Successful management of inventory is the key to a successful business setup. Businesses do all that they can to optimise their inventory management and make them as efficient and cost-effective as possible. However, there are times when even the most modern and well-thought-outinventories struggle.
One of the most common problems plaguing inventories worldwide is that of excess or slow-moving goods. This is a phenomenon that usually occurs at the start of the year, or during the end of the festive season, when demand for new products is felt in the market. Ideally, products should be sold within 90-120 days, and if they aren’t, they are just costing you money and vital shelf space.
This is a problem that every retailer faces at some point in time, despite heavy research and accurate forecasting of sales. Things almost never go according to plan, and therefore you should always have a plan to clear out excess/slow-moving inventory.
Organise a Sale
This is the most obvious and effective way of clearing old stock. It is hard for the customer to resist a discount. Begin with 10% off on goods that are lying for more than 90 days. As the days increase with the product remaining unsold, consider upping the discount on it. It is normal for businesses to offer discounts ranging from 35%-70% on goods that have remain unsold for more than 120 days.
Try Something New
Sometimes, re-positioning a product in a different way or using various marketing approaches can help infaster liquidation of the inventory. For example, a product of daily use of a certain brand may have been accumulated in the inventory as it fails to differentiate itself from its competitors. In such a situation, marketing and positioning it as a lifestyle product based on its superior qualities may help in solving the problem.
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Bundle Them Up
Here is the second most popular way of getting rid of old inventory. While the movement of the inventory is slow, bundling two or even three of these surplus products and offering them at a lower price may help. Sometimes, there can be bundling multiple units of the same product. Bundling high-demand products with low-demand ones is seen as a bargain by shoppers, as the price is discounted. Same item bundles also hold an appeal with the pricing and help in clearing even more of the excess inventory.
Suppose that you have tried every marketing trick in the book and are still left with stale inventory. If this is the case, then that stock is already a complete loss, with no profit margin whatsoever. However, even in this situation, there is a way you can benefit – donations.
Unsold inventory can be donated to community events, or some other organisation as a public relation exercise. This will not only get rid of these products but will also serve to improve your visibility among the community.
Additional Read: The Top 5 Reasons Companies Apply For a Business Loan
The movement of inventory is intrinsic to the cash flow and finance of a business. For this, a mode of finance matching with the cash flow of the business is necessary. Flexi Business Loan by Bajaj Finserv is an innovative borrowing tool which is scalable with the business objectives and the interest is paid only on the amount withdrawn.
So, when the inventory is moving slow, the interest paid is only on the fund withdrawn and not on the entire loan amount. This is cost-effective for the business. Moreover, once the stocks start moving, the funds can be repaid at your convenience.
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