As hard as you work to move your inventory quickly, some of it seems to grab a hold of your storeroom shelves, refusing to let go. Stalled inventory is nothing new. It's a part of selling goods that every business needs to understand. But just because some items are slow to sell, don't believe they're necessarily costing you money.
On the contrary, these goods might be silently fueling your sell-through rates. Don't believe it? Here's how to take a new look at your old stock, and how to recognize and maximize its value to your business.
Yes, old inventory is a cost
If you think you've stepped into the Bizarro world where inventory that doesn't sell is considered a benefit to your business, relax; you're still on planet Earth. It's true that inventory represents cash, money that's tied up in goods that were intended to return your investment plus additional profit. When those goods don't sell, you cash remains locked away from you and the potential to do something else with it.
Inventory fills your shelves, physical or virtual, and provides shoppers the potential to do what they came to do: shop
In this regard, surely, stale inventory is a cost to your business. But the hidden truth is that there's benefit in a warehouse that has some goods that seem reluctant to turn into revenue.
There's appeal in selection
See if this situation sounds familiar to you: There's a business, online or in your local area, that you've just discovered, and you're compelled to give it a look. You wander over and find a very scant inventory, causing you to wonder if the business is just starting up or is woefully on the way out—maybe both!
Now, look at your stalled inventory in a new light. It fills your shelves, physical or virtual, and provides shoppers the potential to do what they came to do: shop! With plenty of goods to choose from, that languishing inventory serves a vital role in providing variety for your visitors, enticing them to spend more time strolling your aisles. The more time shoppers spend in your store, the better your opportunity to make a sale.
Old inventory can stimulate sales
And that's the key: Shoppers like to shop. Often, they'll buy items on impulse, not caring if it's inventory you brought in last week or last year. Of course, the working assumption here is that you are bringing in goods that do sell quickly and, so long as you are, that stalled inventory provides accompaniment to your faster-selling items (and keeps from having too much of your cash tied up in goods).
Sale tactics can help generate some movement of the goods while stimulating traffic into your store
But, in regards to those "old maids" sitting idly on your shelves, there are some ways to get them to do what those more popular goods are doing:
Have a sale: The most common methods retailers use to get stubborn inventory to sell is to put it on sale. Shoppers these days are scouring the sales venues for discounts of at least 20-percent to 30-percent off regular prices. Check your profit margins of slow-moving goods and then stage a sale to draw in customers.
You can cut margin erosion by offering a percentage of "select items" (that is, your stale goods) when shoppers buy another item at regular price. There are also the two-for-one sales, always popular with bargain hunters. Put that older inventory to work for you by putting it on sale.
Bundle items: Another long-standing technique to move inventory is to create bundles that pairs fast-selling goods with slower-selling items. You'll want to offer a sort of incentive—a reasonable price break—for bundled goods.
Have a limited-time clearance: Although you could take a loss by slashing prices of stale goods, you might find it necessary to move it out and recoup some of your investment. Stage a clearance sale, perhaps for just a limited time, to give shoppers chance at "insanely low prices." You get the idea.
Even though the sale tactics won't garner you the profits you originally intended, they can help generate some movement of the goods while stimulating traffic into your store; that could mean better sell-through rates and potential for repeat business.
You can make old inventory look new
There's plenty you can do to reposition what you've had on your shelves for a while
And before you completely resign those stale goods to becoming clearance fodder, take another look at them to see if they just need to be spruced. There's plenty you can do to reposition what you've had on your shelves for a while. Here are some of the simplest ways to give slow-moving goods a second chance:
Start with fresh new images. In the online realm, an old image of an item is enough to make it look unappealing to shoppers. They'll click right on by. Take new photos of your older goods to give them a burst of newness and excitement. Make sure your photos are crisp, clean and provide good detail of the items. Multiple images also help online shoppers get better acquainted with something they might like to purchase.
Change their placement in your store. Whether brick-and-mortar or online, old goods tend to get pushed back into the recesses of the sales venue. Dust them off, polish them up (as with new photos) and bring them to the front of your store. It could be the reason the items weren't selling is because shoppers couldn't easily find them.
Give them a purpose in your store. Even this month's trendy and timely goods will become next month's old inventory. Categorize your items to help shoppers find what might interest them: "Hot Arrivals," "On Sale This Week" and "Shoppers' Favorites" are ways to give items, new or old, meaning and appeal to your customers.
Stale inventory isn't what any business wants or needs, but when seen in a different light, it can serve other vital purposes until the time it does sell. Don't give up on your older inventory; give it another chance, a second life and an opportunity to draw shoppers into your store.
Other Entries by this Author
Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay…and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues.
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