Inventory Lifecycle Management: Online Liquidation Strategies
Excess inventory due to changing consumer behaviors, aggressive competitor actions or simply missed forecasts is a fact of life. When the inevitable happens, marketing can help in various ways. From in-season promotions and end-of-season clearance sales on your website to outlet stores and third-party distribution, retailers can deploy several strategies to aid in the liquidation of extra inventory.
Because of the flexibility of the online environment, merchants can monitor inventory rates during peak selling periods. During the holiday shopping season, for example, online retailers are notorious for taking immediate promotional action to aid in moving slow-selling merchandise. For example, consumer electronics merchandise that underperforms during Black Friday weekend will be heavily promoted throughout the rest of the holiday shopping season.
Another tactic frequently used in the apparel category is end-of-season clearance sales. Retailers will typically merchandise clearance items on their main site in separate clearance pages that are linked or in header navigation that's found on all pages. For example, J.C. Penney uses a clearance tab in its header navigation that sends visitors to a clearance landing page and includes category navigation to browse the section. Other retailers will include clearance items within the full price category pages, usually after scrolling through all of the new or first-run products.
An "outlet store" strategy is another option for retailers. It's different from the clearance strategy noted above in that an outlet store is generally less merchandised from the main site and is structured as a separate microsite. The main reason for doing this is to avoid cannibalization of the full-priced products. This strategy is most often deployed in the consumer electronics category, where new product introductions drive the need to clear out older models.
Problems with cannibalization can occur when new features may not be enough to offset the lower price offered on older models. Test various strategies to highlight your outlet store from your main site. Usually a link or banner ad from the homepage rather than persistent links in the navigation from all site pages is best for minimizing cannibalization.