Table of Contents
- 1 How to Identify Slow-Moving ASIN?
- 1.1 Overstock
- 1.2 Holding costs
- 1.3 Inventory turnover
- 1.4 Average days to move inventory
- 1.5 Lower AMZ IPI score
- 1.6 Lower AMZ rankings
- 1.7 Higher opportunity cost
- 1.8 Storage limits are clogged with non-selling items
- 1.9 Higher risk of merchandise obsolescence or deterioration
- 1.10 Adverse effects on cash flow
- 2 How to Sell Slow-Moving Inventory?
- 3 Slow-Moving Stock: Final Thoughts
Slow-moving stock is the products that have a lengthier turnover and stay much longer in the fulfillment center or warehouse. Usually, such items are stored for at least three months because they’re harder to sell.
Many aspects can result in slow moving-inventory, for example, inaccurate forecasts, market slowdowns, or competitor’s strategies. So, you must evaluate your supply chain and marketing approach to identify such products and implement an effective action plan.
Slow-moving inventory lowers the bottom line and total sales and uses warehouse space that you might spare for better-selling goods. So, for Amazon sellers, finding ways to eliminate those types of products is vital.
In this blog post, we’ll explore the nature of slow-moving inventory and how sellers can identify and handle it.
How to Identify Slow-Moving ASIN?
So, what is slow-moving inventory? No single definition of slow-moving stock gives a bulletproof method to determine that an issue exists. For example, an Amazon business may flag stock as slow-moving when there is no problem. The following are some methods of determining slow-moving stock to pinpoint issues accurately and early.
Too much inventory of a particular product can result from slow-moving stock. Companies can track it by monitoring how long merchandise has been in stock and/or monitoring absolute inventory levels. For instance, if an Amazon business has a contract where it purchases a fixed amount of some products at regular intervals, and its inventory rises over time, it can indicate that sales have slowed.
When a seller is spending more and more money on stock holding costs, that is a good sign of ordering too much. Sales might have reduced if holding costs grow, but the brand has not changed its ordering approach.
Stock turnover is a general financial metric that shows the speed with which a seller moves its inventory. Still, it is a measure that combines different product types and estimates everything in dollars. A proper inventory management service can calculate stock turnover for individual items, which will be a much clearer sign of what’s selling slowly and what’s not.
Average days to move inventory
Like inventory turnover, average days for selling inventory is usually a combined financial metric of limited use in spotting a specific item selling more slowly (unless the brand sells only one item). It calculates how much time, on average, it takes to get sales equal to the value of the stock. However, it might mean some goods sell out and get reordered multiple times while others do not even sell out once.
Why Is It Bad to Have Too Much Slow-Moving Inventory?
Holding too many products comes with costly challenges and consequences. Among the priciest are the following:
Lower AMZ IPI score
The AMZ Inventory Performance Index (IPI) indicates the overall efficiency of your inventory management within the FBA business. For example, when you have too much stock on hand, you are not converting those items into sales as fast as you should (within 90 days for AMZ merchants). Such an issue might cause a lower sell-through rate, signaling to the marketplace that your stock is not performing well. Therefore, you might get a lower IPI rate, leading to decreased storage limits.
Lower AMZ rankings
Most businesses on the platform generate 80% of their income from 20% of top sellers or items. Slow-selling goods get less attention as they might have poorly optimized or outdated listings.
When a product listing or page is not well-optimized, it’s less likely to appear at the top of the marketplace’s search results, ending up in less traffic and lower sales. Thus, the merchandise is unsold, tying up your money in inventory holding costs.
Higher opportunity cost
In eCommerce, opportunity cost means the value of the stock you might have bought and sold instead of products sitting in your fulfillment center or warehouse. That is why you should put your AMZ excess stock on sale or liquidate it to enhance your sell-through rate and maintain your opportunity cost low.
Storage limits are clogged with non-selling items
With the new AMZ storage-type limits imposing profile-wide restrictions on inventory, more excess slow-moving products mean less Amazon FBA storage space for your best sellers, leading to stockouts. They, in turn, result in lower limits, and you appear in a vicious circle of lower and lower storage limits that may be difficult to get back from.
Higher risk of merchandise obsolescence or deterioration
Most goods lose value over time, especially items that evolve very quickly, like various gadgets. While it is a good thing for the client who always wants the newest, it also signifies electronic items can promptly become obsolete or out of trend as soon as they enter their final life cycle phase.
Adverse effects on cash flow
If you can’t move your excess stock fast, you will need to pay unnecessary expenses on top of your general storage fees per month. And the more unsold stock you have at your Amazon warehouse, the more you need to pay. Furthermore, penalty costs are involved in keeping inventory with the marketplace after six months. After a year, those fees grow even more, and extra penalties can add up quickly. Besides, storage expenses in the Q4 of the year are about six times higher than average, so keeping excess goods during this time will be painful.
How to Sell Slow-Moving Inventory?
Let’s discuss five effortless ways to increase your Amazon sales and shift your slow-selling FBA inventory.
Launch a sale
The most obvious way to liquidate your inventory is to have discounts on your excess and old stock. You will need to heavily discount your products to spur customer demand for such products. Think of providing discounts between 30-70%. Yes, it seems too much, and you might offer the goods at cost (or even a loss). However, these items should go! This way, you can leave your old and excess inventory in the past and look forward to the future. Efficiently notify your customers of your sales with different promotions.
While a sale is an excellent way to bring clients to purchase, keeping the frequency of such heavy discounts in mind is essential. If you present too many sales within a year, they might lose their effectiveness and appeal.
Check for any improvements in your product listings
Sometimes the cause your inventory is not selling has everything to do with a non-optimized product page. Who wants to purchase something with a crummy image or a poor description online? On some of your products, you may want to check for ways to enhance the images, keywords, title, etc.
Pro tip: Use SellerSonar for product listing monitoring and stay aware of the slightest changes in your AMZ business environment. This solution detects and informs you of any problems that may potentially result in slow-moving inventory and harm your online reputation and sales!
Apart from discounts, bundling is another popular pricing way used by sellers. It is when you sell a set of goods as a product bundle for a slightly reduced price than if they were sold separately. As you’re discounting stock, you can keep your profit margins on a sale.
Leverage selling channels
It differs by industry; however, brands can use additional sales channels to move inventory quickly. For example, by leveraging partners who have access to more clients. It is a good option if the slow-moving stock is due to advertising efforts not reaching enough or the proper audience. Such channels may include selling on other online marketplaces, collaborating with another company to give its clients a deal, or joining platforms that share deals.
Donate to get tax deductions
Let’s face it. If you cannot find a better way to move old inventory, giving it to some charity organization might be an excellent option. Many institutions are ready to take donations- and your brand reputation can benefit from helping people.
Slow-Moving Stock: Final Thoughts
Managing your AMZ excess inventory requires balancing between cutting your potential losses and recovering what you can. While it is not good to get zero profits or lose any money, you also do not want to waste more resources and time on an item that becomes increasingly unprofitable when unsold for months after months.
The trick is to spot, track, and sell overstocked or slow-moving items before they become obsolete. Thus, you’ll still be able to boost your rankings and sell-through rate, avoid storage expenses, and recover some capital. And if it works out in your favor, you may even turn a slow seller into another best-selling item.
There has never been a better time to give Amazon listing monitoring software a go.
With a free 90-day trial and a 2-minute sign-up process, there is no reason not to at least give SellerSonar a try.