Excess stock: How to know when to take an offer on your overstocks

Several inventory holders spend a long time considering whether or not to take an offer on their excess stock. I can answer that dilemma very easily – take the offer. In my experience, any subsequent offers will only be for a lower value. It’s always tempting to hold out for a better price on your overstocks, but in most cases, the first offer will be the best that you are going to get. In fact, I have never seen a case in which the price of excess stock has risen over time, especially if you are simply allowing the overstocks to sit dormant in a warehouse.

The Pitfalls of Holding Out

If you don't take the first excess stock offer, you normally have to accept a lower price later for the overstocks. This scenario is common in various industries, where holding out for a better price can backfire. The market for surplus inventory is highly competitive, and buyers are constantly presented with numerous opportunities. Therefore, if you don’t take the first offer, you will likely end up accepting an even lower price at some point down the line for your overstocks.

As long as the first offer you receive is fair and reasonable, you should certainly consider taking it. Retail managers are besieged by offers of low-cost surplus stock, so competition is fierce, and from what I understand of this very particular marketplace, it’s only going to get fiercer. Remember to think about any additional costs you might incur in delivering the overstocks. Are there transport costs or handling costs, for example? If there are, you will need to include these in your final negotiations.

Understanding the Market Dynamics

The dynamics of the surplus stock market are such that prices rarely increase over time. This is primarily due to the nature of the goods in question. Products that become excess stock often do so because of factors like overproduction, changes in consumer demand, or product obsolescence. As these factors persist or worsen, the perceived value of the stock diminishes. Additionally, storage costs for unsold inventory can accumulate, further eroding any potential profit.

Factors Leading to Excess Stock

There are several reasons why you might end up with surplus stock. Some of the more common cases include:

• Companies Going into Liquidation: When businesses fail, they often liquidate their inventory quickly to recover some of their investments.
• Poor Ordering Tactics: Overestimating demand can lead to overstock.
• Changes in Fashion: Trends can change rapidly, making once-popular items less desirable.
• Over-Manufacture: Producing more than the market can absorb leads to surplus.

In most of these cases, the reason that the stock has become surplus is perfectly understandable, and the goods themselves will still have a value. As long as the product is not damaged and is still usable, your excess stocks still have a value, even if it is not quite the same as the original market price.

Realistic Pricing Expectations

It is unrealistic to expect to get the full original market price on any surplus inventory and overstocks. Once you have understood that concept, the only remaining question is who you are going to sell the goods to and how much you are going to charge for the overstocks.

Professional Assistance

If you are having problems negotiating a deal on your excess stock, you can always try using a professional surplus stock seller like Correy & Co. We have over 21 years of experience in researching markets and handling negotiations and we offer free consultations for selling overstocks. Professional services can provide insights into market trends, pricing strategies, and potential buyers, ensuring that you get the best possible deal for your surplus inventory.

Tips for Managing Excess Stock

1. Regular Audits: Conduct regular inventory audits to identify slow-moving or excess stock early.
2. Discounts and Promotions: Offer discounts or bundle deals to move excess inventory quickly.
3. Market Research: Stay informed about market trends to anticipate changes in demand.
4. Supplier Agreements: Negotiate flexible supply agreements to minimize the risk of overstock.
5. Inventory Management Software: Use technology to track inventory levels and predict future needs accurately.

FAQs

How can I avoid accumulating excess stock?

• Implementing effective inventory management practices, such as just-in-time (JIT) ordering, can help minimize excess stock. Regularly reviewing sales data and market trends also helps in making informed purchasing decisions.

What are the risks of holding onto excess stock for too long?

• Holding onto excess stock can lead to increased storage costs, depreciation of goods, and the potential for items to become obsolete or damaged, all of which reduce their value.

Is it better to sell excess stock at a discount or hold out for a higher price?

• Generally, selling at a discount is preferable to holding out, as the value of excess stock tends to decrease over time. Promptly converting inventory into cash helps maintain liquidity and reduces holding costs.

How can I determine a fair price for my excess stock?

• Conduct market research to see what similar products are selling for and consider factors such as condition, demand, and any additional costs involved in selling the stock.

Can professional surplus stock sellers really make a difference?

• Yes, professionals have the expertise and market knowledge to negotiate better deals and identify the right buyers, potentially maximizing your returns on excess inventory.

What should I include in my calculations when selling excess stock?

• Include all related costs such as transportation, handling, and storage, as well as any fees associated with using a professional seller. This ensures you get a clear picture of your net profit.

Conclusion

Managing excess stock and overstocks effectively is crucial for maintaining the financial health of your business. By understanding market dynamics, setting realistic pricing expectations, and utilizing professional assistance when needed, you can make informed decisions that minimize losses and maximize returns. Remember, the key is to act promptly and strategically to turn surplus inventory into valuable assets.