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10 Ways to Convert Excess Inventory into Cash

10 Ways to Convert Excess Inventory into Cash

Having inventory you can’t sell is a problem all retail and ecommerce business owners can relate to. Businesses of all sizes and industries need to deal with the problem of slow-moving inventory — from Mom and Pop hobby stores to Fortune 500 retailers. 

We say “problem” for a reason. Holding onto excess inventory may seem benign on the surface, but it can harm your businesses operations and profitability by:

  • Taking up valuable shelf space you could otherwise use for more desirable stock 
  • Making your store’s inventory look outdated (and thus boring) to customers
  • Reducing staff productivity 
  • Depriving you of the cash you would typically have from selling the stock

So, how do you take slow-moving inventory and convert it into cash? This article will answer that question. Specifically, we’ll cover ten potential inventory-moving solutions you can try, no matter the size and scale of your business. 

Without further ado, let’s dive in. 

1. Set Up a Closeout Sales Event

2. Reduce Your Minimums When Selling Your Excess Inventory

3. Dropship Your Products

4. Market the Discounted Items for Sale on Third-Party Platforms

5. Refresh and Remarket Stock

6. Give Low-Cost Items Away as Promotional Materials

7. Donate Inventory for a Tax Write-Off

8. Market Slow-Moving Products Via Employees

9. Bundle Items With Faster-Moving Stock

10. Sell To A Bulk Inventory Buyer

Conclusion

1. Set Up a Closeout Sales Event 

A closeout sales event is exactly what it sounds like: a special sale you hold to sell old inventory quickly. Depending on your location, you might know this as a “clearance sale.” 

There is an art to running a closeout sales event. 

As a general rule, you want to sell items at your breakeven point or slightly above it. Otherwise, the discounts you offer customers may not be enough to incentivize them to buy your goods. 

Next, you need to gather all items in the sale together so it’s easy for customers to browse items. 

Don’t give customers forever to take advantage of the sale, either. Instead, introduce a time limit to create urgency (like “only this weekend” or “until the 30th”). 

Advertising is also essential — tell customers about the event with in-store flyers, email marketing, and ask retail assistants to refer customers to the sale when they greet them. 

Of course, closeout sales aren’t a good solution for every business. If you sell luxury or high-end goods, holding a closeout sale may damage how customers view your products  (ultimately damaging your brand long-term). If that’s you, we recommend trying another strategy first. 

Speaking of which…

2. Reduce Your Minimums When Selling Your Excess Inventory 

If you are a retailer or wholesaler that sells items in bulk packages, this tip is for you. 

Try reducing the minimum amount required to purchase the item when you notice that specific stock isn’t moving quickly. For example, if you only sell wholesale bags to brands ordering more than 100 at a time, you could reduce that minimum to 50. 

Or, in a retail context, you could split up packaged items. For example, you can divide a candle pack that retails for $29.99 into three individual candles for $9.99. You may find that these candles sell faster individually, as it’s easier for customers to say “yes” to smaller purchases. 

You’ll know if you need to reduce your minimums if your stock hasn’t moved for 90 — 120 days. 

Alternatively, you can watch your inventory turnover rates. You can calculate these rates by dividing the total cost of goods sold by the average inventory over a period. For example, if a retailer earned $20,000 from candles and had an inventory of $30,000, their turnover rate would be 0.66. If this rate is lower than their average from other products, the stock is slow-moving. 

3. Dropship Your Products

Dropshipping is an alternative approach to retailing where you don’t carry items in-store. Instead, you list the items on your ecommerce store, and when customers buy them, you procure them from the supplier and ship them directly to the customer. 

Dropshipping is a big business, and in 2022, the global market is expected to grow to $196.78 billion (an increase of $68.18 billion since 2020). 

If slow-moving inventory is a chronic issue for your business, switching to dropshipping for some (or all) items may solve the problem. 

Alternatively, you can sell items to dropshippers so you have an alternative customer base. Just be warned that you may need to discount your stock heavily, as the dropshipper won’t purchase goods they can’t profit from. If you choose to dropship from your store, you’ll be in good company. As of November 2021, 87.18% of dropshipped goods came from a brick-and-mortar retail store. 

Or, if you don’t like the idea of dropshipping, you can try our next suggestion. 

4. Market the Discounted Items for Sale on Third-Party Platforms 

Retailers often purchase trendy items they think will sell well because they are plastered all over social media. Sometimes, however, things that are popular online are just unpopular with your local market. 

If this happens to you, you can try selling the items via ecommerce platforms like:

  • eBay. Since its founding in 1995, eBay has allowed retailers to sell toys, hobby items, clothes, technology, household items, and a whole host of other things. eBay generates income by charging you for each purchase someone makes. This percentage is 12.9% of the sale in most categories plus $0.30 per order. 
  • Etsy. Etsy allows you to sell vintage items, crafting supplies, and handmade items. Etsy charges a listing fee of $0.20 plus 6.5% of the item’s price, shipping, and gift wrapping.
  • Amazon. Ecommerce giant Amazon allows you to sell almost anything — furniture, clothes, household items, food, etc. Amazon’s fees depend on your industry and whether you ship items independently or through Amazon. 

Alternatively, if you only want to sell one slow-moving item, you could also try listing it on local community pages or platforms like Facebook Marketplace. 

5. Refresh and Remarket Stock

Some stock doesn’t sell because it’s out of style, outdated, or inferior to your other products. But that’s not always true, as sometimes, product marketing is the problem. 

One great way to move inventory without discounting it is to alter how customers interact with it in-store. For example, if a rack of product at the back of the store doesn’t sell, try moving it onto a table near the entrance. 

Alternatively, you could try:

  • Positioning the stock next to the cash register so people can view it while waiting in line
  • Putting the stock into a window display 
  • Placing the stock next to a popular item so more people see it 
  • Using the stock in an in-store display 

Additionally, if the products have been sitting around for a while, make sure you give them new tags, check for dust or stains carefully, and fix any creases or holes in the product’s packaging. These minor details matter to customers, and they can make or break a sale. 

Ecommerce retailers can also refresh stock to remarket it. They can take fresh product photos, give an item a more searchable name, and re-write the product’s description to rank well in search engines. 

Some ecommerce retailers, like Skein Sisters, also publish promotional videos of stock on social media — like this:

Source: Facebook

Of course, remarketing and refreshing inventory takes time, so it’s best suited to higher-cost items. If you are looking to move lower-cost stock, try this next suggestion. 

6. Give Low-Cost Items Away as Promotional Materials 

Sometimes, it isn’t worth trying to sell low-cost items because your margins on them decrease too much. Thankfully, you can still put them to good use. 

One way to get value back from low-cost items is to give them away as free gifts with other purchases. For example, you could incentivize people to buy Candle A by telling them they get a free Candle C. This will boost your sales and eliminate your problem inventory simultaneously. 

Giving customers free gifts also makes them feel valued, increasing their chances of returning to your business. Customer retention is vital in sales — research from Bain & Company shows that increasing retention by 5% can increase profits by 25%. 

If you wanted to get really creative, you could also giveaway low-cost items with marketing materials. Skincare brand Cocokind uses this strategy. Cocokind offers customers who spend $200 annually a free swag gift. 

Source: Cocokind

Cocokind customers can also earn points with every purchase and translate these points into free products like a Turmeric Tonic, an AHA Jelly Cleanser, or a Ceramide Barrier Serum. You could do a similar thing with your leftover goods. 

Source: Cocokind

7. Donate Inventory for a Tax Write-Off

Okay, so maybe your customers don’t like the beach bags you bought. But that doesn’t mean they are utterly useless to everyone. If you can’t sell an item, look into the possibility of donating it to a 501(c)(3) charitable organization. 

If you are a United States-based business, you can claim a federal income tax deduction using Section 170(e)(3) of the Internal Revenue Code. The specifics of the deduction you can make depend on whether you have a sole tradership, LLC, S corporation, or partnership, but generally, you can deduct the cost of the stock

To find local organizations to donate to, use local business directories, ask members of your local community group, or try Googling “non-profits near me.” 

Once you find a charity, you can vet them using tools like CharityNavigator or CharityWatch. These websites ensure your goods go to a good cause.

8. Market Slow-Moving Products Via Employees

Have you ever gone into a store, seen that employees were using a piece of merchandise, and found yourself interested in the item? That’s the magic of marketing through employees. 

If your products don’t look desirable and enticing on their own, adding some social proof into the mix can increase your sales. 

There are many ways to add this proof. For example, if the item is wearable (like an apron), you could ask willing staff members to wear one while on shift. Or, if the item is consumable like a candle, you could burn it in-store to get people interested.

You can also ask staff members to sell items directly by asking people if they’d like to purchase one at the cash register. They don’t have to be overly ‘salesy’ about it either — they can simply point to a display on the desk and ask customers, “would you be interested in any of our sale items today?” You’d be surprised how many people say “sure.” 

9. Bundle Items With Faster-Moving Stock

Several of the strategies we’ve mentioned touched on the idea of using slow-moving items to give customers an extra boost in value. This suggestion uses that strategy, too. 

If you have fast-moving items in your store, try bundling them with slower-moving stock to increase sales of both. The best items to bundle are complimentary, like shoes and socks, tea towels and washcloths, and oil burners and essential oils (like in these examples from Dusk).

Source: Dusk

Items that solve a common problem someone might have with another item are also great to bundle. For example, if you are selling a leather couch, you could bundle it with a slow-selling leather cleaner. 

Alternatively, if you are nearing a major holiday, you could bundle items together in a gift basket with a festive bow. Consumers love gift baskets because they make great presents, and retailers love them because you can put basically anything into a gift basket and make it fun. 

10. Sell To A Bulk Inventory Buyer

Finally, you could offload merchandise by selling it to a bulk inventory buyer like Closeout Express. Bulk inventory buyers purchase unwanted items from you at your convenience. 

Selling to a bulk inventory buyer may not make you a huge return-on-investment (ROI), but it will:

  • Improve your cash flow 
  • Remove unwanted inventory from your hands with no or little work on your part 
  • Free up your store shelves and warehouse so you can stock other items 
  • Help you recoup the cost of the slow-moving merchandise 

Some bulk inventory buyers ask you to deliver your unwanted items at your expense. Closeout Express takes a different approach — we arrange shipping and do the hard work for you. 

We’ll also give you a detailed quote before you agree to sell so you know what you’ll make when you say “yes.” 

Start Converting Inventory Today

Though it’s annoying, slow-moving stock isn’t anything to fret about. All kinds of businesses (from local shops to multinational retailers) struggle to sell some items. 

In this article, we touched on some ways to sell items — via a closeout sale, through dropshipping or third-party retailers, or using in-store marketing techniques. Alternatively, you can give stock away or donate it. 

These strategies work great for some, but they aren’t suited to every business. If that’s you, consider selling your stock to Closeout Express. Closeout Express will handle the hard work for you and give you your cash in 30 days or less. 

Closeout Express takes a wide range of inventory, from appliances, to clothes, food, and sporting goods. Fill out a free price quote to see what your inventory can get you!

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