Future of Commerce Blog

Post-Holiday Slump: How to Deal With Excess Inventory


Many retailers are familiar with the post-holiday slump. For some, it’s excess inventory after overestimating demand when you forecasted for the season. Or, it’s the flood of returns from gift recipients. Plus, consumer spending inevitably drops. After spending nearly $970 during the holiday season, many shoppers slow down through the new year. Regardless, if you’re one of many retailers that have overstocks after the holiday season, there are creative ways you can minimize losses and possibly even earn a profit.

Create Product Bundles

Bundle several products together for a fixed cost, offering some sort of discount for the consumer. This way, you’ll sell more than one product at a time. Use products that are already in high demand, and bundle them with the excess products you have on hand. Consumers are under the impression that they receive more for their money — a lot of products and value for a single price.

The benefits of product bundles don’t stop there. They also provide new marketing opportunities, as you can get creative and create campaigns about your newly launched, exclusive product bundles. Customers are exposed to new products that they might not otherwise have bought, which generates further interest that can lead to repeat customers or word-of-mouth marketing that both impact your bottom line.

You could also contact retailers who sell subscription boxes in your niche to see if they have room for some new retailers. It’s another great way to get your brand in front of a new audience.

Resell Returns

A flexible return policy is important to almost three-quarters of consumers, and it alleviates some of the stresses associated with the purchase process. But it also means a potential for loss for retailers.

Online retailers face the biggest challenge — almost a third of online orders are returned, compared to 9 percent at brick-and-mortar stores. In 2015, online apparel retailers had returns rates as high as 40 percent. And with nearly one-quarter of all returns happening during the holiday season, there’s an influx of used inventory post-holiday.

You might be able to put unused items back on the shelves, and used items could also serve a profit-driven purpose. REI is notorious for selling returned items at a steep discount at their Garage Sale events — events that their customers look forward to regularly. The outdoor retailer abandons their no-questions-asked return policy for items purchased at these events. It works because customers get access to significant savings.

Capture Returns

If you’re processing in-store returns, you have a chance to cross-sell. Although customers are returning products, they’re more primed to buy than you think. 70 percent of in-store returners will purchase a different item. Online returns stand a chance too, though not as great with less than half of online returners also clicking the ‘Buy’ button on something else.

Here are few ways you can do this:

  • Train in-store staff to ask what prompted the return, and to offer thoughtful recommendations based on the customer feedback
  • Create a display of recently returned and discounted items next to the counter where returns are processed
  • When it comes to clothing, the size is often the problem — equip associates with handheld devices with access to your inventory management platform, so they can find out if it’s available in a different size, right on the spot
  • Implement live chat on your website to manage eCommerce returns and encourage the cross-sell to customers during the interaction to reduce return rates
  • Consider implementing a tool like Returnly, which allows your customers to easily return online and buy again, even before shipping their item back


Retarget Existing Customers

Return customers make up nearly a quarter of a retailer’s annual revenue. They’re already acclimated to your brand and your products, making them an easier sell than a brand-new customer. Additionally, you likely have some information on your existing customers.

Use your customer data and run smart marketing and advertising campaigns to help you move the returned stock. Appeal to their interests, milestones in their lives, and other trends in segments that you’ve identified through analyzing your data.

Play to the theme of the New Year, too. Self-improvement is No. 1 on the list for most consumers, so emphasize the ways your products can help customers be a better person. Other common resolutions include finance, health and fitness, and quitting smoking.

Find a New Home for Your Products

Liquidation is one route to go to offload your inventory quickly and in bulk. You might not turn a profit, but you’ll minimize losses. Liquidation.com and B-Stock Solutions are two popular options.

If you haven’t already, explore third-party selling channels, such as Amazon or eBay. And if that doesn’t move the inventory fast enough, consider a company like Optoro. They use their direct-to-consumer online marketplace Blinq to sell excess inventory for retailers across various industries. If you’re concerned about liquidation, this is a good route to explore, as it provides anonymity for brands who want to preserve their reputation.

Give Back

If you’re looking for a philanthropic way to handle your excess post-holiday inventory, donate it. Find organizations that accept non-monetary donations, ideally organizations that align with your brand mission. Donating your excess inventory not only gives to those in need and creates a good perception of your brand, but it’s also a tax-deductible contribution.

Learn how to avoid overstocks with this full guide to inventory planning >

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