What is the Right Amount of Time to Hold on to Closeouts and Abandoned Inventory?

The question of when to offload closeouts, excess inventory, and discontinued items is a complex one that can significantly impact a business's profitability and cash flow. There's no one-size-fits-all answer, as the optimal timing depends on various factors, including the nature of the products, market conditions, and the business's overall strategy. Another thing that matters is what cycle the business is in. Is this a startup that made some poor purchasing decisions and is stuck with excess inventory they don’t need?  Or this this a mature company keen to offload excess inventory that has been sitting in a 3PL warehouse for years? Or is the company shutting down operations completely or downsizing and moving to a smaller warehouse?

• Understanding the Costs of Holding Inventory

Before diving into the timing considerations, it's essential to understand the costs associated with holding abandoned inventory and dead stock. These costs can include:

• Storage costs: The cost of renting warehouse space, paying for utilities, and maintaining inventory.
• Opportunity costs: The potential earnings that could be generated if the capital tied up in inventory were invested elsewhere.  Getting rid of liquidation inventory creates cash flow and makes room in your warehouse for new products. Offloading abandoned inventory and selling off closeouts and overstock liquidation inventory is important because it allows you to move forward with new and profitable products that sell.

Obsolescence costs: The loss of value that occurs when products become outdated or no longer in demand. Just because you have been storing old inventory for many years is not a good enough reason to continue holding on to it. By offloading overstock products and getting rid of closeouts that aren’t making you money, you will be able to concentrate on bringing in new goods and making money again.  Dead stock, overstock products, liquidation products, abandoned inventory and excess inventory is all old news. Get rid of it, move on, and start generating profits with better merchandise.

Damage and theft costs: The expenses incurred due to product damage or loss. Damaged products are not the same as liquidation inventory.  Closeout housewares, closeout pet products, overstock lawn and garden and excess inventory of tools and school supplies are all examples of brand new closeouts that simply aren’t selling.  Damaged goods may need to be donated or recycled in order to get rid of them.  If you are keen to clear stock from your 3PL warehouse in the United States, consider an online search using these terms: looking to offload closeouts, keen to clear stock, getting rid of abandoned inventory, closeout buyers, closeout brokers, discontinued items, overstock products, shutting down business, downsizing warehouse, closeout websites.

• Factors to Consider When Timing Inventory Offloading

1. Product Demand and Obsolescence:
   • Demand trends: If a product's demand is declining or expected to decline, it's generally advisable to offload it sooner rather than later to minimize losses. Customer trends are hard to follow, so getting rid of closeouts before the products flood the market may be a good idea. If you are looking to offload inventory simply due to cash flow needs or because you need to make space in your warehouse, this is less of a market concern.
   • Obsolescence rate: The rate at which a product becomes outdated or obsolete can influence the timing of offloading inventory. Products with a high obsolescence rate should be sold more quickly. As an example, dated food products should be liquidated quickly. Closeout home goods and closeout houseware everyday products can be obsolete inventory but there isn’t a clock ticking forcing you to liquidate quickly.
2. Market Conditions:
   • Economic factors: Economic downturns can impact consumer spending and reduce demand for certain products. In such cases, it may be necessary to offload inventory more aggressively. In our current environment where the economy is resilient, there is actually strong demand for overstock products, closeouts and liquidation stock. Discount retail stores and thriving and there is demand for closeouts, keeping inventory liquidators busy.
   • Competitive landscape: If competitors are offering similar closeout products at lower prices, it might be advantageous to reduce prices and sell the inventory quickly. If you have your company outside the United States, but warehouse inventory in the United States, it would be a good idea to find reliable closeout partners who specialize in buying closeouts, overstock products, excess inventory and who can help you liquidate inventory quickly.
3. Storage Costs and Opportunity Costs:
   • Storage costs: If storage costs are high, it's generally more efficient to offload inventory sooner rather than later. Spending more money to store old merchandise sitting in the warehouse is generally a poor business decision. Let’s be honest about it, it you have dead merchandise and liquidation inventory collecting dust on pallets, you should be looking to move the inventory and offload closeouts rather than spend money to continue storing it.  Getting rid of old products might be painful and a hit to your bottom line, but the problem only gets worse as time goes on.
   • Opportunity costs: The potential earnings that could be generated from alternative investments should be considered. If the opportunity cost of holding inventory is high, it may be better to sell it quickly. Remember, closeouts are taking up warehouse space that could be better utilized for new products arriving.
4. Business Strategy and Goals:
   • Cash flow: If a business needs to improve its cash flow, selling excess inventory and offloading abandoned inventory can be a valuable strategy. If you view old merchandise as cash just sitting in the warehouse it may be motivating to liquidate.
   • Inventory turnover: A high inventory turnover rate can improve profitability and efficiency. You are in the business of moving out inventory and getting rid of dead stock. Closeout buyers that specialize in liquidating inventory and working with closeout brokers and closeout websites understand this.  Inventory liquidators are accustomed to quickly moving out dead stock.
   • Product mix: Selling excess inventory and liquidating closeouts can help a business maintain a healthy product mix and avoid overstocking.

• Strategies for Offloading Inventory, closeouts and excess inventory.

1. Discounts and Promotions: Offering discounts or promotions can stimulate demand and help sell excess inventory.   There are always opportunity buys that you can promote in an effort to liquidate and get rid of inventory. If you are keen to clear stock, promotions are always a good option.

Bundle Sales: Combining excess inventory with popular products can increase sales and reduce the overall cost of holding the excess items.  

1. The Do's and Don'ts of Managing Excess Inventory | Elite EXTRA

Liquidation Sales: Selling excess inventory through liquidation channels, such as online marketplaces or auction sites, can help recover some of the initial investment.  

1. How Retailers Can Effectively Manage Excess Inventory and Offload Closeouts.

2. Donation or Recycling: If the inventory is no longer salable, consider donating it to charity or recycling it to minimize environmental impact. Getting rid of excess inventory is often more of an emotional problem than anything.  When we let old inventory sit in the warehouse for years and years we feel we have made an investment and we think it has value.  The truth is, the older the inventory is the less value it has and at some point it will cost you money to dispose of it.  Obsolete inventory is merchandise that literally has to be thrown away or donated.  Don’t wait this long before looking to get rid of closeouts.  There are closeout buyers and inventory liquidators willing to help you reduce your inventory.

The decision of when to offload closeouts, excess inventory, and discontinued items is a strategic one that requires careful consideration of various factors. By understanding the costs associated with holding inventory and carefully evaluating the factors mentioned above, businesses can make informed decisions to optimize their inventory management and maximize profitability.

Merchandise USA has been in the inventory liquidation closeout business almost 40 years. We buy closeout pet products, closeout housewares, overstock inventory of school supplies and hardware, toys and sporting goods. We can help you with the liquidation process and closeout brokers process if you are looking to offload lawn and garden closeouts, home goods overstock or any excess inventory of consumer products. If you have liquidation stock due to shutting down operations or moving your warehouse, we can help you. Wholesale liquidation companies are not all the same, so consider contacting Merchandise USA if you are getting rid of overstock inventory, closeouts and abandoned inventory. We liquidate overstock inventory of all kinds.