A continuous flow of inventory is a major goal for ecommerce businesses. But when seasonal, market, or other fluctuations negatively affect your sales, you may find yourself stuck with excess inventory. Consider the following tips to address the excess inventory you have, and keep more of it from building up.
Make a plan ASAP
The longer you wait to do something about your excess inventory, the more problems it causes by taking up space (which is even worse if you are leasing additional space just for excess), increasing taxes (if you wait until that time of year), and potentially devaluing (if the next iteration of a product is around the corner, demand for the previous iteration may drop even lower).
Liquidate in moderation
Perhaps you're willing to deeply discount excess inventory to get rid of it quickly. But, if you find yourself doing that on a consistent basis, it can spell trouble for your profitability. If you liquidate regularly, you’re losing out on profits without addressing the root cause of the excess inventory. Consider a change in marketing strategy to renew consumer interest, or move on to different product lines.
Partner with a charity
Donating your products can do more than just spread goodwill. If your business is eligible for them, the federal tax deductions you receive may even be better than what you’d get from liquidation. A gifts-in-kind organization can help you donate excess inventory to where it’s needed.
Optimize your Inventory Strategy
Because excess inventory can tie up your working capital and warehouse space, it’s best to try and avoid it in the first place. With Fulfillment Works, our state-of-the art inventory control management system is fully automated to help you manage your inventory by sending out real-time movement history reports, current usage analysis reports, and other metrics to maximize the efficiency of your inventory levels.
From its humble beginnings as an online bookstore and throughout its steady growth into the titan of industry that it is today, Amazon has done a lot for the field of ecommerce. When Amazon started up in 1994, ecommerce was barely a thing and the Internet was still exotic and confusing for most consumers. In 1995, astronomer and author Clifford Stoll sneered at the idea of ecommerce, writing in Newsweek:
“We’re promised instant catalog shopping–just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete [sic]. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet–which there isn’t–the network is missing a most essential ingredient of capitalism: salespeople.”
Amazon was one of the leaders in tackling the issues addressed in that sentiment. Over the years, Amazon refined their customer service offerings to earn shopper trust and loyalty, pushed the development of safe online transactions, and evolved to keep pace with consumer demand by increasing selection and reducing shipping times.
This growth had a two-fold impact. Firstly, it’s served as a model of success for countless ecommerce businesses to follow, while simultaneously creating the space for them to compete by increasing the popularity of, and demand for, ecommerce among everyday shoppers. Secondly, it acted as a catalyst for improvements in the supplier and fulfillment industries – driving down costs, improving logistics and inventory tracking, and spurring innovations to further increase the viability of the ecommerce industry.
Last month, Amazon.com celebrated its 22nd anniversary. The ecommerce industry has gone through so many changes in that time period, and Amazon has either been at the forefront of those changes, or been able to adapt to them successfully. And if Amazon’s track record is any indication, they’ll keep innovating for many more years to come.
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Fulfillment Works is a full-service, end-to-end fulfillment company serving start-ups and Fortune 500 giants alike, across North America and beyond. We've attracted these clients by showcasing our strengths as a company – including our 99.9% warehouse inventory accuracy. More...