The Shipping Squeeze: High Costs Cripple Sales of Overstock and Surplus Inventory.

High shipping costs have become a significant obstacle for businesses looking to liquidate closeouts, overstocked products, discontinued items, abandoned inventory and unwanted merchandise. Today we will explore how these elevated costs directly impact closeout sales velocity, profitability, and ultimately, the success of liquidation efforts and offloading abandoned inventory from your warehouse.

The Impact of High Shipping Costs on Surplus Inventory Sales:

• Reduced Profit Margins:

Thinning Margins:Surplus and excess inventory, by its very nature, often carries lower profit margins. Adding substantial shipping costs further erodes these margins, making it difficult to achieve profitability on each sale. In most cases, if your goal is to get inventory off your hands and offload everything at one time, you will be liquidating your inventory below the original cost. You can expect to recover approximately 10% to 20% of your original cost when offloading closeouts to a wholesale inventory liquidator.

Price Sensitivity:Customers are acutely aware of pricing, especially when dealing with discontinued products or liquidated goods. High shipping costs can quickly negate any perceived savings, deterring potential buyers. Whether you have an overstocked situation in your warehouse due tocanceled orders, slow-selling inventory or simply having bought too much inventory, the liquidation process is going to be the same. You have to reduce pricing cheap enough to get offload the entire inventory in one fell swoop. This can be achieved by reaching out to inventory liquidators and other buyers for discontinued and closeout merchandise.

Increased Cart Abandonment:

• • "Sticker Shock" at Checkout: Unexpectedly high shipping costs at the final stage of the purchase process are a major cause of cart abandonment. Customers are more likely to abandon their carts and seek alternatives if shipping fees significantly increase the total cost. For this very reason, many sellers are offering free shipping so the customer doesn’t have to deal with this. Free shipping is good for the person buying the closeouts but not so good for the seller.

Limited Visibility:If shipping costs are not clearly displayed upfront, they can create a negative surprise for customers, leading to frustration and ultimately, lost sales. Bargain shoppers are interested in getting good deals on discontinued merchandise, closeouts, overstocked products and any other merchandise being liquidated below cost.

Reduced Order Volume:

Price Competitiveness:High shipping costs limit the ability to compete effectively on price. Competitors with lower shipping costs or free shipping options gain a significant advantage in the marketplace. Try to keep your prices low enough so you attract buyers, but at the same time try getting rid of excess inventory without losing too much money. If you are looking for a great closeout partner, try a simple Google search using terms including these: closeouts, closeout websites, closeout brokers, shutting down business and retiring, downsizing warehouse, very keen to clear stock from warehouse in the U.S., inventory liquidators, offloading excess inventory in bulk, liquidate inventory, looking for overstock buyers, surplus inventory buyers, excess stock from previous season, very keen to liquidate, need to clear out warehouse, overstocked goods in our warehouse, closing down operations, our company was bought out excess inventory.

Geographic Limitations:High shipping costs disproportionately impact customers in remote locations. This can significantly reduce the potential customer base and limit sales reach. Sometimes it’s easier to get rid of closeouts closer to home. If you are liquidating pet products or selling closeout lawn and garden products, shipping can increase the cost and kill the deal. Large closeouts like lawn mowers, shovels, furniture, etc are likely better off getting liquidated close to home.

Delayed Inventory Turnover:

Reduced Sales Velocity:Slower sales translate to longer inventory holding periods. This increases storage costs, increases the risk of damage or obsolescence, and ties up valuable capital. If you have too much leftover inventory sitting in your warehouse taking up valuable space, you may need to make a stronger effort to liquidate inventory and get rid of dead stock. Discontinued products take up warehouse space that can be better used to store new merchandise you can sell for a profit. If you are trying to get inventory off your hands, consider reaching out to the most reliable and largest closeout liquidators in the U.S. by listing closeouts on overstock websites.

Cash Flow Issues: Slow-moving inventory, abandoned inventory, closeouts, discontinued items, overstock products and unwanted merchandise can create significant cash flow challenges. Businesses may struggle to recoup their initial investment and may be forced to resort to more costly liquidation methods. Keep in mind, whatever the reason you are looking to offload excess inventory, the liquidation process and procedure for getting rid of closeouts is likely the same.

Strategies to Mitigate the Impact of High Shipping Costs:

• Optimize Product Packaging and Weight:

Minimize Shipping Dimensions:Reduce packaging materials and optimize closeout and overstock product dimensions to minimize shipping costs based on carrier weight and dimensional weight calculations. Liquidating inventory gets more complicated when you have to calculate low shipping costs in order to make the closeout process work.

Lightweighting:Explore options for lightweighting products where feasible without compromising quality or functionality.

Explore Alternative Shipping Methods:

Negotiate Discounts:Leverage volume discounts with shipping carriers by negotiating contracts or utilizing shipping platforms that aggregate rates from multiple carriers. You may want to consider eliminating some types of inventory from your line if they are too costly to ship. For example, closeout housewares, closeout pet products and excess inventory of toys and games are examples of smaller products that can easily be shipped. However, closeout hardware and furniture liquidations might be more challenging due to these being closeout products that are larger and heavier to ship.

• Consider Alternative Carriers: Explore less expensive shipping options such as regional carriers or slower shipping methods for less time-sensitive items. If you need to empty out your warehouse quickly, this may not be a good option. But if you are liquidating merchandise and are not in a rush, sometimes slower shipping methods are cheaper. If you are closing down operations and liquidating everything, you may not have the time. This may also be a problem if you are liquidating and moving to a smaller warehouse.

High shipping costs pose a significant challenge to the successful liquidation of surplus inventory. By implementing a combination of strategies, including optimizing packaging, exploring alternative shipping methods, leveraging technology, and improving order fulfillment processes, businesses can improve the closeout and liquidation process, making getting rid of overstock inventory easier. If you need to move out excess inventory and move on to new products, consider calling on the most reliable and experienced closeout buyers in the industry.

Merchandise USA is an experienced and reliable closeout company in business almost 40 years. We buy overstock products, abandoned inventory, discontinued products, excess inventory, slow-moving merchandise, unwanted items and dead stock. We buy closeout housewares, discontinued pet products, overstocked lawn and garden inventory and closeouts of home goods and home accessories. If you are going out of business and need to liquidate large amounts of inventory quickly, we can help. If you are downsizing your warehouse to save money on storage and looking to offload inventory in bulk, we can buy your inventory. If your business is going in another direction and you are keen to offload excess inventory to a liquidation buyer, you can count on Merchandise USA.