Timing is Everything: When to Offload Excess Inventory

The age-old question for many businesses is when to bid adieu to excess inventory, closeouts, and those lingering, slow-moving items. Is the beginning of the year the magic time, or does the end of the year hold the key to reducing the inventory and offloading merchandise that stopped selling? Let's dive in and explore the optimal timing for offloading your unwanted stock and clearing inventory from the warehouse.

Understanding slow-moving Inventory and Overstock Products.

Before we review the best time to offload excess inventory, let's clarify what we mean by excess, closeouts, and abandoned inventory.  These terms often mean the same thing, but are used interchangeably by many closeout buyers and overstock companies. 

Excess inventory: More stock than you can reasonably sell within a specific time frame. This can be if you have a program in place for a specific customer, but their orders have slowed and you have too much inventory in the warehouse for your current needs. It puts you in an overstocked position because you have more product that the customer currently wants.

Closeouts: Items that are being discontinued or replaced by newer models. Closeouts may be end of life products, promotions that ended so you have extra merchandise to get rid of, or simply if you are shutting down a warehouse or closing a division and have leftover products to offload from the warehouse.

Abandoned inventory: Products that have been sitting in the warehouse for an extended period without selling. Abandoned stock may also be pallets that were left in the warehouse when a tenant moved out or shut down their operation.

These categories often overlap, but understanding the distinctions can help you tailor your offloading strategy and may help you when working with inventory liquidators or other types of closeout buyers.

The Case for Beginning-of-Year Offloading and clearing stock from the warehouse.

Traditionally, the beginning of the year has been seen as a prime time to clear out old stock. Here's why:

Fresh Start: A new year brings a sense of renewal and a desire for businesses to start fresh. You may simply feel better emotionally by getting rid of overstock early in the year. Don’t underestimate the value in feeling good. It might put you in a better frame of mind to jump start your year and get going. Holding onto old inventory and accumulating dead stock takes up valuable space in your warehouse and stops you from getting new products that can be profitable.

Tax Implications: Depending on your location, there might be tax benefits associated with writing off excess inventory at the end of the fiscal year. Let’s be honest, nobody wants to get rid of inventory at a loss. And even if you have to liquidate stock below cost, you don’t want it to be too far below what you paid. But there are times when you simply have to clear stock from the warehouse to make room for new products.Especially if you have old inventory getting in the way of new products.

Inventory Valuation: By offloading slow-moving items, you can adjust your inventory valuation and potentially improve your financial statements. You may also be moving to a smaller warehouse or downsizing your operations this year, which means you can get rid of inventory and write it off before you get started in your new location. Closing a business can be stressful and challenging, so if this is something you are considering doing you may want to contact an inventory liquidator to help you with the closeout process.

Make Room for New Stock: Clearing out old inventory creates space for new products, allowing you to focus on fresh offerings. Having a fresh inventory is a great way to offer your customers fresh product.  Let’s face it, customers want to know what do we all have that’s new product – not old inventory.End of life products should be disposed of to inventory liquidators before they begin to look aged and weathered. Getting rid of closeouts early in the cycle is the best way to offload excess stock; especially while it is still salable and has value.

The Allure of End-of-Year Offloading

While the beginning of the year has its advantages, the end of the year also presents opportunities as a good time to reduce inventory and get rid of merchandise that hasn't sold.  Some companies liquidate overstock inventory as part of their fiscal year end, and clean out the warehouse at the end of every year. Other businesses only offload excess stock when it piles up in the warehouse and begins taking up too much valuable space.Today, warehouse space is so costly that having dead stock sitting on the floor is often more expensive than liquidating to closeout buyers for pennies on the dollar.

Holiday Rush Clearance: If your excess inventory is seasonal, the end of the year can be a great time to capitalize on post-holiday sales. This allows you to sell as much as you can for full price during the season, the offload products at the end of the year after Christmas. This approach can be appealing to certain customers who are willing to store the excess inventory in their warehouse, justifying paying a lower price.

Year-End Promotions: Many consumers are looking for deals at the end of the year, making it a prime time for clearance sales and promotions. Today's shopper is a bargain hunter looking for deals on anything that can save them money.With inflation hitting everyones pocketbook hard, saving money by getting deals on overstocked products or discontinued items is always a great closeout opportunity.

Tax Loss Harvesting: In some cases, writing off inventory at the end of the year can offer tax benefits. This works because a business might have had a hugely profitable year and by disposing of dead inventory at a loss they can write off the products being offloaded.Also, when a business is profitable it is easier to absorb the loss of getting rid of closeouts and offloading excess or abandoned inventory cheap.

Factors to Consider

The optimal time to offload your inventory depends on several factors:

Product Type: Seasonal items might benefit from end-of-year clearance, while evergreen products could be better suited for a beginning-of-year push. Keep in mind there are many reasons a business might decide to get rid of excess inventory.Maybe they are completely shutting down and closing the business; maybe they are downsizing and moving to a smaller warehouse.It is also possible they had customers who canceled orders and they are getting rid of the inventory rather than trying to resell it. Another possibility is business has slowed and the inventory is not moving quickly enough.

Economic Conditions: Economic downturns can impact consumer spending, so timing your offload accordingly is crucial. When the economy slow and business is bad, there may be a need for offloading slow-moving inventory to generate much needed cash flow.The good thing about contacting closeout buyers is they will often take your entire inventory in one fell swoop, pickup everything quickly and pay quickly.If you are having trouble finding and inventory liquidator you help with offloading overstocked products you can try a simple Google search.Here are some search terms you might find helpful: closeouts, looking to clear stock from my warehouse, overstocked inventory for sale, closeout websites, closeout brokers, looking to get rid of closeouts, looking to offload abandoned inventory, downsizing warehouse, going out of business.

Industry Trends: Your industry's sales cycles and peak seasons will influence the best time to clear out inventory. You might learn that it is worth holding onto inventory rather than disposing of products that you will be able to re-use next year or later in your sales cycle.Certain product categories are seasonal for example you might have closeout Christmas trees in December and overstock inventory of swimming pools after the Summer in September.

Business Goals: Consider your overall business objectives and how offloading inventory aligns with those goals. Getting rid of overstock inventory to closeout buyers isn't for everyone.Keep in mind you will get rid of a lot of inventory at one time, but you will have to offer a big discount for this to happen. Some businesses may choose to hold onto the closeout inventory and sell it slower at higher prices.

Strategies for Offloading Excess Inventory

Regardless of the timing, effective offloading strategies are essential. Here are some proven methods:

Deep Discounts: Offer substantial price reductions to attract customers. You can post discontinued inventory online on closeout websites or inventory liquidation sites.These platforms will allow you to explain as much as you can about why you have overstocked inventory and why you are keen to clear stock from your warehouse.You can post it online with discounted prices and reach customers that would be unreachable without having the internet.

Bundle Deals: Combine slow-moving items with popular products to create attractive packages. If you have closeout housewares and excess inventory of tools, you can bundle them together in a package.The same applies if you are offloading slow-selling pet products and you also have closeout sporting goods you can bundle them and sell them together.There are many ways to reach closeout buyers and it is important to be creative when offloading overstocked products and abandoned inventory.Whether your company was acquired and you have extra inventory, or you have accumulated old merchandise there are many ways to dispose of discontinued products and closeouts.

Liquidation Companies: Consider working with liquidation companies to sell your excess inventory quickly, although at a lower price. There are inventory liquidators in every major City and some of the largest closeout buyers in the United States are in small rural towns where large warehouses are plentiful and warehouse space is affordable. One of the biggest reasons a company may have overstock inventory is because warehouse costs have become too expensive to store dead stock.

Donations: If eligible, donate your inventory to charities for a tax write-off and positive public image. Giving away inventory free is never easy, but sometimes it is the only way to clear stock from the warehouse and move out inventory. At least you will get the write off and goodwill for donating inventory.

Balancing Act: Overstock vs. Abandoned Inventory

While the general principles apply to both overstock and abandoned inventory, there are nuances to consider:

• Overstock: Often involves items with recent purchase history but in excess quantities. Focusing on quick sales through discounts or promotions is key. Finding inventory liquidators that can buy closeout merchandise in large quantities is also important.
• Abandoned Inventory: Typically, items with little to no recent sales. Aggressive pricing, liquidation, or donation might be more suitable options. Abandoned inventory may also be due to a tenant moving out of a warehouse and leaving behind inventory or abandoned products.

The decision of when to offload excess inventory is not one-size-fits-all. By carefully evaluating your specific situation, considering the factors mentioned above, and implementing effective strategies, you can maximize your chances of recovering value from your unwanted stock.

Merchandise USA is one of the largest and most reliable closeout buyers in the United States. We have been in business almost 40years. We specialize in buying closeouts, abandoned inventory, unwanted merchandise and liquidations of pet products, overstock lawn and garden inventory, discontinued and abandoned inventory of home accents and housewares, overstock tools and automotive and much more. If you are closing down your business, liquidating excess inventory, moving warehouses or shutting down your 3PL warehouse you can count on us to help you through the liquidation process. If you have dead stock to get rid of and are keen to clear your warehouse inventory quickly contact Merchandise USA today. If you need to clear out warehouse space for new projects we can buy the entire inventory in one shot.