Excess inventory: How do companies get stuck with too much inventory?

Author: John Coorey

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 unbeknown 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 you 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.

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 once 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

If you do not have a database of customers to promote a closed door sale to, 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.

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.

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.

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 to john@coorey.com to let us know more about your excess inventory.

Author: John Coorey
Managing Director