One of the biggest drains to cash flow which can cripple your online retail business, is excess dead inventory. Often times, an eCommerce merchant is left sitting on a pile of unsold, dead inventory. Even more importantly, tied up cash that could be used in other areas of your business.
Over time this inventory becomes more expensive to warehouse, inventory and can even disturb your mood when seeing it collecting dust.
The home based online retailer tends to hold inventory even longer, due to inexpensive storage costs, which creates a downward spiral, both emotionally and financially.
I know personally when I started my shop, I had an emotional tie to the inventory I purchased, since they were items I personally liked and used. I wanted to stockpile a deep and wide collection of SKU’s in the hopes of “getting a good start” and having strong cash flow. This didn’t always work out as planned.
If you have a pile of particular SKU’s sitting there 60-90 days that aren’t moving at all, it’s time to consider making room for fresh stock. Understanding, some specialty items could theoretically take 6 or more months to sell. It is usually the 20% of your stock which accounts for 80% of your sales.
And remember at this point, it doesn’t matter what you paid for the stock, or even what the MSRP is.
All that matters is what someone else is willing to pay for it!
This situation may have occurred from several past actions including:
- Buying discontinued SKU’s for extra cheap, optimistic on their sales potential.
- End of season product leftovers
- Inventory purchase mismanagement
- Damaged inventory during storage/transport in warehouse
- Increased marketplace competitiveness
Some of the usual outlets for disposing of dead inventory and getting pennies on the dollar are:
Sending products back to the manufacturer
While this option may seem an easy and attractive way out , a hefty restocking fee may be charged. This is considering IF the manufacturer will even take it back at all!
Selling in a clearance sale
There may be some benefit in this approach. Some customers may have been waiting for markdowns to buy a particular item, refusing to buy at it’s peak price. Consider this a loss leader approach. Consider up selling higher end recommended products that would be a nice accompaniment if possible. Depending upon how your email management system is structured, can you do a follow up “related items you may like” email tied to these clearance SKU’s?
Sites like eBay can sometimes uncover those obscure buyers who have been looking for exactly what you have. Those buyers are often making an emotional decision to spend a good amount to obtain a particular item. Given the potential costs/time investment to list, answer questions and ship, this is a mixed bag.
This approach could work fairly well, if you find a local business that happens to need what you are offering. Again, expect a fairly low return on your initial investment, perhaps below wholesale cost.
This tactic can help you unload your excess product, but for pennies on the dollar.
Perhaps there is a better way?
Could some of this dead inventory welcome deep links into your eCommerce category pages, which were otherwise difficult to obtain?
Let’s look at the possibilities…..
Many local business websites have a website resources page, or even an email newsletter you could be included within. Not to mention getting a shout out to their social media audience or face to face customers.
Instead of just purposely searching for companies needing sponsorship, be proactive. Search out local companies in your niche via every source possible. Organic searches, local, news, social etc. Make it easy for the company to say yes!
For example, let’s say you’re a physical products retailer, and your market is the infamous pet niche, or more specifically dogs.
I would consider a search in all of the following areas:
- Canine rescue
- Dog trainers
- Vet’s offices
- General resources. Meaning a dog enthusiast that keeps up a local website.
- Dog parks
Here is a practical example.
1.I did a search for: Canine Rescue Orlando
As we can see from the organic search results page, we have several options to start with , from this one search term.
2.Let’s see how the first opportunity looks….
Several options exist for potential ideas which I’ve pointed to in red. Even the upcoming Dog Adoption Day event is an opportunity. Perhaps you could lay out a few giveaway products with your business card attached at the event?
Take a look at the Donation page. We will see an entire chart full of acceptable donation item types. If you sell pet supplies, I bet you can find something that fits.
Now we’ve identified a place we can contact for a potential relationship. One of several, based on this one search term alone. In a case like this, I would recommend sending a brief introduction email, followed by a phone call. It’s worth going the extra mile with a phone call. It sets you apart, and lays the groundwork for a mutually beneficial relationship in the future. Not to mention the next time you have excess inventory, you can have a list of past collaborators.
Hey… what about our link?
After looking through this site, I see a few possibilities. One is the Resources For Owners page, which lists out several categories of places to buy stuff. Most importantly, this is a legitimate, helpful resource page for a site visitor, which can result in actual click thru traffic.
Secondly, when I click through to their Facebook page, I see over 6,000 fans and recent activity. Perhaps something can be worked out here as well.
While this example would potentially work out well, not all niches are this exciting. What if you are a parts retailer to local air condition repair companies or lawn care products?
It just takes a bit of creativity, and perhaps help from a digital strategist. Even if the end result is not a link, it could be a business card included in a local mailer or some other benefit we have yet to conceive.
Accompanying video for this post:
Have you used any tactics to ditch your dead inventory that worked out well? Do tell!