Are you stocking inventory that doesn’t sell? Do you have a system in place to tell you when certain items aren’t moving fast enough? If you’ve got unpopular inventory on hand, it’s costing you money and it’s time to get rid of it once and for all. However, that’s easier said than done if you don’t know what isn’t moving.
How to know what inventory to eliminate
Maintaining inventory based on what sells is a process that takes time to figure out. You have to see what sells throughout the seasons, over a few years, to gauge what you should keep in stock and what should be cut loose.
To do this, you need to be using software to manage your inventory. For example, fleet maintenance teams use Cetaris to track parts inventory and reduce slow-moving parts. Without a digital tracking system, it would be nearly impossible to see what parts need to be phased out.
Here’s how you can get a handle on what’s selling and what needs to be eliminated.
1. Start digitally tracking inventory
The first thing you need to do is get an inventory tracking system in place using software to track sales, chargebacks, customer returns, damaged or broken items, salvaged items, and manufacturer returns. This should be a straightforward system that allows you to scan an item and adjust the amount of stock on hand during an inventory count.
Any items that see constant returns should be considered on the chopping block. People return items all the time, but excessive returns indicate a problem either with the item itself or that it just doesn’t meet expectations.
Items that sell well without many returns should go on your “green light” list, but take note of the season. You might find some items sell better in winter even though they aren’t holiday-related. For example, even plain candles and tablecloths sell well in the winter months. Items don’t need to be holiday-themed to be popular during the holiday season.
2. Automate ordering based on inventory counts
On the back end, your inventory system should have the ability to automatically place an order for more items if the on hand number you enter is below the threshold you set. For example, you might want to order more of a particular item when stock reaches below 20 items. Setting product par levels that automate ordering means nobody has to manually type in an order, and that’s essential when you have hundreds or thousands of items.
You can set up your orders to be reviewed by a staff member before it gets sent to your vendors, but item quantities should be automatically generated from inventory counts.
3. Get rid of deadstock
Almost every business will have deadstock at some point. Deadstock consists of items that don’t sell, and the longer you hang onto it, the more money you stand to lose.
Over time, deadstock becomes harder to sell, so it’s better to cut your losses and put it on clearance as fast as possible. You don’t have to start too low. Give it a fair discount to start and then every couple of weeks, lower the price even more. Any money you can recover from deadstock is good. If you can’t sell it, start giving it away to charities and write it off on your taxes.
4. Identify popular seasonal items
In every business, both ecommerce and brick-and-mortar, there will be items that sell and those that don’t. Some items will be popular for a time and fizzle out, while others will remain best sellers for years. Other items will sell seasonally, like things people buy during the winter holidays, for back to school, or designated days like Mother’s Day and Father’s Day.
Some popular items are seasonally relative. Make sure you document which products sell during certain seasons or for various holidays. Don’t eliminate these. Instead, forecast your needs prior and order appropriately. You can expect to have some of these items in your stockroom throughout the rest of the year.
It’s time to let go of unpopular stock
It’s important to know your flow throughout the year so you don’t eliminate items that sell well during the spring or fall, for example. However, you’ll save good money by letting go of those items that either don’t get used or don’t seem to ever leave the shelf.
If your backroom piles haven’t changed in a while, that’s a strong indication of an item that isn’t selling. Ditch these items and start testing new inventory until you find things that move and bring you more sales.