What is Overstock and how to Prevent Excess Inventory in the Clothing Industry?
Dealing with overstock is a common issue in the apparel sector. It can be both a challenge and a chance for retailers, wholesalers, and distributors. In a previous discussion, we discussed the advantages of accessing surplus inventories and how it can be advantageous to acquire overstocked items at a much lower cost compared to their market value[Read the article]. But what if you suddenly find yourself in a situation where you have an abundance of inventory to deal with? This article provides practical solutions for effectively handling and reducing overstock’s impact.
The apparel industry frequently experiences overstock, which has a number of causes:
Issue with demand forecasting: Businesses that struggle to accurately anticipate customer demand for specific trends or products may end up ordering more inventory than necessary, resulting in an overstock situation.
Adapting to the Seasons and Staying Fashionable: Keeping up with the ever-changing seasons and rapidly evolving fashion trends can sometimes leave retailers and wholesalers with excess stock that becomes outdated or out-of-season.
Bulk Purchasing Commitments and Cancellations: Overstock can become a problem when wholesalers and distributors are left with large amounts of unsold inventory due to bulk purchasing commitments and cancellations from buyers.
The Disadvantages of Overstock
Having excess inventory can be a burden on your business, because it freezes your money and takes up valuable space in your warehouse. As discussed in Surlups Stocks Article excess stocks are usually sold way below their real value for the sake of leaving room for incoming goods and getting instant money on the account of a company.
How to deal with Surlups?
One way to deal with overstock would be to consider liquidation. Clearing out surplus inventory by offering clearance sales or discounts at outlets allows you to immediately return portion of your money, which might be the best strategy if you have any other deal to invest in.
Another way to fight existing overstock would be to go on surplus inventory platforms. Online platforms that focus on buying and selling surplus inventory provide a convenient way to sell off extra stock. By tapping into a network of buyers who are specifically interested in purchasing excess inventory, you can effectively streamline the process of reducing your surplus.
Besides liquidations and surlups, you could likely make a contribution to a local community, which would not return to you as a profit but would always benefit your brand’s image as well as provide tax benefits.
But most crucial question is not how to deal with overstock, but rather how to prevent it happening. If excess stock is a frequent guest in your warehouse, you should review your inventory management strategy and operations.
Prevent Excessive Stock with right Inventory Management
Forecasting Demand
Consider investing in advanced demand forecasting tools and techniques that utilize historical sales data, market trends, and predictive analytics. These tools can help you make more accurate predictions about future demand and improve your overall forecasting capabilities.
Inventory Tracking
Consider implementing a real-time inventory tracking system to effectively monitor stock levels across various channels. Having this level of visibility allows for swift adjustments to purchasing and sales strategies, minimizing the chances of having excess inventory.
Cooperation with Suppliers
Consider discussing more flexible terms with suppliers, such as shorter lead times and the option to modify orders based on sales performance. Being flexible is essential for adjusting to market changes without ending up with too much inventory.
Multi Sales Channels
Exploring different sales channels, like online marketplaces or pop-up stores, can help boost sales and minimize the risk of excess inventory. Expanding your customer base and exploring new markets can be a smart move, as it may allow you to transform surplus inventory into lucrative sales opportunities.
Retail and wholesale businesses need good inventory management. Although proactive planning can prevent many overstock situations, extra stock is nonetheless widespread. In such cases, liquidating these products can benefit traders or wholesalers while you get cash and tidy upф your storage space. As excess inventory is unavoidable in a company, inventory techniques must be continuously improved.