Posted on 23 January, 2019 | 5 mins
Has Christmas left you with a slew of stock left over? Has a customer pulled out of an order leaving you with products itching to be sold but sat redundant on the shelves? Has 2019 arrived but you have a warehouse full of 2018 stock that needs to go sooner rather than later?
The list of reasons why you might find yourself overstocked is as long as it is wide. And it’s not a great position to be in.
Cash flow in retail is infamously “lumpy”—the sales pipeline can be fully flowing in some months but reduced to a trickle in others. You’ll want to smooth out these highs and lows as best you can, and one way is by selling slow-moving stock.
But there’s also a bright side.
When asked 1 why customers choose to shop with a particular retailer, the most common answer is “because they have the items I want in stock”.
It also brings people coming back for more. When shoppers are asked 2 to rank store features that make them loyal to a particular store, they say:
- Good prices (59%)
- They trust the brand (43%)
- Items are in stock (37%).
In a strange way, you have a sales advantage with your over-stocked store. So, it’s time to start selling. Here are five ways to liquidate that redundant inventory.
1. Having a sale
The average small business owner spends 90 hours a month managing inventory 3. That’s around half of the standard working month just spent managing product sourcing, stock levels, purchase orders and sales orders.
So, our first tip is simple, quick and effective… Discount your products and have a sale.
You’ll want to be careful of your margins (which you can find out more about through your data dashboard) and price to perfection.
This could be a great time to try out some psychological pricing hacks, three of which we’ve delved into in a recent blog post.
2. Bundling your products
Did you know, only 3% of smaller retailers use product bundling? Compare this to medium-sized and larger retailers, 8% of whom price bundle, and an interesting gap has formed. 3
And why? There’s nothing stopping smaller stores from bundling products together and selling them together for a discount. In fact, when things like delivery costs are considered—which could be lower when shipping many items at once—smaller retailers might be the ones most set to benefit.
You see price bundling everywhere. If you’ve ever purchased a satellite television package and not used some of the channels you still pay for, that’s bundling in its purest form. If you’ve ever ordered a meal in a restaurant instead of selecting individual ingredients you’d like to eat, that’s technically bundling.
And your business can likely do the same. You might even think about bundling your slowest-moving products with some of your best-selling ones—you can see which products they are on your dashboard. Alternatively, you might choose a few products you’re overstocked with, to help move them more quickly.
To learn more about price bundling—and some other pricing options you might find useful for shifting old stock—take a look at our recent infographic: the seven best pricing strategies for small businesses.
3. Offering them as free gifts
While you’re not in the business of giving products away, it can help to drum up business in the long term, should you do it well.
In a sense, items have more than one value. You might decide to use them as testers, so your sales representatives can show them to potential customers; you could run an online competition where participants win a product in exchange for, say, signing up to your newsletter; or you can simply donate some overstocked items to charity.
Using old stock as samples turns them into sales tools. An online competition is like trading your surplus stock for something potentially more valuable to you: a closer relationship with your customers, and a way to get your brand out in front of new people.
Meanwhile, donating them to charities has a number of unique advantages. You can build a better relationship with your customers and attract new shoppers, 33% of whom say they prefer to do businesses with brands that do some form of social good. 4
As a marketing opportunity, you can build trust in your brand, as people see you doing something beneficial to society. You might also find tax advantages from making charitable donations, too.
Of course, it depends what your selling and your financial capacity to give things away. But by thinking creatively, you can find new ways to unlock the alternative value of your overstocked products.
4. Making use of online marketplaces
Retailers know as much as anyone that the world wide web lives up to its grandiose name. Frankly, it’s massive.
It’s hard to get people to find your website among so much competition, never mind buying your products.
So, consider using someone else’s website. Online marketplaces like eBay and Amazon might be part of your competition, but they’re also channels to sell your products.
It was in 2017 when the value of goods sold by third parties on Amazon’s website actually exceeded those sold by Amazon itself. In particular, vendors like to take advantage of Amazon’s Goliath-like logistics capabilities and fulfilment services to cut the costs of delivery, customer service and returns.
The trade-off is that these marketplaces will take a cut from what you sell, usually as a listing fee. While you might not want to snip into the profit margins of your best-selling products, you may feel comfortable taking less of a profit on the items you want to sell quickly—your overstocked products.
5. Refreshing and remarketing
Sometimes, the reason for slow sales isn’t actually to do with the product itself but how it’s sold or marketed. If your overstocked items are poorly presented online, hidden away in your store or disregarded by your sales staff, it’s no wonder you’re stuck with so many of them.
If you think this could be an issue in your business, consider spending a little time refreshing and remarketing the product in question.
Take new, refreshed pictures of the items for your website; move the products to a better position in your store and update their presentation so they stand out to customers; educate your staff on the products so they’re selling them in their best light, or even incentivise staff with bonuses for selling the items you want gone.
You might also decide to focus some of your marketing efforts on those products, paying for social media promotions or writing a blog post on each one's benefits. You’ll likely have to pay for some of these activities, but they could be just what you need to put your overstocked items in front of a new, hungry-to-buy audience.
Seeing what’s working with 9 Spokes
Whatever you choose to do to liquidate your surplus inventory, it’s important to find out quickly what’s working and what isn’t.
Are the profit margins on your online marketplace sales too thin? Are your marketing tactics working for that promotion? Are your high-stock items selling in bundles? Your app data can tell you all this and more.
Connect your apps to your free 9 Spokes data dashboard and you can see all these metrics alongside dozens of others in easily readable charts and graphs.
It means you can see what’s working in your storeroom, through your sales channels and in your marketing efforts, all in one place. Give it a go for free, and let us know how you get on!