If you work in eCommerce, you probably have mixed feelings about the end of the holidays. Sure, it’s a relief to not have to work so hard, but there are new stresses to contend with before the holiday lights even come down.
Sales are great during the holidays. But all the overstock afterwards, often exacerbated by a surge of returns? That doesn’t scream “holiday cheer.”
A lot of eCommerce operations – even the ones that are in a really financially healthy place – have overstock in January. If this sounds like you, don’t worry – there are things you can do with your overstock that will help you keep your operations tight and your profit margins large.
In this article, we’ll talk about how you can unload some of the post-holiday overstock sitting in your warehouse.
How Overstock Affects Your Ecommerce Business
No serious business owner is going to just toss out all their overstock without a second thought. But knowing what to do with it isn’t always so clear. And there’s not exactly a one-size-fits-all plan that you can find on page 1 of Google that tells you what to do. That’s why it helps to think about why overstock is a problem and how you can mitigate those problems.
At the top of the list are the direct financial strains. Holding onto excess inventory incurs significant holding costs. In fact holding costs can consume 20-30% of the inventory’s value on an annual basis. Add to this warehousing fees, especially if you’re renting external storage space, and the numbers can climb rapidly. Over time, certain goods may also depreciate in value, especially if they’re seasonal, trendy, or tech-related. This depreciation translates to lower sale prices, thus affecting profitability.
As tempting as it may be, it doesn’t always make sense to just sell off all the inventory in a rush either. Excessive sales and clearance events, driven by the need to offload overstock, can inadvertently send the wrong message to your customers. If consumers perceive your brand as constantly discounting items, they may question product quality or delay purchases anticipating future sales.
About two-thirds of consumers will wait for a sale item to become discounted before purchasing online. Over-reliance on clearance sales can inadvertently nurture this behavior in your customer base.
Beyond the tangible costs, there’s the lost potential. Funds tied up in overstock could have been reinvested into other avenues such as marketing, product development, or digital infrastructure. This means lost growth opportunities and the potential to fall behind industry peers.
It’s true that while some level of overstock may be inevitable, understanding its real impact is crucial here. We’re not just talking about a warehousing issue. Overstock is both a financial and a marketing problem that must be approached strategically so good opportunities don’t go unseized.
5 Steps To Unload Post-Holiday Overstock
1. Assess Your Inventory
Post-holiday, before diving into sales strategies, your first step should be understanding what you’re working with. There’s no way around doing a comprehensive inventory audit.
After the rush of the holidays, you may find your stock levels quite different from your expectations. A study by the National Retail Federation indicated that almost 18% of holiday sales might be returned, altering inventory levels. Taking stock, literally, ensures you are neither caught off guard nor overestimating your overstock situation.
Consider this as well – warehouses hire seasonal staff and experience high order volumes during the holidays. Even the best-run warehouses are working with less-experienced staff and are sending a lot more orders out and bringing a lot more back in. Human errors happen – items don’t get scanned out and they don’t get scanned in. At a high enough order volume, this might mean that it really is necessary to recount them all by hand.
Another factor to consider – not all overstock is created equal. Certain items may need immediate attention based on their shelf-life or relevance. How many people will be buying Christmas candy in January?
Older stock has higher holding costs and might be harder to move due to reduced demand. Perishable items, whether in terms of actual product expiration or style trends, require swifter action. And, if you have items specifically linked to the winter holidays, it’s wise to address these first before their seasonal appeal diminishes further.
2. Craft Strategic Discounts & Bundles
Moving post-holiday overstock often requires strategic pricing adjustments. But how you discount can make the difference between a successful sale and devaluing your brand.
At its core, discount pricing taps into the consumer’s desire for value. For the vast majority of consumers, price is a determining factor in their purchasing decisions. But that doesn’t give you carte blanche to slash prices recklessly. You have to consider perceived value too. A well-timed, well-presented discount can sway hesitant shoppers without undermining your brand’s worth.
One of the smartest ways to move overstock without steep markdowns is bundling. Pair a slower-moving item with a best-seller. The perceived value increases, and customers feel they’re getting a deal. For example, a winter accessory might be bundled with a popular year-round item. The trick is to ensure the pairing makes sense, adding value to both the customer’s purchase and your bottom line.
While discounts grab attention, urgency gets action. Flash sales, where discounts are offered for a limited time, can drive significant traffic and conversions. Loyalty program discounts can not only clear stock but also enhance customer retention. The ticking clock encourages immediate purchases, reducing the chance of cart abandonment or postponement.
Strategic discounting is both art and science. By understanding consumer behavior, using bundling wisely, and creating urgency, you can efficiently reduce overstock while preserving—and even enhancing—customer perception of your brand’s value.
3. Use Multiple Sales Channels
Diversifying your sales approach can significantly enhance your chances of offloading excess stock. Instead of relying solely on your primary platform, consider these alternative avenues to reach a broader audience:
Websites like Amazon and eBay host millions of shoppers daily. According to Statista, Amazon alone had over 2.7 billion combined desktop and mobile visits in December 2022. Listing your overstocked items on such platforms can expose them to a vast and varied customer base. These marketplaces are particularly useful for products with universal appeal, tapping into audiences you might not usually reach.
Even if your brand is online-first, that doesn’t mean you can’t find value in physical presence as well. Collaborating with local stores or setting up temporary pop-up shops can help you target consumers who prefer in-person shopping. Offering discounted items in a physical setting might give them the tangible shopping experience they crave while clearing your overstock.
Don’t underestimate the influence of social media in pushing sales. Platforms like Instagram, with their shoppable posts feature, or Facebook’s marketplace, are valuable tools for promoting overstocked items. Datareportal revealed that 27.6% of global internet users discover new brands or products through social media ads alone. Crafting engaging posts showcasing discounted items or bundles can drive traffic to your eCommerce site, turning views into sales.
By leveraging various channels, you not only amplify your reach but also cater to diverse shopping preferences. Whether it’s the convenience of Amazon, the tangibility of a pop-up shop, or the discovery potential of social media, multiple sales channels maximize your post-holiday overstock sales opportunities.
4. Consider Liquidation & Wholesaling Your Overstock
A lot of eCommerce store owners want to get rid of overstock as quickly as possible to cut down on warehousing fees. In order to mitigate potential losses and free up warehouse space, many turn to liquidation platforms and wholesaling options.
It’s best to not be too hasty here, but liquidation really is a good option when certain conditions are met. Specifically, liquidation platforms come into play when inventory isn’t moving even after deploying primary strategies like discounts or bundling.
If you’re finding items still sitting on your shelves 45 days post-holiday, it might be time to explore these platforms. These platforms enable you to sell surplus inventory in bulk, often to resellers or other businesses.
Wholesalers are another viable channel for offloading post-holiday overstock. They typically purchase in large quantities at reduced prices, then redistribute the products to other retailers or direct consumers. While you might be selling at a lower price point, the volume typically compensates for the reduced per-item profit.
If direct sales or liquidation isn’t appealing, consider consignment. By placing your items in another retailer’s store (physical or online), you’re leveraging their customer base while keeping ownership of your stock until it’s sold. It’s a risk-mitigated way of expanding your product reach and getting those items off your storage shelves. Just ensure you have a clear consignment agreement that spells out terms like sales splits, return policies, and display commitments.
5. Don’t Forget About Customer Retention!
While acquiring new customers is important, retaining existing ones can prove more cost-effective and valuable in the long run. As you strategize to offload post-holiday overstock, channel your focus towards the audience you already have.
Email marketing remains one of the most powerful tools for customer retention. A targeted campaign showcasing post-holiday deals can pique the interest of previous buyers. By tailoring emails to highlight exclusive deals or bundles, you re-engage these valuable patrons, encouraging them to explore your overstocked items.
Lost sales due to cart abandonment can be frustrating. However, with retargeting ads, you have a second chance. Remarketing to these visitors can recapture their interest. Users who are retargeted with ads can be twice as likely to convert. By reminding them of the items they left behind, especially with the added incentive of post-holiday prices, you’re not only clearing overstock but also recovering potential revenue.
Your most loyal customers can become your brand’s advocates. Offering loyalty points or referral bonuses for sharing post-holiday deals can create a ripple effect. Word-of-mouth remains a dominant force in the world of eCommerce. By tapping into this, you can reach a broader audience and incentivize repeat purchases.
Final Thoughts
Getting rid of excess holiday overstock can be stressful. After all, it’s not just about clearing space. There are tons of implications, ranging from strictly financial to branding and marketing. It can be tricky to balance it all.
But, fortunately, there are a lot of strategies you can employ to offload excess overstock. Strategic discounts and smart use of multichannel eCommerce can help increase direct sales. Customer retention strategies can help make the coming year more profitable. And when all else fails, liquidation and wholesale can bring in quite a bit of money in their own right.
With all this in mind, heading into the new year, remember: overstock is an opportunity. Use it wisely!
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