It’s Outta Here
Even the best merchants sometimes over-buy or miscalculate sales projections. And sometimes your returns ratio creeps a bit higher than normal. What’s a cataloger to do?
Dump the stuff.
Surplus goods have no value to your catalog until they’re converted into cash and those funds are reinvested. In addition, the overstocked items are taking up precious real estate in your warehouse, and you must pay to insure and maintain them. Finally, surplus assets depreciate in value more quickly than other assets as they become obsolete.
Following are some ways to discard inventory and clear your shelves for tomorrow’s new goods.
Discount to Move
1. If done right, sale catalogs can offer a high recovery rate. The purpose of a sale book is sell-through, not customer acquisition, says George Mollo, president of GJM Associates, an operations consulting firm.
“You have to be cautious that you don’t send so many sale catalogs that you train your customers to wait for sales,” he notes. “Rather, your sale books should include remnants—odd sizes, odd colors—not the cream of your selection.”
In this way, he says, customers won’t want to wait for sales; they’ll learn that the best stuff is available only from your full-priced book.
Mollo says when some catalogers devise profit-and-loss statements for each book, they often think that sale books produce a loss. But, he cautions, it’s usually only a paper loss. “They should look instead at how much inventory they’ve moved with that sale book.”
“If you didn’t have a sale book, how would you dispose of the $2.16 million in inventory?” asks Mollo.
2. Try an overstocks page on your Web site. Lands’ End’s overstocks page notes when new listings will appear (every Wednesday and Saturday)—a good way to drive traffic. Be sure to include disclaimers such as “quantities are limited.”