Is Stale Inventory Killing Your Business?
What’s stale inventory and why is it so dangerous?
It’s all the merchandise that sits in your store or or in storage for months on end with no sales.
No matter what you sell or where you sell it, stale inventory is a costly business practice that drains your profits and takes a toll on you psychologically.
It’s pretty simple: If a product sits on your shelf and doesn’t sell, you’re losing money on your investment. And worse, all your inventory that isn’t selling robs you of potential revenue if not replaced with inventory that does sell.
In order to run a profitable business, you must manage your inventory efficiently.
But you also have to stay true to your main business goal of maximizing long-term profits. Any attempt to reduce inventory should be in harmony with your long-term goals.
What can you do to turn your excess inventory into cash?
Cash flow is the key to your small business health.
Stale inventory stops the cash from flowing and eliminates opportunities to launch or sell new products and services.
In order to reduce your stale inventory, you’ll need to compare risks and rewards. You’re likely to take a monetary loss to move inventory, but what can you do with the cash and opportunities it generates?
Let’s take a look at some things you can do to turnover your stale inventory quickly.
7 Steps To Eliminating Your Excess Inventory
- Audit Your Inventory – The first step in turning dead inventory into cash is to perform and audit and grade your inventory objectively. You should be turning over inventory every 90-120 days. Items that take longer to sell need to go, so be realistic about market value and what you can get for what you have.
- Reduce Restocking Times – If you believe your products will sell and would rather stick with your current inventory, change your restocking times or amounts. Keep your inventory lean by ordering less or less often.
- Eliminate Obsolete Stock – Getting rid of inventory that is seasonal or has run its’ course should be a top priority. Use this inventory as loss leaders, cross promotional collateral or even giveaways to increase awareness for new products.
- Have A Tent Sale – Offering deep discounts is rarely a good practice, but can be an effective means of moving stale inventory while generating more publicity for your other products. Launch a tent sale that includes slashed prices, music, visual displays or a contest to build excitement and curiosity.
- Take Better Photographs – If you do any kind of online selling or print advertising, your product images can be the defining factor in making a sale. Even obsolete inventory can benefit from an updated image and may enjoy new life and increased sales.
- Bundle With Bestsellers – Piggyback off the success of your best selling products and services by bundling stale inventory into new packages. Create attractive prices that reduce buyer objections and move as much stale inventory as possible.
- Sell Off In Lots – You can also bundle as much of your stale inventory together and sell off as a lot, which are popular among eBayers and consignment shops. If you have an eBay account and the inclination, you can sell your lots directly online to buyers around the world.
Excess inventory can drag your business down and slowly robs you of profits and potential growth opportunities.
Audit your inventory and grade it objectively with pricing based on your specific risk/reward outlook. Once you’ve determined a fair price, put the other ideas above into action to eliminate as much of your stale or obsolete inventory as possible.
By having a strategic plan of action for your excess inventory, you’ll enjoy increased cash flow and better selling products.