How To Address Overstock Problems In Online Stores During Holiday Sales

June 17, 2024

November 14, 2022

•

6 min read

A foreseeable economic slowdown is pushing consumers to tighten their budgets and hunt for the biggest sales. Therefore, merchants have all reason to be excited about the BFCM frenzy this year.

Still, this also casts a shadow over inventory management. Rapid shifts in shopping behaviors make it harder than ever for businesses to predict demands and create stocking plans for large-scale shopping seasons like BFCM and Christmas.

In this article, we analyze the root cause of overstocking and propose some solutions to address it.

Understanding Overstocking Problems

What is Excess Inventory?

Excess inventory or overstocking happens when the stock amount in the warehouse is over the customers' demands. In other words, it’s stores having more products than they are able to sell.

Why Is It So Easy To Get Overstocked?

It's common for retailers, especially start-ups, to experience surplus inventory. The very first reason is the failure to forecast demand. Stores may overstock (as well as understock) as a result of inaccurate demand predictions. You may not have enough sales data (as a new retailer) or your methods and techniques are insufficient to handle market complexities. It's also easy to overlook a number of demand-influencing factors such as seasonality and the overall economic situation.

Businesses usually order in surplus to guarantee high levels of product availability when the supply chain gets difficult (like when COVID-19 broke out). However, many find it difficult to sell their goods when demand ultimately drops. The circumstance is an illustration of how companies attempt to overcompensate as a result of market concerns. Moreover, surplus inventory can also be the result of a bargain. Brands may stock their warehouses with products that aren't necessarily in demand when offers are too good to pass up. This is why it's important to use an inventory management software and regularly check its data.

Last but not least, inappropriate marketing efforts to clear out inventory make overstocking problems even worse. Most of the products have a life cycle. While demand is at its peak during the maturation of a product, inadequate merchandising strategies don't do justice to the sales potential. That leads to excessive stock at the end of the product life cycle. Having too much inventory is a result of not selling things when they are most in demand.

What Happens When You Overstock?

The excessive inventory does no good for brands.

The most obvious issue is a restriction on capital flow. Unsold items limit the amount of cash that may be utilized for other purposes. In other words, sales revenues support ongoing corporate activities that won't generate benefits. Keeping slow-moving merchandise is expensive since you have to pay for storage space without seeing a return. And that doesn't include paid staff, utility costs, insurance, taxes, and other costs.

Additionally, surplus consumes space in your warehouse that may be used for more lucrative goods. Products depreciate quicker the longer they are stored. Along with passing up that chance, you run the risk of failing to seize an emerging trend.

Product obsolescence is also a big problem. While this normally refers to goods that have expiration dates, like food and medicine, it might also refer to products that have lost value because they are out of style or have degenerated in quality or materials. Businesses occasionally have little choice but to discard inventory because it cannot be sold, even at a discount.

How Does Reasonable Stocking Help With BFCM & Year-end Sales?

Your company's performance in the future BFCM and Christmas periods will be directly impacted by your ability to manage your inventory effectively. Your brand must provide things when clients need them if it wants to remain competitive. Here are some more advantages of having good inventory control.

Apparently, it helps to optimize spending. The cost of keeping products in a warehouse is not cheap, especially if your offerings need to be stored in a special condition. Therefore, if these items are not purchased, it's such a great waste. Inventory control ensures you don't overspend on resources and unpopular products.

Keeping track of your inventory ensures you stock sufficient quantities that will sell. This determines how financially successful your company is. Additionally, you may decide which SKUs to restock to make sure that orders keep coming in. It maximizes the completion of orders. Based on the sales number of products, you may determine how to disperse your inventory.

Great inventory management improves customer satisfaction by speeding up delivery and paying less for shipping. When combined with the appropriate product discovery tools, such as recommendation engines, it brings the right product to the right shoppers, increasing the chance of sealing a sale. Moreover, at least 30% of customers feel negative when coming across stockouts. 70% will switch to a rival after seeing their desired items out of stock three times.

Get how important it is for managing inventory during the biggest sales events of the year? Let's move to the best part - some tactics to prevent and handle overstocking.

Better Stock Forecasting Through Data

How do you decide which products to stock? Data analytics may provide insightful information about what products are in demand. Site search history is definitely an excellent source to predict customers' demands. The Top search terms reports let you know your trending keywords while the Top search terms without results reveal potential sales. Collections that have the highest views or traffic are also a signal for a rise in customers' interest.

Boost's Analytics feature gives you insightful data about shoppers' behaviors so you can make better predictions for inventory.

Compare this to market and economic trends to identify changes in consumer demand and the supplier chain. When you combine your market research with your vendors, you might gain even more insights.

It will be possible to plan how much to order from suppliers and manufacturers after you have determined which SKUs will be in high demand. Months or weeks before BFCM & Year-end sales, having enough goods will go a long way toward guaranteeing consumer happiness.

Better Preparation For Annual Or Holiday Sales

You may start with sales preparation once you've decided which goods should occupy your retail space on BFCM, year-end, and new year. Stock up on your highlighted products and start promoting them right away. How much you should stock will be determined by your pre-sale stats.

Estimates from your inventory management also help you with the new product launch. Even though it may be riskier, you may gauge consumers' degree of interest by looking at how they interact with wishlists, and email registration forms. To let customers know when it's ideal to make purchases through your app or website, use an integrated email campaign.

Annual shopping occasions like BFCM are excellent venues for selling surplus stock and seasonal merchandise. During this time, consumers are very motivated to make purchases, both for themselves and for loved ones.

The Thanksgiving weekend, also known as BFCM, is not the only significant holiday you may observe. Easter, Mother's Day, Back-to-College, and Back-to-School are some of the top US consumer spending occasions. Even Amazon Prime Day poses a halo effect on non-Amazon retailers.

It's vital to adjust your on-site experience to accommodate customers of different occasions if you want to maximize the benefits of shopping holidays and seasonal specials.

In the US, sales from rival competitors’ sales events are catching up to Amazon Prime Day (Source: eMarketer)

Better Marketing Strategy With e-Commerce Merchandising

When choosing which brand or retailer to buy from, 88% of consumers say that having a wide selection of products is vital. Make sure your surplus products are visible to your customers, especially if it fits their needs. Some practical strategies to make your overstock inventory more noticeable are:

Check these out!

Make it simple for customers to browse your overstock inventory, especially if you have hundreds or even thousands of goods that are currently on sale. For instance, Sage+Paige offers a range slider for the filter by price, which is useful for the price-conscious.

With faceted search, you can provide customers with more options for exploring product results. It gives more detailed and precise filtering choices to your search results page, often known as guided navigation. According to the type of items your customers are browsing, the filter options often vary. With faceted search, your consumers will not only locate what they were looking for but also discover more about your product range.

A good example of the faceted search on Red Dress. You can try this with Boost Product Filter & Search.

Mitigate Risk and Maximize Revenue with Pre-orders

Accurate demand forecasting is crucial, but even the best predictions can fall short. That's where Boost's Pre-order feature steps in.

By allowing customers to purchase products before their official release, you can gauge demand with unprecedented accuracy. This intelligent approach lets you fine-tune production, minimize waste, and maximize profit margins. It's a win-win: you get valuable sales data before launch, and your customers get exclusive early access to highly anticipated items.

Boost's Pre-order functionality isn't just about gathering data; it's about building excitement and driving sales. You can offer attractive discounts and flexible payment options (full payment, partial payments, or even no upfront payment) to incentivize purchases and reduce cart abandonment.

This pre-launch buzz translates directly into higher day-one sales – often exceeding expectations by a significant margin. Boost helps you accelerate conversions, drive more revenue, and establish a loyal customer base from the very beginning. It's the perfect tool for managing risk and maximizing return on investment for new product launches.

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Turn Stockouts into Sales Opportunities with Back-in-Stock Notifications

Stockouts are a retailer's nightmare, but with Boost's Back-in-Stock Notifications, you can transform this potential loss into a sales opportunity.

The “Notify Me” button, easily customizable to match your brand's aesthetic, collects customer contact information for those eager to purchase sold-out items. Then you can set up email flows on Klaviyo to automatically send email or SMS alerts once the product is restocked. This ensures you don't miss a single sale.

Boost's Back-in-Stock feature is more than just a notification system; it's a powerful lead generation and customer engagement tool. You can effortlessly track and manage back-in-stock requests, gaining valuable insights into high-demand products.

The ability to import and export leads allows seamless integration with your existing marketing tools, streamlining your workflow and maximizing your marketing ROI. Boost empowers you to accelerate conversions, drive more revenue, and cultivate lasting customer relationships by capitalizing on the pent-up demand for your most popular items. It's a simple yet effective way to keep customers engaged and coming back for more.

Before You Leave

Making the most of excess inventory is an important aspect to keep your competitive edge over rivals. Consumer behaviors will change in a way that makes it challenging to precisely estimate demand and manage the supply chain. Still, with a clear mind, data, and complete insight in your hands, you can be better at forecasting and handling overstock. After all, being flexible and staying in sync with what customers want and need is the key to success in a time of uncertainty or downturn.

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Ellie Ho

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Content Marketing Specialist

June 17, 2024

•

6 min read

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How To Address Overstock Problems In Online Stores During Holiday Sales

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