In uncertain business times, business owners think about stocking up the inventory to meet customers’ requirements without fail. The business might purchase over owing to projected demands or the crisis. However, sometimes the business does not nurture sales as expected. If you can relate well to this, you are not alone in the league.
What does Excess inventory symbolize?
Excess inventory is the high amount of a product that business stocks up as per the projected customer sales, but a maximum of it remains unsold. It represents mismanagement due to over-purchase, an inflationary economy, inaccurate sales projections, unforeseen weather changes, etc.
What could be the Potential reasons behind excess inventory?
Excess inventory could result from several factors:
- Shipment delays due to international regulation failure, processing times, and order frequency.
- Issues in System integration, EDI, Purchase orders, and nearly no business transparency
- The product does not meet the quality or durability standards.
- Lack of market understanding and seasonal market
- Complex supply chains
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5 Potential Strategies to Manage Excess Stock Build-up
Before you re-strategize your brand motive, tap into the existing inventory/stock and check out the following measures to avoid weakening your brand.
1) Identify the risk associated with inventory
Sometimes, it is natural to have a higher stock of something than the sales. For example, if you have a high stock of something selling in a flash. In this case, it is not problematic. However, if you have a huge stock of something that is barely moving, it catches the concern.
You may stop ordering different quantities and prevent its expiry. Products having seasonal or volatile demand may not sell quickly. You can sell it at a discount or giveaway it if nothing works.
2) Tap into the cause behind over-stocking
Many business owners regret loss without tapping into the root cause of the issue. What provoked over-stocking at the first point? Break the requirements and identify the root cause. Analyze whether:
- Did you miss out on something relevant while forecasting?
- Did you mitigate the supply risks by evaluating the supply chain process and its success?
- Did you fear losing the stock to competitors? If yes, how to counter it?
- Did the team take some casual decisions on updating the stock and inventory?
There exist multiple questions that you must seek answers to before re-stock.
3) Sell the item with the most-selling item
Product bundling is one of the best ways to sell off excess stock. For example, if your chain of PCs is selling well, you can pair it off with keyboards. You can sell keyboards for free along with the PC.
In this way, you can clear the over-filled stock and improve the brand’s reputation. Bundling is an apt way to tackle the excess stock, as it changes the value proposition of slow-moving items. It is important to ensure the good stock of the best-selling item.
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4) Revise the Price of the overstocked product
Amid the corona wave, people got used to cyclic promotions. Thus, identify this requirement of your customers. Please review the pricing of the product portfolio and adjust the things to sell at the most attractive prices.
For this, analyze the competitive market scale and evaluate the right price for your product. Increasing your margin must benefit other parameters. It is about understanding the market and the product’s utility among customers. Can you create one with the marketing strategy or a stunning copy if there is no demand? Think about it.
5) Donate Items to Charity
While it may not seem important, you can do so if you have good stock. As per a recent survey, over 84% of customers engage with companies that are into charity causes. Thus, it is a great way to leverage the opportunity and attract customers to your brand.
Bottom line
These are some ways that a business can manage excess inventory efficiently. Do you have any other ideas? Feel free to share.
