THREE Easy Ways to Cut Inventory Overhang

Did you know nearly half of all retail brands (45% in the UK, 42% in the US) have surplus goods they’re desperate to offload?

In a market that’s already plagued with problems like rising costs and unpredictable demand, excess stock is a major issue for retail brands because:

  • It kills cash flow. Tying up your money in inventory means there’s less available for paying bills, salaries, rent and for investing in new products.
  • It takes up space. Inventory storage is a major expense and wasting it on excess stock is a bad plan.
  • It hits profits. Excess stock is often eventually liquidated, which can hit your profit margins hard.

The trouble is, even established brands with a track record of success are struggling to keep surplus inventory in check right now – and some have outright failed.

British furniture brand went public on the London Stock Exchange in 2021 with a valuation of £775 million but was out of business less than a year later and established countrywear brand Joules has also entered administration. Both brands blamed their failure on having inventory overhang at just the wrong time.

Meanwhile, department store Kohl’s has admitted that the amount of excess goods it was holding “got out of control” in 2022, fashion retailer GAP has run sales to clear inventory overhang and clothing marketplace Asos has struck a partnership with Secret Sales in order to sell its surplus stock at a discount.

Struggling with excess inventory of your own? Try these simple ways to cut it back and boost your cash flow…

1. Reveal your true excess stock

You may have a vague notion of how much overhang is in your inventory, but before you can tackle the problem, you need to reveal exactly how much excess stock you’re holding onto. Inventory Planner tells you the retail and cost value of overstocked units so you’ll know exactly where your inventory-slimming efforts should be focused – this is especially helpful if you have a general sense that there’s too much cash tied up in your inventory, but you don’t know exactly how bad the issue is.

2. Get specific with forecasting

Accurate, reliable demand forecasting is a game-changer for e-commerce retailers, and the more specific and custom you can go with it, the more beneficial it will be to your bottom line. Inventory Planner offers forecasts and buying recommendations based on the multiple variants of each item (including size and color) so you can be super specific with your purchasing and avoid having too many variants you might not even sell.

3. Introduce flexible stock cover

It’s important to be flexible with your stock cover days and lead times, especially when supply is tricky as it has been in recent years. Merchants often end up going out-of-stock when stock cover days aren’t increased in tandem with increasing lead times. Inventory Planner makes it easy to adjust this, offering customizable, time-based replenishment recommendations – so you can order to cover a certain and specific amount of time.

Want more? Download the complete checklist of 11 ways to stop excess stock now – it’s free!