Surplus stock, excess inventory, stressed inventory, overstock. Whatever you call it, most online retailers have an issue with it.
Having more stock than you need is part and parcel of the eCommerce business. No one can accurately predict what our customers will buy (or at least no one willing to share the secret.)
As we await the presence of a commercially available crystal ball - or maybe an AI intervention - we’re often left with items that simply don’t sell as fast as others.
Excess stock can impact your eCommerce business in many different ways:
- You lose revenue from items that depreciate in value
- Your budget is locked up in items kicking around your warehouse
- You spend money storing items at that same warehouse
- Your excess stock takes up valuable space on your website
Holding excess stock is expensive, but moving it doesn’t have to be. The key is to create opportunities to sell certain items when the time is right.
We’ll be going through some of the ways of creating those opportunities in this short guide.
How big is the issue of selling excess stock?
As mentioned, moving excess stock is a common challenge among eCommerce retailers. It’s a piece in the eCommerce inventory management puzzle and an important one to master.
Are retailers finding it harder or easier to move excess stock?
In 2020, retailers were dealt with heaps of excess stock as COVID-19 influenced a switch in buying behavior. Beauty brands in particular felt the pressure of consumers reducing their use of cosmetics amid lockdowns in many countries.
In 2021, reports pointed to “lean” stock levels due to production-based challenges encountered during COVID-19. But things changed rapidly.
According to research from Supplychaindive, US retail inventory has continued to operate at a high level due to a mismatch between supply and demand.
There’s also the strange factor of an improving supply chain. That's right - an improvement in something is actually generating a negative outcome.
Nowadays, retailers receive stock quicker than they did even a year ago. Faster shipping is a positive development. However, it can result in seasonal items waiting in the wings before they can be sold.
As predictions regarding retail fortunes remain hard to come by, retailers must have effective systems for moving excess inventory.
Here are some simple strategies that our team has deployed in the past:
Tip #1 Get a product recommendation engine
When we talk about opportunities to move excess stock, we mainly focus on looking for customers that want to buy it. You need a tool to identify these shoppers based on their cart contents and on-site behavior.
A product recommendation engine allows you to create ties between different stock-keeping units (SKUs) in order to find those opportunites. Here are two ways of using it:
- Push excess stock to ‘complete a look’: E.g., highlight socks to someone checking out with sneakers.
- Consider selling extra items from collections: E.g., push ‘end of line’ items whenever someone already has a product from that same collection in their cart.
It’s not the easiest tip to master. It takes time to build rules that trigger recommendations for the right products. But done effectively, product recommendations are one of the best tools for selling overstock without a heavy discount.
Tip #2 Create bundles
While you’re setting up your product recommendation engine, why not bundle up certain products in the meantime?
Beauty brands are masters at creating gift sets from their stock. See how L’Occitane offers skincare products as part of a routine, where customers can save money by purchasing more items.
You could even create a bundle containing a mix of best sellers and excess stock. That way, you have a ‘hook’ for your set.
Once your product recommendation engine is working, you can then push that bundle to whoever is checking out with a best seller.
Tip #3 Run a multi-buy promotion (sale only)
An organized sale page is a good starting point for moving excess stock. The next level up is to run a multi-buy promotion on that same collection.
Don’t just offer ‘10% off’ your sale items – offer the same discount on multiple purchases.
Some retailers even dial up the discount when customers spend more. They play off the idea of sale shoppers looking for value, rather than a specific item.
Below, we can see how one brand runs two offers, depending on what the customer orders.
Tip #4 Run a flash sale
Big discounts aren’t always conducive to running a profitable eCommerce business. But sometimes, desperate times call for desperate measures.
Every retailer has a few products they simply cannot shift. A flash sale backed by a major price reduction is perfect for this.
Unlike some of the more discreet and tactical incentivization strategies, anything goes with a flash sale. Run a multi-channel campaign to engage customers on different touchpoints, for instance:
- Overlay: Trigger an impactful pop-up advertising a discount on a specific item, or go multiple with a carousel.
- Email campaign: Bring your flash sale out to your subscriber list to get a response from your loyal customers.
- Social campaign: Amplify your reach with social posts advertising one or more products in your flash sale.
If you run a flash sale, don’t forget all the small details that grab your customers’ attention.
See how ColourPop Cosmetics shows how long its sale is available for, the products included, and the minimum price.
Tip #5 Free gift it
Our last resort is to give your excess stock away, but that doesn’t mean you can’t get something in return.
Retailers often use overstock as ‘free gifts’ for customers when they make their next purchase. Beauty brand Lancome actually lets its customers choose their freebie, which is a handy step if you have lots of excess stock.
There are endless ways of gifting items – from freebies given to customers when they make their next purchase, to gifts that can be redeemed once they spend a certain amount. You just need to think about the outcome you most want to drive.
Tip #6 Get RevLifter
Want some good news? All of these strategies can be launched in the same place through RevLifter’s Intelligent Offer Platform.
We’re moving overstock for some of the leading players in fashion, beauty, homewares, consumer electronics, vitamins & supplements, and more.
Book a free demo to get a test drive of the engine that moves your inventory.