This is Day 16 of my 30 day writing challenge and today I move back to a more business focused post. Slow-moving inventory is defined as any stock of products that sits in your storeroom or warehouse for an extended period of time without movement. These items are essentially static, with not a single item being purchased, refunded, or replenished. Ideally, products should be sold on a regular basis and your stocks replenished with newer items.
One reason slow-moving inventory is bad for your business is that it takes up valuable shelf space. This is an even bigger concern if it involves high quantities, or if the product itself is large and requires a lot of room on the display shelves. And when you’re dealing with perishable goods, too much slow moving product might eventually mean junking the entire stock as it goes bad and writing it off as a loss you must resolve to do something about it..
Below you’ll find some useful tips to clear the way for newer products without having to junk the items:
One reason an item might not be moving is because customers are not aware of the product and its benefits, instead opting for a similar product with more top-of-mind presence. Try promoting the product by using in-store advertisements or via an aggressive sales campaign using principles of the psychology of sales.
I don’t recommend paid advertisements, though, but rather to make marketing a habit. The slow-moving product is, by nature, not earning money, and therefore can’t justify the expense of an advertisement. The sole exception is if this is part of a larger promotion featuring multiple products, in which case the slow moving item can be highlighted along with the others.
Sales and Discounts
This is the tried and tested method of selling off slow items. In fact, some businesses announce their discounts with the phrase “priced to move”. The discounted percentage depends heavily on how badly you want to get rid of the stock, and how much profit you’re willing to give up in order to clear your shelves. In certain cases, like groceries or perishables, getting rid of a product stock for next to nothing is better than nothing at all—especially since you will have to take care of disposing of all the expired items yourself. Savvy businesses can even apply bulk discounts, rewarding customers for removing large quantities of your product at a time.
If you’re feeling socially conscious, you can always opt to donate your slow-moving goods instead of throwing them away. Most products each have an appropriate venue for donations. Grocery stores can donate to a food bank or soup kitchen, for example. Clothing stores can donate to shelters and thrift shops. Bookstores can donate to schools or libraries.
Some businesses will not want to donate the items themselves, as this may dilute the brand and lower its status (luxury brands are especially concerned about this). In this case, you may want to donate part of the sales of certain items to charity.
If an item cannot be sold or donated, then perhaps it can be sold back to the supplier. This is the last option because it is highly dependent on the industry and your relationship with the supplier. Businesses like bookstores have this option, where they return stocks of unsold books to the publisher, but this is an industry convention and has been going on for some time. Check the return policy on your supplier’s agreement and see if there’s a commitment from them to buy back unsold goods. Compare their buyback price with your situation, and determine whether or not you would be able to get a better profit than just trying to sell it off yourself.