What could cause Nike’s Chief Financial Officer to say the word “inventory” a whopping 48 times on an analyst call? If you’re like many e-commerce owners, you already know.
Excess holiday inventory gathering dust on shelves is costing the modern retailer big time. With rising warehouse storage fees, the current “holiday hangover” and its impact on over-inventoried retailers might be the biggest inventory headache yet.
This, coupled with layers of confusion around inflation and inconsistent consumer trends, has made demand forecasting a legitimate challenge for almost every e-commerce brand. The past year has been a whirlwind of unpredictable price hikes, supply chain mishaps, and impossible forecasting.
But that’s just one side of the coin.
Even though inventory planning in Q4 feels like peering into a murky crystal ball, you can still put strategies in place to ease your post-holiday inventory hangovers and keep the revenue coming.
What to Do with Excess Inventory After the Holidays
- What Is Excess Inventory?
- 5 Ways to Deal With Excess Inventory After the Holidays
- Sell Your Excess Inventory and Cure Your Holiday Hangover
What Is Excess Inventory? (And Why There May Be More of It Than Usual This Year)
In short, excess inventory or ‘overstock’ is exactly what it sounds like. When you have more products than you can sell, you have excess inventory.
After the pandemic-driven sales spike and inevitable market correction, it has been a bit uncertain where the future of e-commerce holiday sales will fall. After a peak in 2020 and 2021, and the subsequent drop in 2022, where does that leave us in 2023?
Fortunately, we’re seeing a gradual increase (AKA more sustainable growth) in e-commerce sales, bolstered largely by the growth of mobile shopping. In fact, mobile shopping is seeing the largest holiday sales growth at 14.8% YoY increase.
Taking a broad view, this may mean overall revenue from this holiday season will be roughly the same. But thanks to increased product costs, sellers will likely see more inventory left on shelves as consumers purchase fewer products for the same amount of money.
5 Ways to Deal with Excess Inventory After the Holidays
If your products are non-perishable, you can store them until the next holiday season rolls around. However, with soaring storage costs, this option isn’t always feasible for growing brands.
This year, sellers may have to get more creative about how to liquidate or store excess inventory. The tactics you choose will depend on your unique brand and e-commerce business model, but here are a few ideas to consider.
1. Host a Post-Holiday Sale
Once the holiday season is over, many consumers cut down on their purchases, but remain on the hunt for lower prices.
In fact, 68% of holiday consumers will likely shop the week after Christmas to take advantage of post-holiday sales and promotions, while putting their holiday gift cards to use. The mentality of shoppers shifts from gifts for others to “rewards” for themselves.
If you serve a younger demographic, you’re in luck. Shoppers between the ages of 18–24 are the most likely to shop the week after Christmas.
By marking down prices and promoting your post-holiday products on your most-visited channels, you may be able to offload excess inventory and at the very least, break even.
With the right tools and data insights, you can also implement retargeting strategies that nudge bargain-hungry post-holiday shoppers closer to conversion on your overstocked products.
2. Reduce Returns by Offering Exchanges and Gifts
An equally busy return season often follows the busy holiday sales season. This is obviously a nightmare for over-inventoried retailers who are already short on storage space for their existing overstock. One possible solution?
Ease the sting of high returns by encouraging customers to exchange their products and promise them a surprise gift along with their new product. Additionally, if your business model allows, you could encourage shoppers to keep (and donate) any exchanged items. A member of our team recently purchased from Bombas and needed to exchange for a different size. Bombas’ customer service allowed her to keep the original purchase and encouraged her to pass it on or donate to someone in need.
This is a great way to reduce excess inventory by offering products as free gifts or “pass it on” that also helps increase customer loyalty. Studies have even shown that this could have a positive effect on purchase satisfaction, which can help boost your customer retention rate.
3. Bundle Your Excess Products
When in doubt, consider creating “bundles” at discounted rates. In fact, consumers prefer buying bundles since they cut down on search time and help them save money.
By bundling up your best sellers with your less popular or slower-moving items, you can clear out your excess inventory, increase your bottom line, and improve the customer experience.
Want to get really creative? The Running Buddy kills it with its “Super Saver Pouch Bundle” display.
The brand’s website includes an entire page dedicated to promoting cost-saving bundles and prominently displays its slashed prices. With cost-saving bundles like this, post-holiday shoppers can instantly see how much they’d end up paying if they purchased the products separately vs. in a bundle. It’s FOMO marketing at its finest.
4. Pop-Up Shops
From brick-and-mortar stores to e-commerce websites, many brands have seen successful with pop-up stores. Some have even seen tangible revenue outcomes to the tune of a 46% increase in sales and a 51% lift in visibility.
Pop-ups not only create great opportunities to liquidate overstocked inventory, but the physical store setting can also help you build closer connections with your customers and contribute to an omnichannel presence.
5. Don’t Destroy; Donate!
If you want to make the best out of excess inventory, donating it may have some valuable benefits.
It’s no secret modern shoppers have an increased focus on social responsibility. By donating your overstocked products to an important cause or organization, you can increase customer loyalty. Socially conscious shoppers love it and you can sleep well knowing you’ve done a good thing.
Depending on where your brand is domiciled, donating may also help you secure certain tax advantages. There may also be opportunities to work together with partner companies or other local sellers. E-commerce software provider Seller Labs worked with clients to donate over $100,000 in toys to local communities all over the US.
Interested in donating part or all of your excess holiday inventory? Be sure to meet with your tax professional to see which tax benefits you might qualify for.
Sell Your Excess Inventory and Cure Your Holiday Hangover
The only thing worse than running out of stock is having excess inventory at the end of a sales season. But if you find yourself with excess inventory after the Q4 holiday rush, know that you’re not alone.
Slower sales and higher storage costs put increasing pressure on the bottom line. Many sellers are facing tight cash flow heading into the new year as a result.
Luckily, that’s where we come in.
At SellersFi, we’re committed to helping e-commerce entrepreneurs achieve their goals during the busy holiday season and beyond. With all-in-one funding solutions, you can secure the e-commerce funding you need to launch new products and expand into new markets. Funding can also help you offload your overstocked inventory and get your forecasting back on track.
Learn more about how SellersFi helps brands grow. Check out our growing library of success stories from sellers just like you.
