With a very challenging Christmas trading period this year, Vladi Shlesman, Managing Director EMEA of ChannelAdvisor, share five tips to avoiding excess stock this Christmas:
Correctly stocking products is not an exact science. Last year, following on from the pandemic, many retailers struggled with supply chain issues, a rise in fuel prices and lack of delivery drivers. This resulted in the dreaded out-of-stock stickers and empty shelves leaving many customers disappointed. This year however, the pendulum has swung in the other direction, with some figures estimating UK businesses had £2.8bn worth of excess products to sell in 2022.
A pile up of stock may occur for a variety of reasons, but in the current climate, with a potential global recession and a cost of living crisis, this is more of a concern than usual as consumers are more frugal with their spending.
Additionally, as retailers prepare for Christmas, another problem many will deal with in the aftermath and going into the New Year, is the excess of unsold and returned stock. While Boxing Day sales will move a lot of this inventory, retailers should prepare to be a bit more creative with ways to reduce surplus stock.
So what are some ways retailers can manage their excess inventory? Whilst there isn’t one strategy that will work for all, there are some which have proven to be useful.
Pay attention to your paid search
Stating the blindingly obvious, the best way to deal with excess stock is to sell it. Paid search is an important part of the marketing mix and in order to get the most out of your paid search campaigns, you should experiment with new keywords to find the right selection which fits both your budget and profit margins. There are some key pieces of advice that you should follow to maximise your investment:
Don’t blow your budget on key selling days. Customers shop around for deals in the days and weeks surrounding sales, so advertise your promotions around excess products then. If you avoid the peak selling days, your ads will have less competition and prices will be lower so reaching them will be more cost-effective.
It is also crucial to properly segment your products in order to advertise them effectively. You can do this by using Google Merchant Promotions and separate them into appropriate product categories.
In addition, make sure you customise your feed to specific product sets. You can use Google and Bing feeds to flag high inventory product sets and plan your campaigns accordingly.
Expand your marketplace reach
Consider tapping into international markets, but only if you can still be profitable. It has become more of a challenge for UK retailers since Brexit as the additional burden of customs declarations and import taxes has made it a less attractive option. Using global options within the platforms you already use may be a good way to test the water. For example, Amazon and eBay have global selling and shipping programmes which you can use to trade globally to consumers who are using these platforms.
Another way to expand your reach is by starting on a new marketplace. ChannelAdvisor’s Commerce Network allows sellers and channels to discover and connect with one another, so you can find a channel that is looking for products like yours.
Focus on fulfilment
Improving your fulfilment is a long term strategy. But, in addition to discounts, new channels and advertising, you should make sure your fulfilment approach is attractive to customers. You may consider lowering your threshold for free delivery, or using data to guide delivery pricing and working with a third-party logistics provider (3PL). These changes can increase efficiency, cut costs and potentially enable you to pass savings onto customers. CommerceHub Delivery Suite not only improves Last-Mile delivery efficiency and cost reduction, it can also enhance Customer Experience as part of your longer term strategy.
Sell complementary items as a bundle or try a kitting technique like “buy one, get one free” to move more product. This not only helps you shift inventory, but provides customers with better value for money.
Boost visibility by promoting deals and new bundles on all your social media channels, especially Instagram and TikTok. According to ChannelAdvisor’s 2022 Online Consumer Behavior survey, 55% of 18-25-year-old US shoppers have discovered products they’ve purchased on social media in the past 12 months.
A smooth shopping experience is key to driving sales when using social channels to promote product. You may want to consider eliminating friction by using a shoppable media solution to get customers to a shoppable channel as quickly and easily as possible.
It may prove to be a matter of trial and error and finding out which advertising strategies work for your business, but there are a variety of options for reducing excess stock. You could even consider gifting excess products as part of your marketing if sales strategies don’t prove successful.