Having excess unsold or unused inventory is a headache. Every day that your excess inventory spends sitting in your warehouse is a loss of profit, as you’re not seeing a return on the investment that you made in the inventory in the first place.
The question is: how do you liquidate inventory when it starts piling up? There are different views about what the best way to let go of old inventory might be, but these 4 tried and true methods are sure to help you recover your losses — and maybe even see a profit. Read on to find out how you can clean house and see your bottom line recover after some inventory turned out not to move as quickly as you’d hoped.
- Find a professional liquidator
- Attempt to return to suppliers
- Trade with industry partners
- Start an auction
- Excess inventory: key liquidation takeaways
Let’s start with one of the most straightforward options that business owners have when facing a buildup of excess stock without any clear options for how to clear it.
Find a professional liquidator
Finding a professional liquidator might seem like you’re giving up right out the gates. After all, there must be some other strategy that can recoup more of your losses that you haven’t tried. And the truth is that this might be the case. However, there’s an important variable that you might be forgetting to factor in: time.
As the old saying goes, time is money. And the more time you have available to you, the more money you can make.
So, the longer that your assets sit collecting dust in a warehouse, the longer you’re spending not making money. For example, there might be new shipments that you could be receiving and turning around for a profit, but your existing surplus inventory might be keeping you from being able to receive them.
What’s more, spending the time attempting to find a new place for your goods, a new buyer to take them, or setting up an auction for them is valuable man-hours that could be spent on other, more profitable activities. Using a professional liquidator service gets the excess inventory out of your hair immediately. In the business world, that can make a huge difference.
Attempt to return to suppliers
Another option you may have is to simply return your inventory to the suppliers who you purchased them from. Not every supplier — and not every type of inventory — can be easily returned (for example, raw materials that you’ve processed likely cannot be returned), but this can be a good option in cases where they can be.
Similar to working with a professional liquidator, by returning your goods, you can more easily and quickly recoup losses by returning unsold inventory directly to suppliers. Keep in mind, however, that not every supplier will allow returns as part of their policy. It’s a good idea to at least call and ask if this is possible if you are overstocked, as the call will only take a few minutes, and could wind up saving you a ton of time and hassle.
Trade with industry partners
Chances are, you might have something that someone else needs. The local market in your area might not be too interested in the excess supply that you purchased, but your industry partner halfway across the country might have a huge source of demand to tap into.
If you do find yourself in a situation with excess product piling up on your shelves, it’s always smart to call around and see if anyone is willing to take it off your hands for you. They might buy it off you, or they might simply trade you for another product that you do have more use for.
If you do end up choosing this option, be sure to calculate the costs of shipping your excess inventory to the industry partner you’re trading with. Many business owners fail to factor in travel and delivery costs, and wind up paying more than they had expected, reducing the total amount of value that is recouped when you complete your trade.
Start an auction
When all else fails, an auction can be a great way to recoup losses. Depending on the industry you work in, auctioning off excess supply could be a lucrative way to tap into new markets. For example, if you sell summertime leisure wear, but demand is low in your local market due to colder weather, auctioning your excess inventory online could help you seriously increase sales, especially if people who live in warmer climates are able to bid on the items, too.
Auctioning can come with significant downsides, however. As mentioned previously, you might lose significant profits to shipping and delivery costs. Additionally, auctioning excess inventory takes time — between making listings and managing hours, you’re sinking a good amount of worker hours into managing your auction. And, on top of that, it’s likely that not everything will sell. Keep these risks and costs in mind as you think about auctioning excess stock.
Excess inventory: key liquidation takeaways
Stuck with an overstock of inventory? Here’s what you need to remember about offloading excess stock:
- You can always try to find a professional liquidator, who can help buy you out of your excess product.
- If possible, you can attempt to excess inventory return to suppliers.
- Trade with industry partners who could make use of your excess supply — especially if they have product that you can trade for that you have a use for.
- You can always try to auction some of your product online or in person, but remember that this is by no means a guaranteed way to recoup your losses.
Excess stock is a frustrating problem to have. However, with the right strategies, it is possible to recoup losses, and potentially even turn a profit. And remember, the sooner you act, the better: you don’t want to be losing valuable productivity time sorting out your excess inventory solution.
About the Guest Author : – Michael Lawrence
Michael Lawrence is the Director of B2B E-commerce for Direct Liquidation, an online marketplace connecting buyers with sellers of wholesale and liquidation inventory. Michael holds a Bachelor of Applied Science in Civil Engineering from the University of Waterloo. Over his career, Michael has worked for several Fortune 500 companies in a variety of technology-related roles as well as developed his own online businesses as an entrepreneur. In his previous role Michael was instrumental in propelling his business into the top 1000 most visited websites in the world.