How to get rid of overstock Inventory?

how to get rid of overstock Inventory

  Touseef Riaz

Posted on: 20 Dec 2021

how to get rid of overstock Inventory

Understand how to get rid of overstock Inventory

It is essential to understand the whole picture while doing or even incorporating a new business. You must be careful enough regarding the fact that anything is possible. Therefore, making sure that your business has been running smoothly and keeping all the precautions and threats in mind will be to succeed in the future. 

Moreover, we should take guidance from the most trusted and widely used platforms like Amazon. Amazon manages its Inventory in such a wise way that, in return, earns it a considerable amount of sales every single day. This is because it has a good idea and regulates a check on how to get rid of overstock inventory. You cannot be careless when your reputation is at stake, similar is the case with Amazon. Although it faces a lot of challenges and issues regularly it also has the proper measures to cope with them. This is what makes it the most popularly used e-commerce platform worldwide. 

A most frequently faced problem while the management of the Inventory of any business is overstocking, this is what we will be going to discuss further in this article below.

To understand how to get rid of overstock Inventory, we must first know about:


 What is Overstock Inventory?

It is as simple as its name; overstock inventory is the amount of stock that is left in your business due to not being sold to the customers. This type of situation occurs in many businesses due to various factors which are not considered concerning. However, there are also several ways to cope with this huge problem of overstocking Inventory in your business. Amazon is undoubtedly famous for its wide scope and e-commerce dealings worldwide. One can surely get guidance from it in terms of how Amazon manages Inventory in its business.

In addition to this, people nowadays tend to install automated inventory software to manage their business's Inventory better. The most well-known and undoubtedly professional automated inventory management software is Inventooly. It helps your business to get updated from time to time by the external changes affecting it. Also, this software will alert you regarding every possible threat to your business. 


How does Amazon manage its Inventory?

Amazon manages its Inventory in such a way that all the customers are facilitated in every possible regard 24/7 whenever they require guidance. No one's problems stay unresolved while doing business at Amazon. Plus it also offers super flexible ways in which each and every part of your Inventory is managed efficiently without any collision. 

Amazon is a commercial giant and it has a massive portfolio of products that are inbound and outbound at the same time. It is necessary for Amazon to maintain its Inventory to maintain its recognition and generate stable and increasing revenue. This inventory management can be understood by looking into Amazon's branches to regulate a good flow of Inventory. The main subsets of inventory management by Amazon are Fulfillment by Amazon and Fulfillment by the merchant. Including these, there are a number of things that are taken into consideration by Amazon and should be considered by any macro or micro-level business while considering inventory management.

Below are stated some of the effective ways through which Amazon manages its Inventory effectively:

  1. Good relations with Suppliers:

As being the most widespread platform throughout the globe, it is widespread that one will care and carry out effective means to stabilize its reputation. Similarly, Amazon tries its level best to maintain excellent relationships with its suppliers. Wonder why? Because they are the entities that will deliver the goods and services to Amazon in order to serve the customers at the end. 

It is essential that your supplier is happy with you because, in case of overstocking Inventory, it is the supplier who can take the goods as returns from you and free your business from this burden. 

Some effective ways that Amazon uses to build good relations with the supplier are:

  • Informing about the need for Inventory before placing an order.
  • Offering incentives from time to time.
  • Not rushing him, which will let him work in peace.
  • Letting the supplier know about the customer's actual demands.

2. Reduce overstocking through liquidation:

It is no secret that every business faces an overstocking situation at some point when it has ordered more than the maximum amount of stock for future use. But it happens a lot that the customer is fed up with the same product in a very short time and then he wants something new and unique right away. For this purpose, you must have all the means to cope with such an issue. 

Amazon being the world's most widely used platform handles this problem very well through liquidation. It takes the help of liquidators and offers them to sell their overstock inventory at a reasonable price. We could also take guidance from how Amazon manages Inventory in the overstocking situation.

3. Employing a suitable inventory system:

Another effective measure that Amazon uses to manage its Inventory is that it researches carefully about what inventory system will be suitable for its E-commerce store. While creating an e-commerce store, Amazon will also suggest which inventory system will be suitable for running your operations smoothly. 

Furthermore, using an automated inventory management software tool like Inventooly could prove to be a great help in terms of managing the inventory levels of your business. In addition to this, this software will generate alerts when there is a time to reorder the Inventory or even when you should stop ordering more stock.

4. Observing the sale ratio:

It is very important for any business to strictly observe its sales ratio so that it can estimate the future selling products also. Amazon manages Inventory in such a way that they keep the exact record of its sales throughout a specific period of time and then takes the necessary means to increase it in the future. 

We all are aware of the fact that sales are the basis of any business. You cannot do well or stay even alive when focusing on sales is not the goal of your company. It is without a doubt said that a business can assure its long life when it is successful in attracting a large number of people towards it by selling most of its products. Likewise, Amazon manages its Inventory and estimates according to the observations made regarding the sales of its business.

5. Marketing products digitally:

If we talk about Amazon, it uses digital and latest methods to sell its products worldwide digitally. We are aware of the fact that now a major part of the public is involved with each other through different social media platforms like Facebook, YouTube, Twitter, Instagram, etc. Amazon uses its products publicity by placing ads over various platforms to compel a large number of people and make them permanent buyers. 

Marketing the products digitally proves very useful because people don't have to go all the way down to the stores to buy the products. Instead, they could see and inquire about their interesting products from their mobile phones by sitting at their homes. 


Effects of overstocking Inventory:

It can be said without a doubt that overstocking Inventory is not always helpful for your business because no one knows about what is yet to come in the future. As technology is being improved and enhanced, so are the demands of the people. 

Customers are attracted by innovation. If you have mishandled your Inventory and have accidentally overstocked, there is a good chance that besides increasing your storage cost, of the products that are not being sold, you will be restrained to use newer and more contemporary products. This might leave you at a halt to your business and hinder your progression.

Overstocking Inventory is undoubtedly a huge problem that has been suffered by many businesses, due to which various other problems also occur. Some of the major effects of overstock inventory are stated below:


  1. Danger of obsolescence:

The main problem of overstocking Inventory is the danger of expiration or obsolescence of the products in your business. This means that these products are either not usable, become obsolete, or have lost their trend. Therefore all your products must be sold timely to avoid problems.

No one would want their products to be laying in storage houses and not generating sales. Likewise, amazon manages its Inventory in such a way that all of its products are sold within the specific time period before they expire.

2. Cash is not put up to use:

It is for sure that when you buy a large amount of Inventory, all your cash is tied up and you wait for it to return in the form of ROI (Return on investment) of your business. However, when there is a large amount of stock stored in the warehouses of your company, it risks the shortage of cash too because, at a certain level, you want all your invested money back with or without profit.  

3. Low Ranking on Amazon:

When your business is suffering from overstocking Inventory, it faces numerous challenges due to which the focus on expanding the sales is divided. This not only becomes a reason for facing loss but also ranks you lower on Amazon search results as you are not generating as much business. Lower-ranking will automatically damage your business potential and the sales that are already going through.

However, if you fail to manage this problem, the rankings of your business start to fall over time and gradually, the close down situation of your business arrives. 

4.  No Storage space: 

When there is an overstocking situation in your business, there is no storage space left for the new products to enter. The major setback you face due to minimum storage space is the cost you have to face due to your obsolete Inventory, which is neither producing income nor generating benefits of any other nature. It creates an environment of frustration for your business as it becomes difficult for you to cope up with such grave problems at the same time. 

On the other hand, Amazon manages its Inventory by shifting them to FBA or FBM fulfillment centers so that it can store a large amount of Inventory. This will help them to deal with the overstock inventory and also with the storage problems of the business.


Inventory Management Software for Overstocking:

When we talk about inventory management software, you can opt for Inventooly for your business. It will help you manage the inventory levels of your business and deal with situations like under or overstocking.

Additionally, the best inventory management software overstock also helps your business to examine the reorder levels of your Inventory and generate alerts when there is any threat coming your way so that you can be ready in advance to cope with all such situations.

Here we have established a good understanding of how to get rid of overstock inventory. We also understood the ways to avoid it and face it when it has occurred. We cannot compete with Amazon based on E-commerce. What we can do is to learn from it so we can earn without it.