I need some outside the box thinking or maybe inside the box thinking on a problem I have.

    We, a retail store, take in new inventory that is all unique. Everything is good quality (but not all amazing brands) and everything gets priced by staff. We have a problem: 40% of inventory doesn't sell in the 6-9 months it spends on the shelves.

    Liquidation starts at month 5 or so. The things unsold may not be bad items, and liquidation can drop pricing down 90%.

    I'll give some easy numbers that are actually fairly realistic.

    Say we price 10,000 items and process a max of $90,000 from that run of items.
    Q1 we sell $24,000 and get everything on the shelves
    Q2 we sell half that, $12,000 (a separate new batch starts getting processed and shelved)
    Q3 we sell half of that, $6,000 (another separate new batch starts getting processed and shelved etc)
    Q4 if it's still around, maybe a $1,000. Not nothing but…the goal here is to move volume of old items in its final liquidation sales but it's never good enough to sell everything, we always have 40% left.

    By the end of Q3, 4,000 items are still on the shelves and are 90% off. We have sold $45,000 from said batch. From years of doing this and being established, I am not squeezing a ton more than $45,000 so when I near that value, I start liquidating and trying to move volume.

    But I don't know what to do with these items. In my mind, I'm leaving $45,000 on the table from either poor efficiency, lack of foot traffic, lack of shelf space, or restricted customer pockets where the new items take the cake vs older items.

    Space is a constraint but buyers want fresh items and so as each batch gets processed, that batches first quarter of 10,000 items can generate $24,000 (not immediately, labor time is a constraint on how fast new items get on the floor so those 10,000 items get shelved at say 300 items a day which means the oldest items are taking up half of the space with 4,000 or so left to sell. The obvious debate here is, yank anything worth nothing for full price fresh items, sooner the better.

    If you argue that old items make the shelves junky and we'd sell more of the full price new stuff…I'd agree, but the discounted items also retain customers and keep shelves full, not too full, but full.

    By removing them from the shelves from age, I lose the labor time from processing and pricing. 40% of that work goes wasted and if we didn't waste time on that pricing, we could price and shelve items faster and achieve higher/better cash flow in the opening Q1/Q2 of new item batches.

    I do not want to hoard old inventory, there is cost to removing anything leftover on the shelves and storing and then pulling that stuff out at a later date, especially when we always have new inventory that hasn't been picked through. The stuffs not bad or trash, it's just never found the right customer.

    As we grow my suspicion is we have a higher sale through rate, but for now…what can I do to avoid this old inventory or maximize the revenue from it and reduce the labor handing it?

    What to do about 40% of inventory that doesn't sell as priced?
    byu/NoTimeForPost inEntrepreneur



    Posted by NoTimeForPost

    7 Comments

    1. Set up e-commerce? Have things be in store first and then move to e-comm afterwards? Reframe the price drop as ‘online only deals’ — have shoppers sign up for a membership and call it a member discount. Allows you to pull it off the shelves, throw it in a warehouse and still monetize it. Plus expands consumer-base considerably and makes marketing more actionable (folks can purchase immediately from ad)

    2. Throw it all in bins and charge a flat rate for each item. You could even only do this a couple days a week if you wanted to. Similar to a bin box model but just on your old inventory.

    3. Your initial pricing might be too high or markdowns are too slow. Try boosting local traffic with an SEO platform like Babylovegrowth or explore online liquidation channels.

    4. BeautifulFile7731 on

      Honestly, I’m often unsure which channels customers will use to buy my product, but I don’t have the energy or resources to test all of them. This leaves me feeling helpless.

    5. prototypingdude on

      Things at 2+ mo hike the price put a clearance on them for 20-70% off at face for 1 week only (sell at 5-40% over cost).

      Inventory should never last more than 30 days.
      You pay rent on everything that sits there.

      Think:
      Product value = Cost + cost/sqft per month

      Get it out as quick as possible to gain value.

    6. DavidoftheDoell on

      The information is too vague to give really helpful ideas but it sounds like a thrift store or reselling returned items. The whole “fresh items” is throwing me off. There’s a store near me that dumps everything into bins and on day 1 every item is $50, day 2 it’s $25 etc. The final day is like $1 then the cycle starts again the next week. This removes the burden and labor of pricing. People can do it themselves easily as it’s mostly Amazon returns and see whether it’s worth it. 

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