Excess Inventory

What is excess inventory?

Excess inventory in retail is unsold inventory that is no longer fresh and doesn’t match what customers are buying now. Other names for excess inventory are past-season inventory, overstock inventory, aged inventory, slow-moving inventory, underperforming inventory, stale inventory, and unsold inventory. Excess inventory takes up floor space and cash needed to bring in fresh inventory, including seasonal inventory.

Even high-demand brand-name fashion, such as apparel, footwear, accessories, eyewear, beauty products, and sporting goods, can be examples of excess inventory when few sizes remain or customer interest wanes.

Disadvantages of excess inventory

Excess inventory takes up valuable floor space, creates cash-flow problems, and harms your store’s reputation and customer relationships.

Floor space and hangers

Every retailer needs to bring in new inventory, but old inventory may be taking up valuable space—and hangers. How will you make room for your next shipment?

Tip: Are you out of hangers? Max Retail helps retailers sell their unsold inventory for a good price.

Cash flow

Retailers need cash or credit, but excess inventory ties up funds that would be better used to receive new shipments of merchandise that will sell as well as to pay vendors and fund payroll.

Tip: Need cash for new shipments? Max Retail turns your sale rack into cash.

Sale racks

Markdowns on slow-moving harm your store’s relationships with repeat customers who bought the item at full price. And seasonal sales cause other customers to wait for a lower price, instead of buying today. Or a guest may buy a sale item at a lower price instead of a full-price item, which erodes your profit margin.

Tip: Selling your sale rack and past-season inventory on Max Retail frees floorspace and cash.

Why do retailers have excess inventory?

Every retailer and brand, big and small, faces the problem of excess inventory, because the moment goods are shipped, they start aging.

Even big retailers and well-known e-commerce platforms have inventory that doesn’t sell. Even brands that never mark down inventory have unsold inventory. Independent retailers, fashion boutiques, big-box stores, department stores and brands—we’re all in this together, because everyone in the retail community has excess inventory.

At Max Retail, we know many retailers who had so much excess inventory before joining our unsold inventory platform needed to move it to storage units, warehouses, garages, and even living rooms! Don’t judge—it could happen to any of us.

How do I know if I have excess inventory?

At the center of the excess inventory problem is the concept of turns. Like a server at a restaurant, turning a table and seating a new group is a turn. More seatings per table results in more sales and more tips.

What does a retail inventory turn have to do with a restaurant table? Retail floorspace and hangers are like restaurant tables—selling three items off a hanger over the course of a year is better than selling only two. Similarly, the faster a retailer turns inventory, the more money you make—turn is a metric used to manage a successful retail business.

By contrast, when inventory turnover in retail is slow, money is tied up in unsold inventory and the retailer loses the ability to use that space to sell something else. Cash flow slows. Customers see the same old things when they come back looking for something new.

Faster turns improve profitability, cash flow, and customer satisfaction for retail businesses like independent retailers and fashion boutiques.

What is a good number of inventory turns, also called an inventory turnover ratio? Some benchmarks in the categories that Max Retail retailers sell the most excess are:

The best ways to increase your turns to get closer to these benchmarks are to identify what is selling and what is not selling—and take action!

How do I reduce excess inventory?

You can reduce excess inventory in several ways:

Planning

Knowing what and how much to order next time is key. Using historical sales data, market trends, and predictive analytics helps forecast demand accurately. No idea how to do this? We didn’t either. Retail inventory planning professionals can help. These professionals specialize in analyzing sales trends and predicting future demand, so you buy the right pieces and the right amounts.

Employee spiffs

Motivate your sales team to sell poor-selling inventory at full price by boosting commissions on those pieces.

Markdowns and clearance racks

The locals and tourists find you, come in, and buy it. When merchandise truly bombs, it’s best to focus on achieving the fastest turn by any means necessary.

Tip: Consider whether enough buyers are going to walk into your store this week to get these items sold. And how markdowns affect your business.

Selling online like a consumer – eBay, Poshmark, Shopify

Like anyone with a closetful of unwanted clothes, you can sell excess inventory from a retail store on resale sites, such as eBay, Poshmark, and Shopify. These e-commerce sites are simply marketplaces where more buyers may see your inventory.

Tip: It’s still on you to get your excess inventory sold on these sites, so invest time and money in the growth of your online presence to give your merchandise as much exposure as possible:

• Refine your process of receiving inventory to include taking photographs or finding vendor stock images.
• Use social media: Fun videos on TikTok, Facebook, and Instagram help retailers sell inventory faster.
• Send weekly emails.
• Pay for advertising and boost placements.

Consignment

If you live in a big city, you may be able to partner with some fantastic consignment shops for certain items and brands. These stores tend to do better with items like dresses, blouses, accessories, and handbags. Usually they only take in-season merchandise.

Caution: Consignment stores take markdowns with a specific cadence so you may find yourself with a $5 payout for a $100 wholesale item. Work out terms with the owner to prevent these markdowns or arrange to pick up the item before it’s sold for pennies on the dollar.

Selling through an excess inventory platform

Want to get it sold faster at close to wholesale price with a few clicks? An excess inventory platform like Max Retail puts your item in front of a lot more buyers at an agreed upon price—and does all the marketing for you. More about this later.

Get rid of excess inventory through liquidation or donation

You could give away your excess inventory. At least you’ll free up floor space for better selling items.

Liquidation typically pays 5 to 10 cents on the dollar—and we cringe to give retailers this option, because liquidation feels like giving it away in a not-so-good way.

Or donate your excess inventory—a donation is awesome if you don’t need the money. Our favorite nationwide organization for footwear and apparel donations is Soles4Souls.

Why is it difficult to sell excess retail inventory?

Selling excess inventory is a drag on your business and your time and energy, if you do it yourself. Here’s why:

• It’s difficult to sell excess inventory in your store because no one who saw it wanted it at full price when it was fresh inventory. If they come back, few people will want it from the clearance rack as aged inventory either. Instead, you must reach a new set of buyers—ideally a lot of new buyers.
• Your unsold inventory isn’t worth your time. Your time is better spent managing your business and choosing fresh inventory that will sell fast.

This is where excess inventory platforms like Max Retail come in. Read on.

What is an excess inventory platform?

Want to clear out unwanted inventory for a good price? An excess inventory platform is an e-commerce business where independent retailers and brands discreetly sell excess inventory with ease across a network of third-party e-commerce marketplaces. Max Retail is an excess inventory platform that reaches 400 million buyers through our partners.

How it works

When you have excess inventory, you can run an on-hand report from your point-of-sale (POS) software and have the Max Retail team list it on your behalf. Or you can list it yourself with a few clicks via a software integration with Shopify or Lightspeed. (Square and RICS integrations are coming soon.)

The platform’s technology automatically enhances your product data—finding images, descriptions, attributes—to increase the likelihood that your piece will sell at the best price. We adapt to the nuances of each e-commerce marketplace—they are all different. Then we offer your piece in all relevant marketplaces at once.

Retailers typically recoup most of wholesale price on unwanted inventory. Max Retail covers the entire listing enhancement process, pays for shipping and taxes, and provides customer service to consumers—all for $35/month and a 15% transaction fee. All sales are final, so you don’t need to worry about returns. And best of all, you receive payouts instantly when you ship the merchandise to fulfill a sale.

Max Retail is like an inexpensive employee who boosts your turns and cash flow.