a sense of exclusivity and encourage faster sales. This strategy can generate excitement and incentivize B2B buyers to act quickly before the ‘limited-edition’ stock runs out.
5. Run giveaway campaigns: This can be a win-win situation, boosting sales and customer engagement. Here is how to leverage giveaways strategically:
• Reward loyalty: Host giveaway campaigns featuring your excess inventory as prizes exclusively for your loyal B2B customers. This strengthens customer relationships and incentivizes repeat business. Loyal customers are more likely to participate in giveaways and potentially purchase additional products from your B2B platform.
• Expand brand awareness: Leverage social media platforms or email marketing campaigns to promote your giveaway featuring excess inventory. This expands brand awareness and attracts new potential customers who may have been unfamiliar with your B2B platform before.
• Data collection opportunity: Giveaway campaigns allow you to collect valuable customer data through registration forms. This data can be used for future marketing initiatives and targeted advertising. By understanding your customer base better, you can tailor sales strategies and product offerings more effectively.
Conclusion
Excess inventory doesn’t have to spell disaster for your business. With a touch of creative thinking and goal-oriented planning, you can turn those tarrying items into a source of profit. By implementing the hacks outlined in this article, you can improve your cash flow, free up valuable storage space, and strengthen your brand image. Remember, the key is to be proactive in managing your inventory and to leverage innovation and strategic marketing to transform your excess stock into a valuable asset.
Looking for further insights on how to successfully manage other aspects of your business more effectively? Visit the ‘How Tos’ category on our blog and discover more practical strategies to streamline your business operations.
~ Written by Anvita Mudbidri
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