Stocking the shelves with surplus inventory is a risky as well as ineffective approach. In today’s dynamic marketplace, managing surplus inventory is crucial to maintaining operational efficiency and increasing profitability.
Surplus inventory refers to any excess inventory that has not been sold or is not expected to sell. Such inventory is also called overstock, which often gets overlooked but can significantly impact a company’s bottom line if not addressed properly. During the season time, businesses order excess stock to meet increased customer demands but find it difficult to deal with the leftover stock after the season time.
Whether its excess stock caused by an overestimation of demand, changes in customer preferences, or unforeseen market changes, managing surplus inventory requires strategic strategy and execution. Such inventory not only uses your warehouse space but also ties up the capital and increases storage costs, which is a loss for the business.
To help you with this, in this blog, we will discuss some of the most effective strategies for managing surplus inventory effectively to maximize business profit.
Consigning Surplus Inventory
The best and most effective way is to consign surplus inventory to a third party for the purpose of selling that on your behalf. This is the best approach as you don’t even lose ownership of goods and don’t even have to take the load of finding the buyers, negotiating the terms and pieces, and closing the deal in your favor. The ownership remains with you till the third party sells products to someone.
Basically, the third party can be a consignment store, online platform, or wholesaler, who displays your products to the customers and, in return, receives a commission as compensation, and the consignor receives a portion of the sale price.
Using this approach, you can free up storage space, reduce carrying costs, increase cash flow, and, most importantly, focus on other essential business activities.
Bundling Products Together
Bundling products or services together is an effective way to manage surplus inventory by increasing sales. It means you can pair a less popular or inferior product with a popular product or an unpopular product with a service, which can significantly increase sales and clear out the excess stock easily.
Customers get more attracted to combos, discounts, sales, freebies, etc., therefore, they can pay a slightly higher price for two products rather than a bit lower price for one. For example – you can combine shampoo with hair gel to clear its stock with the help of a hair gel.
Sell Products on Discount
Discounts attract customers; the greater the discount, the more ready the customers are to spend their hard-earned money on it. Therefore, you can offer high discounts on surplus inventory that would otherwise just use the space and increase your storage costs.
Limited-time discounts are an effective way to get rid of excess inventory easily and efficiently without much effort. Discounts are not just actual discounts; they also include slashing the price, a get-one promotion, creating a buy-one, or something else like this.
Remarketing of Products
Remarketing of surplus stock is another effective way to remove products that use space unnecessarily and block your capital. However, this approach requires effective strategies that can attract customers such as using eye-catchy images of a product on social media, selling it by exaggerating its benefits,
placing them on the counter or more viewable place of the store, display them with trending products, etc.
If you sell products online, simply change the title, update the description, and use more keywords to increase their discoverability. Add 3D images and 360-degree view videos to allow people to check the product better.
Collaborate with Suppliers
It’s crucial to maintain a positive and healthy relationship with your suppliers and effectively communicate with them for proper inventory management.
Collaborate with suppliers and try to get benefits like reduced lead times and a flexible ordering process, as well as persuade them to buy back the products in case of surplus inventory. Some suppliers offer the flexibility of sending the excess stock back to them at a discounted rate to minimize excess inventory and other drawbacks associated with it.
Although consigning surplus inventory is an evergreen option that will help you manage surplus inventory, you can consider collaborating with suppliers as your last option.
Sell to Liquidator
A liquidator is a person or a company that buys non-saleable products in bulk at a high discount and resells them using their brand name and effective marketing and promotion strategies. Such people buy surplus stock from different companies at discounts,
modify the products as per the trends, and resell them to the customers at an affordable price with their brand name. Remember that you won’t get any additional profit or commission on selling such goods, as in the case of consigning. You can easily find liquidators in B2B online marketplaces.
Selling Online
The online marketplace is full of e-commerce sites like eBay, Walmart, Amazon, Best Buy, Etsy, etc., offering a simple way to reach your customers directly.
These platforms allow you to sell your extra inventory to customers outside of your own local area, particularly to those who might be interested in your product but aren’t aware of it.
You can use promotional campaigns, bundles and discounts, holiday marketing techniques, countdown sales, etc., to sell your surplus inventory using online platforms.
Donations and Tax Benefits
Donating surplus inventory to some NGO or other charitable institution is a win-win situation for you as it clears excess inventory as well as leads to tax deductions for a social cause. However, not every type of donation is subject to tax deduction;
therefore, make sure to check your excess inventory and whether the organization to which you are donating qualifies for a tax deduction or not. Your accountant can help you determine this and help you make the right decision.
Sales and Promotions
There are different types of sales and promotion methods to sell surplus inventory at a lower cost to attract customers and increase sales. You can use a ticking timer, limited-time discount, bundle deals, flash sale events, festive sales, email marketing campaigns, cross-selling, clearance sales, etc. These discount and promotion strategies generate FOMO among clients, encouraging them to buy your products.
Conclusion
In conclusion, we can say that surplus inventory can be used as a source to earn some money by implementing effective strategies and methods. We have discussed some of the best strategies for managing surplus inventory, including consigning, discounts, sales, bundling, online selling, remarketing, etc. These strategies allow you to optimize resources, reduce wastage, clear space, and increase cash flow, which ultimately helps you manage your business more effectively and efficiently.
