At some point during the life of your small business, you may face the consequences of carrying excess inventory. While having enough of your products is important to keep shelves full, having more inventory than you can sell in the short term is dangerous to the health of your business. Excess inventory remaining unsold costs your business in terms of unearned revenue, impacts your cash flow, and takes up real estate in storage space that could be used for other items. Take these steps to avoid physical and financial burdens that excess inventory can impose on your business.
Top Notch Inventory Management
One of the best ways to avoid an overabundance of the products you sell is to ensure thorough and careful management of your retail inventory. Consider using a good online bookkeeping/accounting program such as Quickbooks Online that enables easy inventory tracking, reports, and management. Software that automatically updates whenever you buy or sell products, offering a quick and efficient tally of the goods you have on hand, can be a big help in effectively managing your inventory. It pays to review reports of how rapidly individual products sell so you can put together more cost-efficient inventory replenishment orders.
Product Placement and Advertising
The goal is to move excess goods out of the warehouse and onto your store shelves and then out the door in the most efficient manner possible. Facilitate this process through the use of strategic product placement within your store. While this is typically thought of as applicable to brick-and-mortar stores, using a little creative thinking can let you use this strategy for online stores, too. Feature inventory items you want to clear out on your home page or on other high-traffic pages of your website. You might publish a blog post about a certain product to stimulate customer interest.
Successfully using the tactic of strategic placement requires some research on your part in regard to what areas of your store’s layout have the highest amount of traffic or are prime areas where customers spend lengthier periods of time. Placing excess inventory in such areas makes it more likely to be viewed and purchased. Try drawing more attention to the items with catchy signage options labeling them as “Manager’s Choice,” “Pick of the Week,” or with a sign indicating that the products were sold out but have returned for a limited time only.
Slice the Price
Customers are always looking for a deal. The longer it takes to move goods from your inventory, the longer your cash flow suffers. Cutting the price of products requires a delicate balancing act. Keep in the mind how much revenue your business is potentially losing by hanging onto the goods as well as your need for bottom-line profitability. The price cut must be significant enough to encourage customers to buy it, but not so steep that you end up only breaking even – or worse, losing money on the sale.