7 Ways to Deal with Excess Inventory

Stocking the shelves for the holiday rush can be tricky, while you want to have enough inventory to meet your customer's needs you may also find yourself with excess inventory post holidays. These strategies could help you turn that surplus into profit.

Keeping on top of your inventory can sometimes feel like a full-time job in itself but managing it proactively can boost cash flow, assist with purchase ordering and reduce the chances of being stuck with excess stock. It can also help you avoid a net loss in your business.

Square Invoices

Built to save time and get you paid faster.

What is excess inventory?

Excess inventory is stock which doesn’t sell, is not anticipated to sell or sells much more slowly than expected. Also known as overstock or deadstock, too much of it can tie up cash, valuable warehouse space and impact your profits.

There’s no hard and fast rule around the length of time before products are considered excess inventory. It will depend on the nature of the business. It could be weeks, months or even years. For example, if you bring out a newer model, the older model might not sell as well or stop selling altogether, and any remaining stock would be deadstock. Or you could find a particular product that didn’t sell as well as you thought it would during the festive season, so now you have to find ways to offload it in the new year.

Strategies for excess inventory management

Almost all businesses will experience excess inventory from time to time for a host of different reasons. Fashions change, economic conditions fluctuate, newer models are released and market demand is sometimes simply different to what you anticipated. Some circular economy businesses will reuse or repurpose leftover stock to ensure it doesn’t go to waste. But whatever your industry, managing inventory is key to preventing excess stock from becoming a problem.

Bundling stock to create new offers

You can give products or services a new lease of life by bundling them together to create one great offer. For example, you could mix a slow-selling item with a fast-selling one. Or you could create buy more pay less bundles where the price of buying each item individually is more expensive than, say, all three together. If you run a service-based business like a dog grooming salon, you could bundle a service like a standard groom with a free home shampooing product for people who make multiple bookings in advance.

You can also market bundles for particular occasions, making it easier for customers to just pick up and buy rather than have to select their own items. For example, a Mother’s Day gift basket of soaps and toiletries.

And don’t forget about buy-one-get-one-free offers. BOGOF can be a great way to boost sales of a slow-moving item because of the perceived extra value a customer gets. You might not be selling the products at their full value but at least you’re getting something for them rather than leaving them to gather dust on a shelf.

Offering discounts

Giving customers a discount is an obvious way to shift excess inventory and it can work particularly well for older models. People naturally want to pay less for something that isn’t bang up to date, but that doesn’t mean there isn’t a market for customers with a smaller budget who still want a great product from a particular brand.

You can offer regular discounts, flash sales where you offer discounts on certain items for a limited time or offer seasonal discounts on products that aren’t likely to sell at other times of the year. Think excess Christmas stock on sale in January or summer clothes heavily discounted going into the autumn.

Cross-sell bundles through personalisation

Another great way to shift excess inventory is to offer customers items of similar interest. You basically package everything the customer needs alongside their original product choice and to make it more attractive you can offer a discount if they buy the whole lot. For example, an art store might see a customer buying canvases but offer a deal if they also buy the paints, brushes and cleaners to go with it.

If you already sell online, you could create offers that spring up during your online checkout process to encourage upselling or offer easy payment links which make it simple to click and buy.

Updating your marketing

Some inventory might not have sold because you’ve been marketing it to the wrong people or in the wrong place. It’s worth updating keywords and product titles as well as looking at who you’re trying to sell to. Your audience may not have been aware of some of the product benefits and with a simple shift in messaging it will fly off the shelf. Similarly, targeting a slightly different audience through your email marketing can reap financial benefits.

Offering buy now, pay later options

For big ticket items and customers on a tighter budget, offering buy now, pay later services can be a deciding factor. It makes the purchase more manageable and more palatable if broken up into a series of payments over time. According to money experts, Finder,, more than 17 million Brits have used buy now pay later services.

Donating stock for tax purposes

If you’re a limited company, you can effectively write off stock and reduce your corporation tax liability by donating it instead.

You don’t need to include anything on your sales income to account for the value of the stock or gift, which allows you to claim tax relief on the cost of the stock. However, if you’re VAT-registered you’ll need to account for VAT on any items you give away unless it goes specifically to a charity which then sells, hires out the items etc. In that case, you can reclaim VAT on the cost of the donated stock.

It’s a little complicated and if you’re not 100% sure about how to record it you can check out HMRC’s stock donation rules or speak to your accountant.

Try selling online

There are many ways to reach your customers online, whether it’s through a dedicated online store, via social media selling or through platforms such as Amazon or eBay. By taking an omnichannel approach to your selling you can reach a wider audience and tap into markets you wouldn’t usually consider.

Contact sales

Contact our sales team to learn more about how Square could help your business.