From aged inventory to assets: ways to generate revenue from your old stocks
Imagine this: a room full of entrepreneurs gets asked, “Who here has experienced having more products than they were able to sell?”
Can you imagine how many hands were raised?
Unsold inventory is a common occurrence in the world of business. You don’t need to panic if your shelves aren’t empty by the end of the day. But when those days turn to weeks and those weeks turn to months, you may want to consider strategizing how you can flush out your stocks—fast.
Aging inventory is a reality that most business owners don’t even dare to discuss. Whether it be from simply not knowing who to turn to or how to improve their situation, business owners usually end up struggling with their aged stocks in secret.
We believe, however, that it should be talked about.
What is aged inventory?
Aged inventory is simply excess inventory that has been sitting in boxes and shelves anywhere between 60 to 180 days from its receiving date.
Yes, we’re talking about stocks that don’t bring profit to companies anymore. These are the stocks that don’t contribute to your cash flow because of low demand from your customers. These are the stocks that are taking up space in your warehouse and costing you money.
Why is it important to make room?
A warehouse full of aging inventory is problematic for several reasons:
- It ties up your capital. The capital you invested on your aging stocks won’t return to you unless your customers buy them. Unfortunately, aged stocks are not attractive to customers, so they have a higher probability of extending their stay in your warehouse and limiting your cash flow. This decrease in stock movement and the resulting lost sales opportunities will freeze your capital and prevent any ROI from coming to your business.
- It occupies space that could have been allotted to your fast-moving or better-selling products. This represents sales opportunities lost and additional revenue loss. Slow-moving products which eventually age consume spaces that newer, better-selling products should be occupying instead. Having aged inventory produces a negative chain reaction on your business: The older your aged inventory gets, the more difficult they will be to sell at profitable rates and the more you’ll need additional storage for your fresh stocks. This means that you’ll have to increase the budget for your inventory storage while you lose profit whenever your aged items get sold.
- It hikes up your inventory costs. Storing products costs money. The downside with storing aging inventory is you have a slowly decreasing chance of recovering your storage costs as the days go by.
- It increases your inventory’s risk for obsolescence. As your inventory spends more time on your shelves, its exposure to obsolescence also increases. Obsolescence simply means your product is no longer in demand and wanted by your customers, hence negatively affecting your cash flow and decreasing the profitability of your business.
How should you handle aging inventory?
Managing aging inventory—and recovering the capital you invested on it—is easier said than done, but not impossible.
In order to recover the value of aged products or put them into good use, we need to be strategic, bold enough to try new ideas and creative.
If you’re looking for ways on how to generate income out of your months-old products, we have a few ideas that you might want to consider doing.
Sell your old inventory at a discounted price
Think of how your favorite clothing brand changes the price of specific items weeks before the New Year comes. Have you noticed that these discounted products are not from their selection of new arrivals? These items are products that haven’t been sold yet since they arrived in their store months ago! Instead of keeping them in stock when the new year comes, the clothing brand decides to sell them at a lower price before changing their product selections in time for the next season.
Holding a sale is a proven and effective way to flush out aged inventory. There are even consumers that anticipate it to happen at certain times (e.g., during payday, double-digits, weeks leading up to Christmas). Whether that means hosting a limited-time-only clearance sale or a payday-sale exclusive, you’ll have a higher chance of getting rid of your aged inventory if you sell them at a discounted price. You might see more customers adding it to their shopping carts this time around or buying them outright!
Bundle your aged inventory
There is also the bundling technique that businesses with aged inventory can utilize. Take an aged product, combine it with another aged product, another slow-moving item or another item that complements it and sell them in a buy-one-take-one effort. Running a buy-one, get-one promo allows you to hit two birds with one stone: you get to sell aged products fast and make room for new stocks!
Use old inventory to create new products
The idea behind this innovative strategy is this: placing aged inventory back in the market isn’t for the purpose of selling it as it is but transforming it to a value-adding component and using it to generate extra income.
As our society experiences the damaging effects of the climate crisis, our perception and appreciation of environmental causes increases. If you ask us what we like about these modern times in the land of trade and commerce, it’s the initiative of more businesses to become sustainable as the years go by. Business owners are leaning towards incorporating sustainability practices in their operations. Today’s most respected brands look for a balance between gaining profit for themselves and taking care of the rest of the world by avoiding harmful chemicals when manufacturing their products or diverting their waste from ending up in landfills, to name a couple of examples. The bottom line: modern consumers value environmental responsibility and support brands that practice it.
Now, we ask you: why not be one of these business owners that are making a change? You can start by incorporating three little steps we’ve all learned in grade school: reduce, reuse and recycle.
Everything has value in and of itself. Whether you’re trying to get rid of a pallet of aged inventory like jeans or an old stuffed toy animal, it will always have parts that can be used to create something brand new. Recycling aged inventory is a natural solution to generate income without produce waste. Not only does recycling enable you to lessen the load of your warehouse (and of the world, if we may add), but it also allows you to recover the cost of your old products by using them as materials for creating new ones. Using recycled scraps of fabric to make a new piece of clothing, a pillowcase or a bag requires only creativity. Once you begin offering sustainable products that are aligned with your business’ values and goals, we’re confident you won’t regret it!
Liquidate your aged inventory
If you need to get rid of your aged inventory fast, then we recommend you to be open to converting these unwanted assets into cash by selling them to interested buyers.
In other words, liquidation.
Liquidating your aged inventory will help you clear up space in your warehouse and open up new revenue streams for your business by tapping into new markets for your products. Liquidation is an environment-friendly solution for disposing of your aged inventory because you are giving these items an opportunity to find new owners instead of throwing them away in the trash. Oh, and did we mention that this will give you more sales opportunities as well? With the freed up space in your warehouse comes the possibility of housing faster-moving items that will generate profits for your business!
Research about liquidation companies that are accessible in your area. From recovering value from your aged inventory to reducing the number of wasted items ending up in the mountainous pile of trash in our landfills, partnering with a liquidation company is truly a win-win situation for your business, consumers and our planet! Plus points if you can choose a liquidation company that recognizes the importance of saving the earth, too!
Evaluate your inventory
When you find yourself dealing with aged inventory, don’t take it as a bad omen. Rather, look at it as a motivation to further improve how you handle your company and your consistency in running your business.
If you are wondering, “How am I supposed to identify my aged inventory?”, we recommend referring to your aged stock report (or inventory aging report) for guidance. This financial document provides the data of how long certain products have stayed on your shelves before they were sold. Additionally, an aged stock report lets you examine the following information:
- The inventory management approach used to store specific products
- The product journey, from when it was sourced to when it was made available in the market
- The storage and quality maintenance costs by the products being evaluated
This report is crucial in your inventory decisions because it gives you a rundown of your past business reports and gives you a glimpse of how your current stocks are doing. Having an aged stock report is important for businesses because it allows you to identify slow-moving items and calculate how much you’re gaining or losing from them.
Out with the old, in with the new
To be in the world of business means to fall into a continuous spiral of unpredictability. Your customers may be raving about a product now which they will no longer buy in a few months’ time. If your items are already celebrating monthly anniversaries in your warehouse or storage unit, you may want to try out one of the creative and proven ways we shared in this article so you can still generate revenue from them!
Here’s our tip: don’t hesitate to try new strategies when dealing with your aged inventory. Who knows? You might just come up with even more ways to generate revenue from what you once thought was a hopeless situation.
If you have never tried working with a liquidation company that can help you recover value from your aged inventory, why not give it a shot?
Liquidate your aging inventory with Humble Sustainability
Humble Sustainability is a professional liquidation company with a purpose. They accept items from a wide range of categories including high-value IT and office assets such as laptops, mobile phones, furniture, home and living appliances, and more!