How Do I Develop a Liquidation Strategy for Slow Selling Products?
Problems:
Inventory is the largest single balance sheet asset in most e-commerce businesses, but around 80% of sales are typically generated by about 20% of products—and more than 50% of products often either do not meet, or exceed, their burden in terms of contribution to profit. Many centers have significant space occupied by slow selling product; you can’t afford to sit on such high dollar inventories whose fully loaded costs include product costs, inbound freight, customs, marketing, fulfillment, inventory carrying costs, and eventual loss of margin through liquidation. Yet merchants are often reluctant to act quickly on overstocks that sap profits.
Solutions:
- Develop a contribution to profit analysis for products as part of your periodic merchandising analysis.
- Analyze your product sales daily and develop candidates for liquidation (the slow sellers).
- Make your first mark down of retail price your deepest to move product quickly.
- Though you’re an e-commerce company, using other media, such as bounce backs in outbound packages, may clear overstocks faster than other methods.
- A liquidation strategy should be executable with your website or other selling media. The following list is 14 major ways multichannel businesses liquidate overstocks:
- Internet/Website based
- Relist/Repeat
- Return to Vendor
- Clearance Catalog
- Bind-In Clearance Inserts
- Package Inserts
- Sale Page
- Outlet Stores
- Telephone Specials
- Warehouse Sales
- Sales for Employees Only
- Roving Tent Sales
- Charitable Donations
- Jobbers
Benefits:
- Keep your inventories lean and earn more profit.
- Free up cash invested in inventory.
- Proactive purchasing of faster selling product to prevent back order or stock out.
- Free up physical space in distribution center.
Call or email Jeff Barry at 804-264-8040 or jbarry@fcbco.com to schedule a call to discuss how to develop a liquidation strategy. F. Curtis Barry & Company is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing distribution centers, order management systems, warehouse management systems, inventory management and forecasting, and freight rate analysis.
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