Excess inventory is any inventory that unexpectedly exceeds a business’s projected demand. Deadstock, spoilage, and storage costs can impact budgeting and overall profitability. If your business is struggling with overflow, here are a few strategies to deal with excess inventory.
Refund or Revamp
Asking the supplier you purchased from for a refund is one of the most common strategies for dealing with excess inventory, and it’s often the most profitable. There’s a chance that the seller will give you some form of a discount or refund. Before you make any decision, though, it’s best to look at all of your options first to determine which avenue will provide you with the most return. With a refund, you might take some loss on shipping, but it could be your best option.
If you have raw materials or unlabeled products, you could divert that inventory and turn it into a new product. There have been many instances where businesses turned trash into gold and turned an overflow of materials into something entirely new. Alternatively, you could sell the excess to businesses that need them or trade with a company that may have something of value to offer.
Liquidate or Auction Off Inventory
Liquidation is the best option if you want the excess off of your back. While you may get some profit, liquidators will only purchase it for a big discount, so don’t expect to make back all the money you spent. You also have the option of auctioning it off yourself to save money, but this takes time, and if you have a lot to sell, this may not be an ideal option.
Donate, Recycle, or Scrap It
Donation might not seem like the best way to get a return off of excess inventory, but depending on how much you donate, you could see quite the hefty tax advantages later on. Alternatively, if your inventory is obsolete or unusable, scrap dealers will take it for you and give you a sum if it has any value. The worst-case scenario is you’ll have to scrap or recycle it for a small fee.
How To Reduce Warehouse Costs
If you have no other option but to store it for a little while, especially with seasonal items, there are ways to cut costs. If you have a large number of raw materials or products and need to store them, you don’t have to pay exorbitant warehouse fees.
Temporary fabric warehouses are portable, reusable, and customizable. And if you choose the right-sized temporary fabric warehouse, you can save a lot more money than you would by storing your inventory in a brick-and-mortar building. Plus, when you buy it, you own it, so you can rent it out, resell it, or reuse it if inventory overflow is hard to mitigate in your business.
However, fabric buildings aren’t your only option. You can optimize storage to increase overall floor space by sorting products into aisles. Also, purchasing used containers and implementing energy-saving strategies are eco-friendly and cut down storage costs over time. This way, even if you do have inventory overflow later on, you have extra funds to manage it.