Excess inventory, stock surplus, dead inventory - you name it, is the inventory that is left unsold at the end of the season. Whether they didn't sell as expected or were ordered in abundance as a precautionary measure (“just in case”), this surplus inventory becomes a burden, causing overstock issues and proving challenging to dispose of.

The question is how to deal with excess stock, and can you even avoid it? In this blog post, we will dive deep into excess inventory, how to avoid it, and how to leverage technology to convert slow-moving inventory into sales and clear the clutter.

What causes inventory overstock and dead inventory?

There are many reasons why overstock can occur, usually, there's a lack of visibility coupled with recurring stockout situations in the past which leads to:

Ordering too much to avoid out-of-stocks

In many cases, excess stock can be a result of past recurrence of stockouts. If the business has experienced frequent out-of-stock issues it starts to compensate with overstocking of each item to avoid that at any cost.

While it does make sense that you don’t want to disappoint any customer and want to ensure high on-shelf availability, it is still a problem as it has costs.

An imbalance between purchasing stock and selling stock reduces your revenue, in addition, the storage costs are higher and so is the handling.

Mistakes in dispatch and delivery

Other cases are caused by mistakes along the supply chain. For example, a store has received way more stock than it should have while others receive too little. By the time the mistake is noticed and you try to fix it, you might have lost the moment.

Another example is simply boxes that haven’t been shipped at all, and at the end of the season, you discover it has been lying in the distribution center this entire time.

These examples are caused by a lack of visibility into your supply chain and a lack of real-time tracking that helps you prevent those kinds of mistakes.

Insufficient data regarding item performance

In the absence of item-level tracking, decision-makers are basically operating blindly. And when ordering stock it’s important to be very precise with amounts based on data and previous performance.

Furthermore, you must have a clear understanding of all the locations, since items aren't sold equally across all locations, so your purchasing should reflect this.

How to avoid inventory overstock?

The good news is that inventory overstock can be avoided, or at least dramatically reduced. The key to avoiding excess stock is precision, ensuring the data you rely on is accurate, and making sure your shipments are delivered on time and at the right places.

Unfortunately, it's easier said than done. Thus, retailers should start automating this precise and laborious process through technology.

Using RFID, BLE, and other technologies for automatic identification and data capture, allows retailers to track every item in real-time, analyze their performance, and allow data-based decision-making.

For example, in the past, if an item was stolen but you didn’t know, thinking it was there the entire time but not selling you might accidentally think this item is not popular while the opposite is true.

Hence, by reducing theft and shrinkage, and improving stock accuracy and availability you guarantee data reliability.

Furthermore, RFID provides transparency in your supply chain and logistics, enabling you to monitor and trace misplaced items, identify bottlenecks, and ensure accurate delivery of every item.

With such capability, you can reduce inventory overstock which leads to massive additional costs that bite from your bottom line

How to sell excess inventory?

But if you already have excess stock, what should you do? While many retailers choose liquidation companies to clear their surplus stock, RFID technology offers retailers the opportunity to handle and sell excess inventory on their own.

By tagging each item with RFID, you gain increased confidence in the accuracy of your inventory, enabling you to offer these items on your online store at discounted prices. Even if you just have one from each piece. 

This approach ensures the sale of every item, efficiently converting slow-moving and excess inventory into cash. With RFID's accuracy, you can confidently broaden your online offerings, supported by dependable data, while simultaneously clearing excess inventory and reducing clutter.

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In summary, excess inventory is a common challenge stemming from overordering, supply chain errors, and data insufficiency. Precision and technology, such as RFID, offer effective solutions to prevent overstock situations by enabling real-time tracking and data-driven decision-making.

For retailers facing surplus stock, RFID provides a means to independently manage and sell excess inventory. By tagging items, retailers can confidently offer discounted products online, turning slow-moving items into cash and reducing clutter. Embracing technology not only addresses excess inventory challenges but also enhances efficiency and profitability in the retail landscape.

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