Airtight inventory management is one of the keys to running a successful and profitable business. Turning your inventory while it’s fresh and attractive to consumers is pivotal to your bottom line. Unfortunately, in today’s unpredictable marketplace, many things can happen to cause products to be sold for less than originally anticipated as well as outside of your regular distribution channel. These types of products are generally referred to under the category of overstocks. They include a broad range of product issues which are discussed below.
For most small and mid-sized manufacturers overstocks don’t occur on a regular basis. Yet when a problem does arise, the difficulty of moving merchandise may be compounded because many companies don’t have the connections to sell these products to the appropriate retailers.
I’ve been in the business of working with companies in the grocery, foodservice, health & beauty and housewares industries buying and selling problem or overstock products for more than twenty years. In writing this blog, my goal is to help manufacturers, distributors, wholesalers and retailers learn about the overstock business. I’ll provide steps to take to stay ahead of potential overstock issues and suggest ways to achieve the maximum amount of value for your product.
Having an excellent inventory management system is only one step in the process. Overstock situations happen, even with the most conscientious planning and oversight. Being knowledgeable about how best to manage an overstock situation can reduce losses and recover greater sales dollars from a tough situation.
I will discuss how The Lansing Group can help you sell overstocks to protect your current business channels and achieve maximum return.
Let’s look at the most prevalent causes of product problems:
- Overstock – In this case a manufacturer has too much product on hand and wants to sell it quickly. This is also known as excess inventory.
- Short coded – Products that have date coding (for example a Sell By Date or Best By Date) in the near future.
- Returned products – Products sent to a retailer, distributor or wholesaler that didn’t sell and are shipped back to the manufacturer.
- Refused products – A retailer, distributor or wholesaler has placed an order for a product that the manufacturer produced, but then cancelled.
- Warehouse changes – The need to relocate a stored product. It may be more efficient to sell the existing inventory off rather than move it to a new storage facility.
- Package changes – Any updates to current packaging, now means the old packaging is unusable.
- Ingredient changes – Similar to package changes because the label now has new wording and the packaging has become obsolete.
The list of reasons that can cause a product’s value to be reduced is long and these are just some of them. There is no end to the strange issues that can occur that are outside of the manufacturer’s control and create a need to sell a product at reduced cost to an alternate channel.
In upcoming blogs, some of the issues I will cover include:
- How to be sure your overstock product is NOT sold to your current customers
- How to improve your inventory management to reduce overstocks.
- How to price products in the overstock marketplace.
- Product dating and its relationship to pricing.
A review of the outlets that buy overstocks.
- How best to move obsolete packaging.
In my next blog, I will look at the ways you can minimize the problem of problem inventory!!
To discuss overstock or problem products you want to sell, contact Dick Lansing at
The Lansing Group: