Introduction:
In the dynamic world of retail, managing inventory effectively is a crucial aspect of running a successful business. Whether you're a seasoned retailer or a small business owner, there comes a time when clearing out excess stock becomes a necessity. While the decision to sell clearance stock is often a strategic one, understanding what to expect in terms of returns is equally important. In this blog post, we'll delve into key considerations such as broken sizes, clearance items, and the role of liquidation companies in maximizing your returns.
What affects how much you can sell clearance stock for?
Broken Sizes:
One of the challenges when selling clearance stock is dealing with broken sizes. Retailers often find themselves with an assortment of broken sizes, such as only having: XXS,XS,S,XXXL,XXXXL. Unfortunately, this can impact the overall value of your clearance stock. Customers typically seek common sizes, so uncommon sizes may result in a slower turnover. This means that if you have lots of unpopular sizes and you haven’t got full size sets the amount you get for clearance stock will be significantly decreased. Consequently, it's essential to be realistic about the potential return on investment for items with uneven size distribution.
Clearance:
The very nature of clearance stock implies a lower price point. While this attracts bargain hunters and can help clear out space for new inventory, it also means lower profit margins. Retailers should be prepared for reduced returns when selling clearance items. However, strategically pricing these items can still lead to a profitable outcome, as long as the expectations are aligned with the discounted nature of the stock.
Sku and Quantity:
SKU and quantity are important to know when dealing with clearance stock. A SKU (Stock Keeping Unit) is a series of numbers and letters applied to a product to identify it from other products. This is different from quantity, as quantity is how many total units. Depending on who's buying your stock, will depend on which SKU:QTY ratio is most favourable. Usually you want low SKU and high quantity, giving you lots of the same products, making it desirable for potential buyers of your clearance. This is because your lot is seen as "itty bitty" with high SKU's and low qty's.
Location and Restrictions:
You may have to send stock from abroad to the UK, but this causes problems and will overall decrease revenue due to the shipping costs likely being quite high. This also appears with selling restrictions on said stock and an added problem of distributors not being able to sell your stock in some markets. This would then lead to your product being left unsold, taking space and therefore money to house. This is why this type of stock is seen as being undesirable depending on where the distributor is located.
Quality:
Quality is integral to being able to sell the stock at a high price. Something like a factory issue degrading the quality of the product will cause the consumer to not want it or prefer a competitor, therefore you would have to put your clearance stock to a lower price in order for it to sell.
Branding:
A product on its own can have a certain value, but a branded product gives a much higher look of quality, therefore higher price. Having your product branded not only increases the perceived quality, but also makes it recogniseable and a comunal factor.
FADS (Fast and Discontinued Styles):
Fast and Discontinued Styles, commonly known as FADS, can be a double-edged sword. On one hand, these items may have been trendy and in-demand at one point, making them attractive to certain buyers. On the other hand, trends change rapidly, and if you're left with FADS that are no longer in style, the resale value may suffer. When selling clearance stock, consider the relevance of the styles and factor in the potential impact on returns. This also affects how much stock is in circulation, as when it’s popular the supply of it increases drastically, but when the demand dies off you're left with lots of stock not being sold, massively decreasing price.
Liquidation Companies:
Turning to liquidation companies is a common practice for retailers looking to quickly offload clearance stock. Companies like Pink Liquidation specialize in purchasing excess inventory, providing a fast solution for businesses looking to recoup some value. These companies normally offer between 3-10% of the retail price. While this might seem low, it provides a swift and hassle-free way to move surplus stock.
Conclusion:
Selling clearance stock requires a strategic approach to ensure the best possible returns. Recognizing the impact of broken sizes, the inherent challenges of clearance pricing, and the influence of trends on FADS will help set realistic expectations. Additionally, exploring options such as liquidation companies, including those like Pink Liquidation, can provide a convenient avenue for moving excess inventory, even if the returns are a fraction of the original retail price. Ultimately, by understanding the nuances of selling clearance stock, retailers can navigate the process more effectively and make informed decisions to optimize their inventory management.