Having too much inventory stock on hand costs your business money that could be put to better use. Holding too much inventory stock raises your storage costs and as a result the cost of goods sold.
Centralised inventory management system
Most businesses will experience peaks and dips. In the relatively calmer periods of business, why not take this opportunity to review your inventory management processes? If your business is still using manual processes to keep track of inventory stock such as spreadsheets, you may want to consider the benefits of a centralised, cloud-based inventory management system. Not only will this simplify processes of recording key inventory data, but will ensure that data is located in a central place when you need it. It also diminishes human error as opposed to manually imputing data into spreadsheets, that can save you time and money.
Some businesses may do a number of inventory stock “clean ups” throughout the business year, such as reorganising the warehouse and counting stock to ensure it matches records. Although this short term solution can work, you will find businesses needing to do these inventory stock clean ups again and again.
It’s a good idea to organise processes now and create systems to keep it organised. For example, instead of inventory stock arriving and sitting in boxes or going straight to shelves, businesses can use barcodes to record the incoming inventory before it is put on shelves. This will directly link with your businesses inventory management system so you can keep track of inventory stock quantity and location, and also when it is sold to your customers.
Accurate record keeping is essential when trying to stay organised and help prevent issues of excess inventory stock or understocking.
Excess inventory stock
As the seasons change, many retailers find that they need to change products or product lines. Last season’s trends are already being replaced, and new technologies upgraded. In order to keep cash flowing, these older items must go while there is still demand for them. Your business needs to know when to act as to not be stuck with obsolete inventory stock that will not sell at all. Slow moving and out-of-season products need to be cleared out, so that money and space can be made for newer or better and faster selling items that in turn can return more profit.
Instead of resorting to discounting products, try these tactics out instead:
Target loyal customers first
Try offering your customers who frequently purchase from your business clearance items first. For example, your business could send an email to your top 15 percent of customers to offer them a chance to purchase sale items at a discounted price. Granting loyal customers early access to sales will strengthen the relationship and build greater trust in the business.
Marketplaces and auction sites
A proven strategy for selling excess stock is post clearance items on market places such as Amazon or auction sites such as eBay. Items can be listed under an alternative business name as not to dilute your premium brand, or sell items in lots to other retailers. Auction sites can also give you an idea of what the market is willing to pay for these clearance goods to help direct your business sales decisions.
Many retail businesses have discovered ways to successfully clear out excess or unwanted inventory stock. As is often the case with inventory spring cleaning, you may not recover the full amount you invested in the items, but you will receive some cash without impacting your brand negatively. It is certainly useful to consider inventory management systems that will work for your business to help decrease excess inventory stock in future.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.