Excess inventory: How do companies get stuck with too much inventory?
Excess inventory is something we all get stuck with from time to time. The obvious question to ask is: how do companies normally get stuck with excess inventory? The main reasons for excess or obsolete inventory are usually a cancelled order, an incorrect forecast, bad or no marketing, or sometimes the product just does not take off! Quite often your customer will place a large order and for unknown reasons, they will cancel the order, leaving you with the stock. Other times, you might assume you will sell a large amount of stock and it turns out that the market will not buy it. Finally, your marketing might not have targeted the right buyers or it was too hard to get the product and price mix right. Regardless of the reason, you now need to work out how to sell excess inventory. First, I will touch on why too much inventory is not good for your business, and then I will share my best tips on how to sell surplus inventory.
Too Much Inventory: Why Is It a Bad Thing?
When you have too much inventory, your working capital is tied up and this means that you cannot allocate cash to other areas of your business that may need it. You might be missing out on opportunities to invest in new opportunities, which have higher profit margins and growth curves. The other problem with having too much inventory is that your focus is taken off your main business. You are consumed with trying to clear the excess inventory instead of working on the main business objective, making more sales of higher margin products. On the other hand, too little excess inventory can be a problem as well. Having insufficient stock can lead to missed sales opportunities and customer dissatisfaction, which can negatively impact your brand's reputation and revenue.
Obsolete Inventory: How to Clear It
If you have obsolete inventory, naturally you want to clear it as soon as possible. There are a few ways you can clear out your obsolete inventory quickly by doing it yourself:
Try a Closed Door Sale: Let your best customers know that you are having a one-off sale, outside of business hours, where the obsolete inventory will be available for sale at ridiculous prices for a few hours only. A closed door sale can often work very well. You just need to ensure that you have a sizeable enough database.
Partner with Other Businesses: If you do not have a database of customers to promote a closed door sale to, consider what other type of business could you partner with to make the offer to their customer base? Joint ventures and host/beneficiary partnerships are a very powerful way to access a completely different set of customers.
Document Your Inventory: It is important to document your excess inventory in a way that is easy for prospective buyers to understand. Whenever we sell excess inventory, we use a professional copywriter and graphic designer to format the inventory surplus in a way that is appealing for the potential buyer. Create detailed product descriptions, including specifications, photos, and suggested uses to attract buyers.
Leverage Online Marketplaces: Use platforms like eBay, Amazon, or specialized B2B marketplaces to list your excess inventory. These platforms have a wide reach and can help you connect with buyers who are specifically looking for deals on surplus stock.
Sell Excess Inventory Fast Using Our Service
If you have tried everything and still cannot sell your excess inventory, then it is probably a good idea to get in touch with us. We have been buying and selling surplus inventory for over 20 years from our Sydney warehouse. Sometimes we can buy your excess inventory straight away on the same day, and sometimes it takes a bit longer. It depends on what type of inventory surplus you have and the current state of the market.
Additional Strategies for Managing Excess Inventory
Optimize Your Forecasting: Implement advanced forecasting tools and techniques to improve the accuracy of your demand predictions. Utilize historical sales data, market trends, and seasonal factors to create more reliable forecasts.
Implement Inventory Management Software: Use inventory management software to keep track of your stock levels in real-time. This will help you identify slow-moving items and adjust your ordering patterns accordingly.
Offer Bundles and Discounts: Create bundles of products that include your excess inventory along with popular items. Offer discounts on these bundles to encourage customers to purchase more.
Donate to Charities: Consider donating your excess inventory to charitable organizations. Not only will this help you clear out stock, but it can also provide you with tax benefits and improve your company's reputation.
Return to Suppliers: If possible, negotiate with your suppliers to return unsold inventory. Some suppliers may offer buyback programs or exchanges that can help you mitigate the financial impact of excess stock.
Benefits of Professional Inventory Management Services
Partnering with a professional inventory management service can provide numerous benefits, including:
Expertise in Liquidation: Professionals have the experience and connections to quickly and efficiently liquidate your excess inventory. They can negotiate better deals and find buyers that you may not have access to on your own.
Time Savings: Managing excess inventory can be time-consuming and distract you from your core business activities. Outsourcing this task allows you to focus on growing your business while experts handle the inventory.
Maximized Returns: Professional services aim to get the best possible price for your excess inventory, maximizing your returns and minimizing losses.
Get a Free Consultation
If you have excess inventory, get in touch with us for a free consultation and we will give you a report on the state of the market. Call us on +61-2-9893 1899 or 0411 430 047. You can also email john@coorey.com to let us know more about your excess inventory.
Frequently Asked Questions
What causes excess inventory?
Excess inventory is often caused by factors such as cancelled orders, incorrect sales forecasts, ineffective marketing strategies, or products failing to meet market demand.
Why is excess inventory bad for business?
Excess inventory ties up working capital, prevents investment in new opportunities, and distracts from the main business objectives, leading to potential financial and operational issues.
How can I clear obsolete inventory quickly?
Some effective strategies include holding a closed door sale, partnering with other businesses, documenting inventory attractively, leveraging online marketplaces, and seeking professional inventory management services.
Can donating excess inventory be beneficial?
Yes, donating excess inventory can provide tax benefits, improve your company's reputation, and help clear out stock quickly.
What role does inventory management software play in preventing excess inventory?
Inventory management software helps track stock levels in real-time, identify slow-moving items, and adjust ordering patterns to prevent overstocking and ensure more accurate inventory control.
How can professional inventory management services help with excess inventory?
Professional services have the expertise, connections, and resources to efficiently liquidate excess inventory, saving you time and maximizing your returns.
Conclusion
Managing excess inventory effectively is crucial for maintaining a healthy business. By understanding the causes of excess stock and implementing strategic solutions, you can free up capital, focus on core business activities, and avoid potential financial pitfalls. If you're struggling with excess inventory, consider leveraging professional services to streamline the process and achieve the best possible outcomes.