July 31, 2017      3 min read

Overstocking can have huge knock-on effects for your business, and one of the primary consequences are the associated draining of profits. Unless you can sell the excess, overstocking can be financially draining due to prolonged storage costs and the wasting outdated or expired stock.

The most effective means to negate the problems associated with excess stock is prevention. Prevention requires a strong control of inventory management and careful attention to inventory-related issues. However, there are certain methods for making the most of obsolete stock if this becomes an issue. Below, we summarize how you can turn overstocking into a business opportunity, to offset the associated financial costs of carrying excess product.

Upselling and Discounts

Consider running campaigns where customers can, for example, buy one product and get the second item half-price. This will allow you to get rid of excess stock while still offsetting original costs to some degree.

You can also sell products at a discounted rate if bought with a selection of other products. This “bundling” of products can help remove excess stock while still encouraging profit.

Another method is to offer drastically reduced prices. Offering 50% off or more for a strictly limited amount of time may allow you to make a profit, reduce stock and offset overstocking costs.

Additionally, encourage customers to refer your business to friends and family. Use excess stock as rewards for those referrals to increase demand and offset the negative effects of overstocking. You can also simply offer free gifts to long-term returning customers to encourage future spending.

Reselling

If you cannot sell your excess stock, consider selling the product to an inventory liquidator. By selling your products to an inventory liquidator, you can offset some of the original costs. An inventory liquidator will then usually go on to sell the items at a discounted rate.

Before selling to an inventory liquidator, make sure you know the value of your stock and how much you are willing to sell for before negotiations begin. You should also consider any brand sensitivities before selling to an inventory liquidator, because any damage to your brands reputation will cost you more in the long run.

For smaller amounts of stock, you can also try selling on online sites such as Overstock.com, eBay or Craigslist. You can also consider selling excess stock at auctions or a clearance vendor, if all other attempts to sell fall through.

Return excess stock

Some industrial distributors will allow returns on some products for cash or credit. This can go some way toward reimbursing the firm for the original expense incurred. It is a good idea to be proactive and engage in flexible return agreements with key suppliers from the outset, so that any excess stock in future may be returned to avoid wastage.

Donate to charity

As a last resort if the excess stock cannot be sold, consider donating the items to a local charity or community organisation. This may improve your reputation, attract new customers and encourage overall customer retention.

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