If you are an online seller, at some point you may have had, or will have slow-moving inventory at bay. It’s pretty much inevitable. Stocks or products that sit in your storage or warehouse for more than 180 days are categorized as slow-moving inventory. Unsold stock products keep the capital tied up and forbid businesses to re-invest it where needed. If you want to make the right purchasing and marketing decision, it is very important to keep an eye on how the product is moving. Simultaneously, inventory management enables you to control the merchandise you have and prevents overstocking in your store.
What is the Slow-Moving Inventory?
Slow-moving inventory is defined as the stock or products that just aren’t selling. If the retail industry moves quickly, and you need to keep pace with it, which means your inventory needs to be moving too. Any product that just sits in your inventory for 3-4 months can be declared to be dead inventory or slow-moving. your inventory is not holding products but is actually holding cash. This cash generated with timely sales can result in the purchase or manufacture of more fresh goods, promote product sales and growth and much more.
Slow-moving inventory not only varies from seller to seller but also varies from item to item. Slow-moving inventory can be categorized as:
- Overstocked Items: Having less than 6 months of demand for any given item over a period of 12 months is one way to define slow moving inventory.
- Stock Turns: Retailers look at stock turns when defining the Slow-Moving Inventory as a higher stock turn ratio is generally better. As quantity increases, the cost per unit generally decreases., however when ordering in large quantities, it will have the effect of slowing stock turns.
- Shipment Frequency: as mentioned earlier the definition of SMI can be different for each seller, but by looking at the frequency of shipment, it allows sellers to truly identify inventory which is a slow-moving, as opposed to inventory that can be overstocked or which turns slow due to large order quantities.
Liquidating Slow-Moving Inventory
Still, uncontrollable circumstances may lead to excessive inventory or unsold stock situations. A sudden change in the trend, failure of the demand forecast or a slow economy could be one of several reasons. So, whatever your case maybe, if you have an overstock of merchandise in your store, there are several ways you can liquidate them.
1- Rebrand or Refresh: The product isn’t always at fault for not selling, many times it’s how the product is being marketed or positioned. You can Refresh your marketing and merchandising method that can help a great deal. Freshen the display, move things around, create new, brightly-colored signage and replace worn out price tags, which is something that can be easily tried.
2- Discounting the Unsold stock items: if re-merchandising does not work, consider lowering prices for your Surplus Stock. Running a flash sale or a storewide event to draw customers is another tactic that can be used. The bigger the event, the better, as seeing the crowd attracts more customers and then sale becomes more about the event than it does of discounts.
There are several other ways such as bundling the merchandise, offering the unsold stock items as freebies or incentives, selling them on online platforms and alternatively you take the help of liquidation companies that specialize in disposing of your excess inventory.