Excess Inventory Can Be a Good Problem to Have in Ecommerce
The more the merrier, right? When it comes to ecommerce inventory, this isn’t always the case.
Ecommerce brands spend countless hours worrying about their inventory. Striking the balance between too much and not enough product on hand is a difficult feat for any business, no matter the industry. If you’ve ever experienced excess inventory at your business, you may have felt the added pressure of getting product off the shelves in a timely manner. But, we have good news! There are ways to manage excess inventory in the future by revisiting decisions made in the past.
Once you grasp the opportunities excess inventory presents, you can manage the overflows. With our recommended strategies, brands can boost storage visibility, customer engagement, and sales, leaving room for new inventory. Think of it as mindful innovation.
Let’s dive in!
What Is Ecommerce Excess Inventory?
Excess inventory occurs when brands have more products in stock than they are able to sell.
No matter how well demand forecasting nailed product need, projections and customers can go sideways. Maybe a hot product flew off the shelves two months earlier but it’s so yesterday right now. The excess inventory is sitting idle, collecting dust, and weighing heavy on your bottom line.
While you might not change how your customers feel about the product, you could gain new interest by avoiding the groundwork that led to excess inventory in the first place, and plan for alternatives.
How Does Excess Inventory Happen?
Inventory fluctuations, having too much or not enough, can also be driven by forces beyond your business and consumers too.
For example, weather-related shifts can impact fashion trends. Let’s say the buzz for 2025 spring and summer is boho chic in suede. Although it sounds fabulous, a miss in timing could rack up inventory.
Fashionistas tend to buy apparel on-trend. If a suede skirt is all the rage in April, but most of the U.S. is set for sizzling summer temperatures, consumers may take a pass on a full-price purchase. If an ecommerce brand leaned into the style, increasing supply, climate shifts could melt anticipated sales.
There are other circumstances affecting inventory management. Some manufacturers source their products and materials from outside the U.S. where carrier delays, ESG regulations, and tariffs can impact production schedules and delivery timelines. To correct, retailers may choose a just-in-case (JIC) methodology to avoid stockouts and ensure inventory in the warehouse—which can lead to excess inventory.
Excess Inventory Is Costly
There’s some truth to the saying, having too much of a good thing can cost you. Excess inventory in the warehouse incurs costs to your business.
There are storage fees and maintenance costs to holding product, and that money could be better spent supporting new featured items or other business activities. Some goods are temperature-sensitive needing specific storage requirements. Others may have a shelf-life and when surpassed, the products are spoiled, unmarketable and obsolete, potentially compromising customer relationships.
In addition to reducing profitability, idle inventory can damper worker morale. People thrive on productivity. Employees are energized when they are busy moving product and restocking shelves to meet customer demand and create epic customer experiences. Excess inventory can slow employees’ enthusiasm and increase concerns about job stability.
But all is not lost. In fact, turning surplus into success is possible.
Knowing How to Work with Excess Inventory Is a Game-Changer
Both direct-to-consumer and retail brands can resolve internal hiccups by repositioning their inventory approach. Effectively managing excess inventory can add value and boost the customer experience.
Success can be yours by following the suggestions noted below and using them at the right time.
Real Demand Forecasting
If there’s one thing ecommerce businesses have learned, it’s this – product-demand history doesn’t always repeat itself. Relying on gut instinct or the most popular Google searches to help with demand forecasting is only as reliable as the opinion you’re operating from. And opinions shift like the wind.
Today, seamless order fulfillment and right-sized inventory go hand in hand when the process includes software supporting demand forecast accuracy. The technology goes beyond reviewing the history of product sales, and digs into shifting consumer behaviors and risks of supply chain disruptions affecting inventory needs. And because the system is automated, it reduces human error—common when relying on Excel spreadsheets for answers.
And when conditions change, and often do, having access to data analysis in real-time gives ecommerce businesses advantages, like greater visibility. Online retailers can then make informed inventory decisions when product is stagnant on shelves. With more accurate forecasting, businesses can stay lean and consider just-in-time (JIT) inventories too.
Kitting and Bundling
Some could say the magic of ecommerce is in the intuitive experience. Consumers appreciate retailers that present products well. But if your excess inventory includes product that has lost its luster or social status, bundling it with other products could give it new life. And by kitting products, what was once stale now satisfies your customers.
Similarly, brands may add stagnant products to a bundle as a free gift, further delighting customers during the unboxing experience.
Promotions and Discounts
Everyone loves a good deal. Many would-be customers wait for price drops before they go all in. It could take some coaxing before a brand is ready to let product go for less, but the sooner it happens your margins will thank you. However, there’s no reason to stop there.
While you have a captive audience, the timing’s perfect to promote presales of your next product, with a limited-time only discount. The strategy presents added value for consumers and gives them something to look forward to: another brand experience to enjoy and talk about.
Pro-tip: Where you market the product on your website can make a difference in sales activity. Place special promotions above the fold of the screen or dedicate specific landing pages for them to get the attention they deserve.
Recommerce, Resale, and Repackaging
Excess inventory, left unattended, could wind up in a landfill and it’s a missed opportunity for a feel-good brand experience.
With sustainability gaining popularity across generations, many consumers seek brands that practice environmental and social consciousness. By sharing ways to remove product waste and including customers in the process, it’s a win-win.
Many brands have resale or recommerce verticals to market excess inventory and sell gently used products. Existing customers can return their goods in exchange for money or a store credit good towards a future purchase. Brands can also repackage products differently, creating new appeal to different sets of customers.
Donation
There’s always a place for your excess inventory at a local charity or non-profit organization. The donation will be appreciated by people who can make good use of it. They may choose to resell your products to raise funds, increasing awareness for their cause and boosting your brand. Besides freeing up storage space, your charitable donations could be tax-deductible too.
When You Partner With a 3PL, Excess Inventory Moves Swiftly
For the what ifs you think about during inventory management planning, when the unexpected happens, having extra help to figure out solutions can save your business time, money, and brand reputation.
The relief is there, ready and available, by partnering with a solid fulfillment partner guiding preventative and proactive methods to move excess inventory, and more.
Working with a one-stop, full-service, logistics company like ShippingTree ensures product volume moves with demand. Our demand forecasting systems combine market trends with your brand’s historical order volume to advise next steps. And with our proprietary inventory management system (IMS), customers stay on top of their inventory in real-time, from warehouse to end-delivery.
ShippingTree’s service capabilities go further. Our system integrations are friendly and communicate easily with the software you already have: ERP, EDI, shopping carts, returns, and big marketplaces like Amazon and Walmart.com.
To manage excess inventory without a second thought, discover the advantages of ShippingTree’s inventory management capabilities and experience the difference teamwork makes to your productivity and cost savings.
