Retailers have sales promotions for a variety of reasons. Sometimes a retailer needs to slash prices to get rid of excess inventory – if inventory is idle on a shelf in a warehouse, not only is that unusable capital, but it also prevents a merchant from carrying faster-moving items. A retailer may need to attract more traffic, whether it’s in-store or online or both. Other times the motivation may be a mix of both.

Inventory Management Software can help Online Retailers Avoid Taking Losses on Sales

Sales can be tremendously beneficial, particularly if retailers are successful in winning new customers or freeing up space that can be used to further drive revenue.

However, sales can also be costly. The Chicago Tribune recently reported that several retailers offered deep discounts on products during the holiday season in an attempt to woo customers. However, this tactic hindered the ability of online retailers to turn a profit, as heavy sales meant they were making less money for each transaction.

“Consumers took a break from shopping after Thanksgiving weekend, so retailers were pressured to offer deep discounts and promotions in the final week before Christmas to finish the holiday on a positive note,” ShopperTrak founder Bill Martin told Reuters. As a result, several retailers – such as Wal-Mart and Gap – found their stock prices taking a hit, despite overall retail spending being on the rise according to preliminary reports out of groups such as the National Retail Federation.

Whether online retailers choose to slash prices to offload product, win new sales or for any other reason, inventory management software can help retailers gain greater transparency into inventory levels and help them minimize or eliminate losses. Being able to tell in real time which products are popular and which ones aren’t allows merchants to take action quickly.

For example, say merchants offer a seasonal product across two different online marketplaces. The item sells out on one but isn’t quite as popular on another. The right inventory management software would enable online retailers to notice the disparity and quickly allocate inventory to marketplace that is going to drive more sales. Without the right inventory management software, the merchant may have ended up with unsold stock that would have had to been discounted offseason to offload it.

When it comes to sales, information is everything. Access to the right data can help online retailers identify which product would be ideal for a sale, how much to slash prices and how much inventory retailers need to shift.