Excess inventory is an issue that all companies should try to avoid by accurately forecasting demand. Surplus inventory is a cost to the company and can create issues if the stock is not generating profits. While slow-moving inventory can be a problem, it is an issue that can be solved. Different inventory control tactics can help reduce the impact that excess stock can have on a company.
How Do Companies Get Rid Of Excess Inventory?
Return the Stock to the Supplier
The first thing a company will consider is returning the stock to the supplier. Upon returning the stock, the company will then receive a credit note or get the money back if it was paid for upfront. However, returning stock is highly dependent on the relationship between a company and the supplier. Some suppliers may be willing to take the stock back and provide the company with the full credit amount for the inventory. In other cases, suppliers may take the stock back but charge a handling fee for the returning of the stock, meaning the company will receive slightly less than the original amount.
If the company is unable to send the stock back to the supplier, there are still other ways to tackle the excess inventory.
Work With Others in the Industry
Another way to reduce the inventory level is to approach other companies that may be able to use the excess inventory. Companies can offer industry partners the inventory at the same cost it was purchased for or perhaps even slightly more. However, they should not expect to make as much profit compared to the normal sales of the inventory. Nonetheless, it will reduce the risk of excess stock and not generate a loss.
Run a Special or Flash Sale
One way to quickly reduce stock levels is by offering the inventory at a lower rate. It can help to promote the fact that the product is on sale. Oftentimes this will entice individuals or businesses to purchase more than usual to take advantage of the discounted pricing.
Depending on the urgency and amount of excess stock, a company will decide whether to run the special for a certain period of time or until the desired inventory level is reached. Clearance sales can also include quantity deals. This means that if a certain amount is purchased, a lower rate will be offered. Although excess inventory is not sold at full price, the company is still able to make a profit and reduce the risks associated with excess inventory.
Remarket the Inventory
If the company is not willing to sell the products at a reduced rate, they can simply look to remarket the product. Companies may remarket products through increased communication among current and potential customers as well as traditional or digital marketing materials.
Remarketing is about enhancing the brand and its offerings to the target audience in order to increase sales and reduce inventory levels. While a company should have a constant marketing strategy in place, remarketing a specific product can help customers focus more on that specific inventory.
Additional Reading: What Should Inventory to Sales Be?
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