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What happens to excess inventory is entirely up to the business. There are no inventory police making the rounds of retail stores, manufacturing plants, and other places where excess inventory can accumulate and telling the owners to get rid of their unwanted, unsold items. Those owners need to decide when enough is enough and make their own decisions as to the best way for them to move out their excess inventory, ideally without having to write it off as a total loss. Find out what happens to excess inventory below.

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What is Excess Inventory?

Excess inventory is a broad term that applies to whatever goods a business sells that exceeds the demand for them and remains unsold. There are many reasons that businesses end up with excess inventory on their hands. Research indicates that 60% of excess inventory can be attributed to shipment delays that cause the demand window to be missed, while 25% is due to technical challenges such as system integration issues, and 15% is caused by other factors, such as quality problems or high return rates.

The truth is, knowing why there is excess inventory of particular items isn’t much help in deciding what to do with them–though that certainly could help prevent overstock situations in the future.

What Happens to Excess Inventory?

The main options for moving out excess inventory are to sell it, donate it, or trash it.

Let’s look at these in reverse order.

• When you discard excess inventory and it ends up in a landfill, you not only lose your entire investment in it, but you also add to the planet’s environmental challenges.
• Donating excess inventory keeps it out of a landfill, but it doesn’t recapture any of the money you’ve already invested in the items.

That leaves selling the excess inventory.

Selling Excess Inventory

Retailers with physical stores can hold in-store promotions to clear out excess inventory. Everyone loves a good blowout sale. You won’t make as much selling off excess inventory items at discounted prices as you would have if you’d been able to sell them at full price, but something is always better than nothing.

You might also try deeper discounts on bulk sales—the greater the quantity purchased, the lower the price per item.

Product bundling is another approach to selling excess inventory. Pair an item from excess inventory with a faster-moving, thematically related item or multiple items and sell them as a bundle for an attractive price—for example, an overstocked cheese grater could be bundled with a pasta bowl and spaghetti tongs. Even if there was little or no profit on the cheese grater, it’s no longer taking up shelf space and the two other items may have sold faster than they would have separately.

It’s common these days for retailers to have an online store as well as a brick-and-mortar establishment. Or they might also sell through an online marketplace such as Amazon or eBay. And some offer items for sale through their social media pages. Any of these can be a viable option for converting excess inventory to cash through B2C online sales directly to customers.

Businesses looking to clear out their entire excess inventory in a single transaction also have a couple of options. They can sell all of their overstocked items to another business on a B2B website or other online marketplace.