Inventory Management Strategies: Using Smart Pricing To Get Rid of Excess Stock
Any eCommerce business will flourish with an inventory that is well managed. Having too many items in your inventory will increase your running costs. On the other hand, a limited amount of stock could potentially make you miss out on sales and discount seasons. If customers can’t find their desired product from your business, you lose out — and that’s all there is to it.
Having items in your inventory which are not likely to sell are called dead-stock. There are two disadvantages of the dead-stock items. Firstly, they take up a lot of space which can be used for better-performing products. And secondly, they damage your profits.
To have a proper inventory management, you need to find the perfect balance between the interests and expectations of your customers. The ideal scenario is to have enough products in stock to meet your customer demand whilst keeping inventory cost to a minimum.
Also, according to a study by Econsultancy, a majority of customers are more willing to buy products from stores who provide the earliest shipping date like same day, overnight or even in-store collection because they want their product as soon as possible.
Nowadays, conducting a proper inventory management becomes hard without the use of management software made for inventories. Such software helps you speed up the inventory management as well as procuring and tracking different items being delivered. Moreover, they allow you to manage everything related to your business in a single place, whilst eliminating manual paperwork and sifting through spreadsheets.
Until now, we have tried to state the importance of a well-managed inventory. Now, it is time to combine inventory management with pricing strategies. Let's move forward and analyze the case from a different point-of-view.
Below you will come across methods of how to decrease the products which are over-stocked and how to correlate them with pricing and inventory management.
Get competitive for your over-stocked products
Over-stocked products not only takes up space in your inventory, but it prevents you from acquiring products that your customers want. If your inventory has over-stocked products, it is crucial that you sell these products now.
The best way to achieve this is to provide the best prices for those over-stocked products without thinking about the profit margin. You’ll reduce your running costs and free up space for promising products.
Track your competitors’ prices
Do take time to study the market and keep tracking your competitors’ prices so you can keep your prices lower than theirs.
Managing this process could be very easy by price tracking software. The solution allows you to monitor your rival’s prices, take the fresh data from the market and gather the required price information to let you offer the most competitive price in the market.
(Tracking ThermoScan prices)
Statistical data shows that above 60% online shoppers consider pricing as a first indicator of purchasing decision. Such behavior increases the chances of underperforming products to get sold easily.
Make use of psychological pricing strategy
In order to maintain your inventory and get rid of the over-stocked products, you can also consider psychological pricing tips.
Let us have a look at some of these tips:
[Inventory management strategy #1] Place the dead-stock near the expensive products
This pricing strategy is called price anchoring and it is very effective if you run a store. The strategy can be explained like this. Place an expensive product first and then place the product which is in excess next to it.
Moreover, what’s even more important is that both the products should belong to the same category. When customers see a product of their choice with a higher price first, they are more likely to go for the cheaper alternative product. Thus, improve your chances of getting rid of the excess stock.
[Inventory management strategy #2] Sell the excessive products in bundles
Grouping two different products as a special offer is another trick for eCommerce retailers to diminish both over-stocked and bad-performing products.
The idea is to place two or more products in the same offer with one product from the excessive product group. The price of the over-stocked item can be reduced to attract the customer.
(CamKix bundles overstocked products | Source)
By grouping two product together to present a reasonable offer, this will prompt the customer to buy-in to the offer since it provides good value for your customer’s money.
[Inventory management strategy #3] Give away the excessive products as gifts
Free products are loved by everyone and online shoppers will pay enough to go for a bundle offer or a product that has something to offer for free. This logic is very simple and still works to this day. This trick will help to off-load excessive stock items from your inventory with ease.
(Who wants a free Miu Miu ouch? Source)
If you attach the free gift with a good performing product, you are not only getting rid of the excessive products, but you are also improving the buy-rate of the successful product which is expected to increase in demand.
[Inventory management strategy #4] Look to your competitors for out of stock products
Let’s explain this through an example. A shopper is looking for a specific mobile accessory and is not having any luck in finding the product. This will automatically increase the worth of product to the customer. So, the customer will be willing to pay a higher amount for that product. This is customer psychology at its best. In such case, the customer could end up in your store next.
You can take full advantage of this scenario by increasing the price of the same product to a considerable limit which is not a burden on the customer.
With the help of the competitive intelligence software, you can gain insights into your rival’s stock availabilities and increase prices on your rival’s out-of-stock products.
Poor inventory can be resolved through smart-pricing
You should always value inventory management!
Poor inventory management will make you lose out on achieving big profits. In addition to that, it will also increase your running costs too.
You can get rid of any deadstock through applying the appropriate smart pricing strategies mentioned in this post. Plus, do keep an eye on the stock levels at your competitors through intelligence software. Any items that are out-of-stock at your competitors, you can take advantage by increasing the prices.
Also, make sure your eCommerce platform allows you to integrate with your chosen inventory management software.