Dealing with slow-moving products
Here's a riddle that most retailers should be able to figure out: What's one thing you keep buying but never want to have? The answer is simple – slow-moving inventory.
Technology and eCommerce software, such as SalesWarp, has come a long way over the years, allowing you to identify trends more effectively. This makes your eCommerce operations more efficient overall, enabling you to invest more money into fast-moving stock while also enhancing your ability to make better decisions on what products to carry in the first place.
Still, slow-moving products are a reality and how you deal with these not-so-popular items can truly make or break your profit margins.
An ineffective retailer lets these units collect dust in their warehouses, while an innovative one will come up with new ways to package and present these goods to either gain customer good will or drive revenue.
One approach to dealing with slow-moving inventory
Maria Haggerty, owner of Dotcom Distribution, recently spoke with Multichannel Merchant on the matter. She defined slow-moving inventory as SKUs that haven't moved in 90, 120 or 180 days, depending on your specific retail niche and the scope of your operations. This stock becomes an expense because it locks up capital that could be used to invest elsewhere and also occupies space in warehouses.
Haggerty asserts that data is critical to offloading these leftovers. By understanding the needs and wants of your customers, you can create innovative ways to get slow-moving inventory out of your hands into your customers' homes. For example, if a clothing store had a pair of oversized pants, try to market them to customers who have bought oversized clothing in the past. If that doesn't work, offer them a specific discount to sweeten the deal.
If businesses are selling low-value products, they could try including them in orders as a way of saying "thank you." A nutrition shop, for instance, could include a bottle of leftover vitamins in customers' packages as a bonus gift. Although this doesn't generate profit, it does endear the customer and could encourage future purchases.
"The longer inventory sits, the more expensive it will be for you. You also really run the risk of that inventory becoming obsolete," Haggerty told Multichannel Merchant.
"What the retailers get from that is really good loyalty from the customer. I mean, who doesn't love getting an extra surprise in their package?" she asked.
Maximizing efficiency by minimizing inventory
The economic recession has forced many retailers into being more efficient with their inventory. Not only does that mean prioritizing fast-moving products but also maximizing the use of their capital. Slow-moving products aren't making you any money, and they could actually be freezing resources you could reinvest in your business, whether that's buying new products or otherwise improving your operations.
Simply put, there are few things more cancerous to the success of a modern-day merchant than stagnant products. Capital is at a premium, and SKUs that aren't moving are only preventing you from otherwise achieving the success you seek.
Fortunately, eCommerce software can go a long way in making your inventory to work for you instead of against you. By making use of tools like SalesWarp, retailers can better manage their product catalogs and cross-sell slow-moving items, bundle them with other goods or otherwise reposition them for their target audience.