Surplus Inventory: What It Is and How to Avoid It

Surplus Inventory: What It Is and How to Avoid It
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When it comes to managing your inventory, keeping too many products on hand at once can cause you more significant loss than gain. This is because several factors can get in the way of your sales.

Apart from reducing your available cash flow, a customer’s buying habits often change quickly. At the same time, sales are not always guaranteed despite the quality of the products. They can be affected by ongoing trends or the availability of more superior products. It’s best to rethink your strategy and keep a certain level of inventory at a time.

While excess inventory buyers can help address surplus problems, businesses still often find themselves at a loss on what to do with the stock they cannot sell successfully.  

What is Surplus Inventory? 

Surplus inventory refers to any excess products or items that remain unsold or unused because of inaccurate demand forecasting. These extra items are often not anticipated to be sold by their expiration date and become wasted products. 

Why Do You Need to Avoid Surplus Inventory? 

Being unaware of the general number of products you sell on average can lead to excess amounts of unsold inventory, which can quickly become a liability to your business. If you don’t maintain proper management over this and stock up on too many products in your storage facility, you risk experiencing some of the many disadvantages listed below.

  1. Waste of storage space

Having excess amounts of unsold products in your storage facility can leave you with little to no space for inventory that may sell more quickly. At the same time, it also prevents you from taking in other products that you urgently need to help your business grow. 

  1. Increase in carrying cost

While you can always buy bigger storage space for your unsold inventory, these facilities still require a hefty fee for you to use freely. Since you are unable to sell some products, you end up losing more money in the process. 

  1. Product value depreciation

Your products would not always remain at the same selling value as what you originally bought them for. As time goes by, newer and more improved items will replace your stock, which means that you end up losing more money even if you manage to sell it later on. 

  1. Product expiration or deterioration

All consumable goods are regulated by several laws that state when it is allowed and not allowed to be sold anymore. Having an excess inventory of food, medication, and other consumables and selling them past their expiration date can cause major legal issues.

  1. Change in demand

Consumer habits constantly change based on current market trends and time. When you have surplus inventory, adjusting to these changes so you can sell them can be more difficult. 

  1. Revenue loss

The lack of income hits all aspects of your business and prevents you from moving forward and growing. Without revenue, you cannot provide a budget for your operational costs as your surplus inventory interferes with your plans.

How to Avoid Surplus Inventory

There are many ways you can avoid surplus inventory and gain better control over the products that you sell. Here are some methods you can try.

  1. Monitor your inventory

Having someone keep a close eye on your inventory status can keep you from buying too many stocks of one product at once. At the same time, you also gain a better idea of what your inventory looks like at all times.

  1. Plan the demand and forecast accurately

Look at your usual sales in the past and analyze the general buying behaviors of your customers. For example, if most of your inventory is sold at a particular time of year, adjust your purchasing routine in a way that meets this demand so that you only need to buy enough that you can sell.

  1. Analyze historical data to identify the causes

Before you can start solving your inventory problems, you first need to figure out what factors are causing it in the first place.

Based on data you’ve gathered from previous sales, take a look at details that may indicate why a product is not selling as well as it should. This can be anything from major competitors, product quality, relevance to a consumer’s needs, etc. 

  1. Liquidate your surplus inventory

If a product isn’t selling as well as you would have hoped, you can re-market it as something more refreshing using a new marketing strategy. These can be in the form of sales, bundled items, or even as freebies. 

Think Before You Buy

There is a truth in the old saying, “too much of a good thing can be bad for you,” in this situation. When running your business, you need to be careful about each step you take, including handling your inventory. 
If you need a quick solution to your surplus inventory problems, reach out to Surplus Inventory Buyer today. Get a quote now!

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What to expect

We purchase surplus inventory such as – general merchandise, consumer electronics, IT equipment, office supplies, home appliances, sporting goods and more. No quantity is too large for us. We always offer a fair price. We work with retailers, wholesalers, manufacturers, liquidators, distributors and bankers worldwide.