Warehouse Woes: When Excess Inventory Needs Out

Surplus. Excess inventory. Where does it go and what are the costs? Depending on how efficient your reverse supply chain is, having excess inventory can be detrimental to your profitability and take time away from core business activities. When it comes to physically storing excess stock, the added costs—depending on labor and facility expenses—can be anywhere between 11.25% and 25% over and above the cost of inventory. 

Because 20-25% of skus bring in 70-80% of sales in most businesses, having excess inventory is simply inevitable. And while it may be perceived as failure, the best way to address it is to move on from it, thereby making room for new products. Once merchandise has reached the end of its lifecycle, it’s important to offload it as quickly as possible.

Here are a few ways to help mitigate overstock:

Find the Balance Between Cost and Recovery

When it comes to the lifecycle of a product, it’s important to know the opportunity cost of holding on to something that’s past its prime. That’s why making your first price cut the largest in terms of discount can help offload, since consumers can also generally tell if they’re getting a good deal.

Set Metrics and Goals

While there’s usually a buyer who’s in charge of procuring the inventory to be sold, assigning an inventory specialist to sort through what’s left over and decide what to do with slow-selling products is key. These specialists can  develop a solution, including creating metrics for goals to meet when it comes to backorder dates and inventory return stats.

Time Promotions with Merchandise Orders 

Finding the right season for your orders may be key in mitigating the amount of excess overstock. Does your company have a marketing calendar of promotions set far enough in advance that will allow you to place a more specific quantity of product?

Leverage the Use of Online Marketplaces 

While dealing with slow-moving and excess inventory is inevitable, it’s how you deal with it that can make all the difference. Depending on your business needs, there are a number of solutions for overstock available. One of these is B-Stock. We help businesses sell their excess, returned, or other liquidation inventory directly to a diverse base of business buyers via an online auction dynamic that allows for: 

• Higher Pricing: Set up an online auction dynamic where specifically targeted buyers compete to buy your merchandise, allowing prices to go up—even comparable to reprocessing back on shelf or returning to vendor
• Channel Control: Control who sees your merchandise and who is allowed to buy it. Exposure to the right buyers ensures there is no confusion between primary (a-stock) or secondary (b-stock) channels and that your brand remains secure. 
• Velocity: Move inventory as needed—regardless of volume, time of year, or product category—with a larger buyer base made up of the right buyers
• Automation/Efficiency: Improve the operational efficiency of your liquidation program. No more spreadsheets. No more faxing. No more negotiating over the phone.

Nine out of the top 10 U.S. retailers are leveraging our platform to drive demand and achieve higher pricing, as well as a faster sales cycle—all while maintaining brand integrity. 

Let us know how we can help you offload your excess inventory by scheduling a demo today.