A Comprehensive Guide to Buying Inventory Stock

It is imperative for businesses to pay attention to how much inventory they need to order and when. It is actually a necessity in order to minimize storage costs and still have a surplus to meet customer demand. Buying inventory stock is a critical aspect of the inventory management process and hence needs optimization to achieve steady growth.

Ways of Buying Inventory Stock 

Manufacturers and retailers use several methods to buy inventory stock and each of these methods has its pros and cons. So, let’s have a look to understand what works for you.

 

Bulk Buying: One of the most well-known ways to buy inventory stocks, is where a company buys the inventory in bulk units that are stored at its own facility or third-party warehouse. This involves buying finished products or raw material in large quantities and is done to ensure supply for future demand. 

Pros: Buying in bulk can result in discounts and a greater profit margin due to less cost per unit.

Cons: Storage/ warehousing cost and inaccurate forecasting could lead to loss.

Drop Shipping: With dropship, no actual buying of inventory stock is involved, instead items are purchased from a third-party supplier as per the customer order. The supplier directly ships the product to the customer, as a result, the retailer does not have to handle or own the stock themselves.

Pros: No need for inventory management, no warehouse needed, no cash tied up in inventory.

Cons: less profit margin, no control over branding, tough competition.

Just-in-time: This is better suited for retailers that manufacture their own product and involves ordering raw materials and fulfilling each order as and when it comes in. it requires less ‘on hand’ inventory but a highly reliable supply chain.

Pros: Reduced warehouse costing, full control of product quality and branding, less wastage of raw materials.

Cons: supply chain hiccup can cause higher TAT, requires reliable management and processes.

When purchasing in bulk, the first question is when is the right time to buy inventory stock. To determine the right time, there are three methods to use:

●   Order Pattern Method: This method of buying inventory stock involved making regular purchases of fixed amounts. The method is ideal for retailers who have almost constant sales figures.

●     Control Rhythm Method: This method suits retailers with a good grasp on demand and supply forecasts. This involves checking inventory at a fixed duration and buying inventory stock after adjusting.

●    Reorder Point Method: This method involves ordering the stock once it is below a certain level. It serves to be an ideal method of buying inventory stock for retailers who deal with fewer products. 

 

Now that we know what’s the best time to buy inventory stock, the second most important question to answer is, how much to order at one time? Before answering this, there are some things that we need to consider:

●      Demand Forecast, which constitutes the number of units sold over a given period of time.

●      Storage Costs, which is calculated by assuming the items in stock for the said given time period and interpreting the cost per item.

●    Ordering Costs are usually the total cost per order. It also includes logistics and other costs involved in making the purchase, excluding the actual order cost.

 Sometimes delivery can be delayed, so it’s imperative to keep into account the lead time between ordering and receiving the delivery. This helps to strikes a balance between demand and stockouts

Tips to Sell Your Surplus Inventory Effectively

Surplus inventory happens to every retail business owner because you purchase too much stock of a similar type of product, after that the latest and the better model than before comes out. Or, it is not selling as fast as you have expected it to be due to this you got short of shelf space for new products. No matter how it arises, you need to liquidate your surplus inventory as fast as possible. Unsold inventory holds your major cash and you know the cash flow is the lifeline of your business.

Here are three killer strategy ways to get earn revenue from surplus stock; Sell it, bundle it, or remarket it.

 Run Unique Sales

Out of ten, nine is the score for this strategy as this is your best option is to sell your surplus inventory. But if it were that simple to sell it, it would not be exceeded. So, it is high time to talk strategy that really works for your business.

Consider selling unsold inventory at heavy discounts, approximately 35 to 70 percent. Of course, it will probably eat into your margin, but you have to move these products off your place. There are so many sale options you can go for to turn your excess inventory into cash Here are two sale options to consider:

 Clearance Sale

Consider clearance sales once a year. Attract customers with heavy discounts on inventory that hasn’t sold out in 3 to 6 months. Promote your sale with the help of an email. Create a clearance section on your website that offers discounts on unsold inventory as a permanent feature. 

Flash Sale

Comprehend the psychology of the customer and the sense of urgency to buy. Many times offering limited period discount and offer on products is an additional catch for shoppers to make purchases. A flash sale is the best way to earn quick cash.

Remarketing or Change Your Marketing Strategy 

The next strategy is remarketing or change your marketing strategy. Your slow-moving products may not be selling because of the way it is introduced in the market. Refreshing the marketing strategy can bring much difference. Here are some easy and quick changes you can make in your marketing strategy

 New Image, New Category

Freshen up your product pages with new photos and add lifestyle or action images. Try to enhance the quality, display your products from various angles. Also, make sure the product you are selling comes under the same category the user wanted to see in. Add a new landing page or new category to enhance its visibility and accessibility.

how to sell overstock inventory ?

Introduce Bundle Packs

Create a win-win situation for your business by introducing bundle offers. You can simply increase your average order value and sell your unsold inventory. The effective way to introduce this method by offering Bundle complementary products, bundle multiple units of the same product, or give combo offers on the slow-moving product with fast-moving products. The customers who are interested in the fast-moving products will view this offer as a great deal.

Buy and Sell Excess Inventory Smartly

Excessive stock is possibly associated with revenue loss owing to more capital bound with the buy or mere storage space occupied. Excessive inventory can be the consequence of over-delivery from the supplier or from poor management of inventory by a purchaser for the inventory.

When in reference to overstock or excess inventory in the form of consumer items in a retail operation, the term refers to products or items that have never been bought by the customer but that are termed as excess stock or inventory from Retailers or showrooms or Wholesalers or company and brand showroom.

Types of Inventory

Slow Moving inventory, Ageing stock, Overstock, or surplus inventory, is the result of kind of mismanagement of stock demand because of the factors includes over-buying, inaccurate projections, Seasonal Overstock, canceled orders, unexpected climate change, bad economy, or early or late delivery of items that have not been sold and that crosses the targeted consumer demand for a particular product.

Selling excess inventory is a serious problem, yet maintenance and management of it become even more difficult, but at Valueshoppe is the inventory liquidator place where you can easily buy and sell excess inventory.

Excess inventory is always discarded get rid of in the following ways: brands or original distributor/wholesalers/retailers,  returned to the manufacturer, liquidated to the companies that can resell it on the next or secondary wholesale or retail market, sold at a heavy discount to customers that are intended to buy the excess inventory, or sold to salvage companies which after that the processed metals and parts of the item that has significant value. 

Initially, the damage due to excess inventory is the quick exhaust of cash flow, and later the loss of disposable capital for investing. In case, you own a business, you are most likely to face the problem of having excess inventory.

How do you sell excess inventory?