With Black Friday rapidly approaching, many sellers will already know what stock they’re going to put on deals on various websites and their own marketplaces, but what about your aged stock?
Every business will have products sat on the shelf which aren’t moving. Many times, you could be top of eBay Best Match search or be winning the buy box on Amazon and yet still the products don’t shift. Black Friday is a time of year for deep discounting these products and clearing out your aged inventory.
It doesn’t matter that you paid £50 for an item a year ago, if it’s still sitting in your warehouse it’s already cost you that many times over. The more times you churn your money in the course of a year the more profitable you’ll be so cut your losses, sell at a knock down price and liquidate.
Churn is a metric that many smaller sellers fail to measure. Put simply, if you take a £50 product and it takes a year to sell for £100 then you’ve made £50 profit (less costs). However if you sell the same £50 for £60, replenish your stock and resell at the same once a month for a year you’ll make £120 profit… £70 more and that’s assuming the first one sold within the first year anyway. This is of course a simplistic explanation of churn, but the principal holds. You only make profit when you sell and aged stock sat on the shelf isn’t making you any money.
It may be unrealistic to churn your money 12 times a year – it will depend on your business and the type of goods that you sell. However if you have aged goods that simply aren’t shifting then liquidating the stock, even at a loss, makes financial sense. You’re paying warehousing if nothing else (and potentially Amazon Long Term Storage Fees if you use FBA) and you’re not making money. Liquidate the stock and reinvest in products that will sell and if that means holding a fire sale then Black Friday is the ideal time of year to do so.
