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How To Manage Slow-Moving Inventory & Turn it into an Asset?

Puneet Bhalla

Associate Director - Marketing @ Shiprocket

July 2, 2015

4 min read

Your inventory is one of the most significant assets in your business. But inventory can quickly turn into a liability when it is slow-moving. Slow-moving inventory ties up your business capital and engages resources that can instead be used for the growth of the business. Therefore, it is essential to devise ways to mobilize the slow movers! Let’s take a closer look at slow-moving inventory and how you can manage it. 

Calculating Your Slow-Moving Inventory

Different companies have different techniques for calculating the slow-moving inventory. But, three frequently used methods are quite accurate –

  • The first and very commonly used method is by calculating overstocked items. If a product is lying in the warehouse for 12 months and hasn’t had any demand for more than six months, it is usually considered slow-moving.
  • Others calculate stock turns to determine whether an inventory is slow-moving or not. This method is more accurate as high stock turns are generally a good thing for the business.
  • The third and most accurate calculation is the frequency of shipment. If a particular product hasn’t been shipped for a specific time, say 120 to 150 days; then, it is considered a slow-moving inventory.
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Try To Make It Work

Once you have identified you have sallow moving inventory, what will you do with it? After all, letting it take up space and capital is never a viable solution. Usually, people directly try to cut prices and sell these items off. But before you resort to such extreme measures, try the following first.

Once you have identified where you have slow-moving inventory, what will you do with it? After all, letting it take up space and capital is never a viable solution.

  • Find out if the products are visible on your webpage smoothly. You will be surprised how many people experience slow-moving items because their webpage isn’t exhibiting the product enough.
  • Even if it is visible, does it make a compelling case? Have you spruced it up with high-quality images? Try offering good quality images and product reviews and see if it does the trick. Try optimizing your pages to give these products a new face.

Evaluate Your Options

If none of the above seems to work, it might be time to take steeper steps. You still do not have to give those items away if you devise a few smart ways of selling them.

  • What works best with the Indian audience? SALE! Put these items on sale. Sales are an effective way to generate need as people love to seize the opportunity when they find things cheaper than their list price. You might have to cut your margins a tad bit by doing this, but you still wouldn’t be making losses.
  • Have you considered Deal of the Day? This is not just good to move slow-moving inventory but an excellent addition to your webpage. Deal of the day creates a shock value as it creates a sense of urgency among customers.
  • If you are still unable to push the inventory, you can resort to deal sites move your inventory. This should be your last resort as your wouldn’t make much money through this. Sometimes you might even incur some losses. But merchants take this option as it is still better than spending capital on sitting stagnant inventory.

Last Resort

Your last resort is liquidators, where you are sure to make some losses. Liquidators will help you clear your inventory but at a price. If all of the above techniques haven’t worked, you can be pretty sure that the inventory isn’t going to sell. It might be time to consider liquidators in such cases.

While all businesses face such problems, it is essential to learn from each episode and take a preventive measure. Avoid stocking inventory that isn’t as promising in the future. Why not try dropshipping? Read about it more here.

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