Inventory management requires continuous attention and it is vital to your businesses success. Even the most successful businesses still come across problems each year, one of the most common problem is slow-moving and excess inventory.
This usually happens at the beginning of the year as well as at the end of seasons when new products come into demand. Instead of expecting these items to suddenly become popular and hoping that someone will purchase them all of a sudden, it is important to find another method of clearing your stock.
Here are a few things to keep in mind when reviewing slow-moving and excess inventory:
- Cash flow is important for your business, even if your products are being sold at a very low profit margin or even at a loss. It is better to sell your products at a loss than not selling them at all as they end up taking up shelf space.
- Inventory should usually be sold within 90-120 days. If items have not moved in this time period then it is probably time to get rid of them.
- Holding onto old inventory is costing you. Ultimately you are paying for space that could otherwise be used for fresh inventory.
It is important to understand that the problem of slow moving and excess inventory happens to every retailer. Even if you research your market accurately nothing ever goes to plan so there is no need to stress when this happens.
Have a scale
Of course the most obvious way to clear your inventory is to discount your excess stock, you will need to discount greatly in order to create a demand for these products. You should try to keep frequency of sales in mind because if you have too many sales throughout the year, your products may lose their demand and effectiveness.
There are four main types of sales
Clearance Sale
In order to keep customers captivated you should aim to have a couple of clearance sales every year. This is the best way of getting rid of any stock that has not sold well in the past few months. Reaching out to shoppers by using social media and e-mail is a great way of hitting customers with offers they cannot resist and drives them to make a purchase.
Flash Sale
Urgency and fear of missing drives customers to your products. Limited sale times gives customers a sense of urgency and encourages them to purchase from you.
Specific Items Sale
If you do not focus specifically to certain sales you may not achieve the result you have anticipated so try focusing on certain products.
Seasonal Sales
As the seasons change your product line will too. This is the time to advertise to people who are looking for deals and this also make room for seasonal stock on your website.
Remarketing your products and change things around
Often the way you market a certain product can affect the way it sells. Sometimes you just need to give your products a revamp and make quick changes that effectively increase your sales.
You can even consider changing the location of certain items on your website. Visibility and accessibility improvements could help you move out-of-date inventory.
Let’s face it, excess and old inventory is unavoidable. However, if you’re a knowledgeable retailer who can find ways to turn your inventory into cash your problems will be reduced. The various tactics mentioned above should provide you with some inspired ways to clear your shelf space and increase your cash flow as a result.
You can use your supply chain to help generate a greater cash flow, here at BIS Henderson, we can help you improve your inventory management with our experience in international supply chain management, ensuring you enjoy lasting improvements and sustained cost savings.
