- Understand the impact of excess inventory.
- Free up cash flow and shelf space with modern tools.
- Turn slow-moving items into marketing wins.
- Strengthen brand image and partnerships with creative tactics.
Did you know that overstocks cost retailers $554 billion in 2024?[1] Meanwhile, they lose an average of 12% of annual profits from carrying excess inventory.[2] Excess inventory ties up cash, takes up space, and squeezes your margins — hurting your business's financial health. Let's explore how to minimize overstock, improve your cash flow, and even turn slow-moving items into opportunities for customer engagement and revenue generation.
1. Prevent Overstock with Better Forecasting
The global inventory management software market is projected to grow from $2.51 billion in 2025 to $4.79 billion by 2032.[3] More small and mid-size businesses will implement modern inventory forecasting tools to predict demand and align stock levels, factoring in seasonality, market trends, shifts in customer behaviors, and historical data for accurate insights.
2. Implement Real-Time Inventory Tracking
Excess stock often builds up when you don't know what's selling and what isn't. Real-time inventory tracking helps you identify slow movers early and adjust orders to prevent them from piling up. McKinsey found that 67% of surveyed companies have implemented digital dashboards for supply chain visibility.[4] They are twice as likely to avoid inventory issues.
3. Negotiate Flexible Terms with Suppliers
Large minimum order requirements or rigid contracts increase the risk of excess inventory. Negotiate smaller batch orders, partial shipments, or shorter lead times with your vendors to align supply with demand. Strong supplier relationships are even more critical in today's environment, where inflation and supply chain disruptions require extra agility.
4. Return Unsold Inventory
Depending on your vendor relationships, distributors or wholesalers, they may allow you to return products for a refund or credit toward future purchases. Read your supplier's return policies and ask about return options.
5. Bundle or Repackage Products to Drive Sales
Discounting isn't the only way to move excess stock. You may bundle slow movers with bestsellers to offer more value or repackage products to add seasonal appeal. You may also launch a flash sale (but not a clearance sale, which may lower a product's perceived value) or a limited-time offer to accelerate sales.
6. List Items on Online Marketplaces
Expand your reach, tap into a broader customer base, and move inventory by listing products on platforms like Amazon®, Facebook® Marketplace®, Walmart Marketplace®, Etsy®, etc. Explore niche platforms or boutique websites to reach specific customer segments. Additionally, sites featuring local product listings offer outlets for large pickup items.
7. Use Excess Inventory for Customer Engagement
You may still have excess stock even if you do your best to forecast demand and negotiate contracts. But these items don't have to sit idle. Instead, use slow movers as gifts in loyalty and referral reward programs or sell the surplus to other small businesses, event organizers, or educational programs to strengthen relationships and build partnerships.
8. Explore Donation and Charitable Options
Consider donating products to schools, shelters, and other non-profit organizations or partnering with resale and recycling programs to reduce waste. These tactics may offer tax deduction benefits, position your brand favorably to generate goodwill, and meet market expectations as consumers embrace brands that prioritize sustainability and social responsibility.
Mitigate the Financial Risks of Excess Inventory
Don't let excess inventory become a headache or financial drain. Instead, you may want to consider trying the tactics here to turn potential losses into opportunities to generate more revenue, boost your brand reputation, and broaden your reach. Having a trusted banking partner makes these strategies even more impactful. It may help you manage cash flow, access financing options, become more resilient, and make financially sound decisions based on your unique goals and circumstances.
At PNC, we help you put business insights into action. Learn more about our small business offerings and book a meeting with a banker to explore how we may support your growth.
