How are you dealing with your overstock issues?

June 8th, 2022

What you do with your overstock can decrease shrink and improve margins.

 

Today’s post is by Ronald D. Southard, CEO at SafeSourcing Inc.

What you do with your overstock can decrease shrink and improve margins.

Many retailers loaded up their back rooms and warehouses with product due to the pandemic and inflation induced supply chain issues. Now the overstock inventory is causing a problem to current financials.

The term overstock refers to products that have been over ordered.  It is the responsibility of the buyer along with the warehouse inventory management team to manage this type of overage. Overstock or excess stock would result in additional operating capital.  Additional operating capital would create a huge impact on profitability due to the need for more storage space, which leads to higher overhead.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock, and services you may want to sell, such as when you need to liquidate excess inventory.

There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items, they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company’s stock price. Due to recent supply chain issues, it is now also an issue at Warehouses and Distribution Centers.

SafeSourcing is an eprocurement company that operates across multiple industries. As such we have specific experience in helping our customers reduce shrink through the forward auction process. To learn more, please contact a SafeSourcing customer services associate.

 

 

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