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Best Liquidation Strategies for eCommerce Stores

Liquidation strategies don't have to be a margin buster. Smart, targeted sales and creative offers help brands turn over merchandise and preserve revenue.

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There is no understating the importance of inventory management in running a successful DTC eCommerce business. Keeping on top of inventory is crucial for cash flow and the overall health of an online business. The goal is to find a perfect balance between what is coming in and what is going out. Ideally, inventory should usually be sold within 90-120 days. Since valuable capital is tied up in every product, eCommerce brands need to have effective liquidation strategies in place.

Even the most successful eCommerce stores run into problems with excess inventory and slow-moving products. Excess inventory happens when a business carries more stock than they need to meet their forecasted demand. Unfortunately, excess stock is a major culprit for sucking up cash flow, which is the lifeblood of every business.

The bottom line is that slow-moving and excess stock does no good for eCommerce businesses. Stock that just sits in a warehouse represents wasted revenue that could be put to better use. Overstock can also lead to higher overhead, insurance and maintenance costs, as well as additional taxes. 

To that end, here are a few proven ways eCommerce brands can turn excess inventory into profits.

Run Special Sales Events

Series of four sample social ads for liquidation sales

One of the best ways to move excess stock and generate customer interest is by turning special, inventory-clearing sales into events:

  • Flash sales: Limited-time only sales that are here and then gone, flash sales create urgency by tapping into consumer FOMO. Setting a short-term offer on products acts as an attractive incentive for shoppers, who will buy before time runs out. Flash sales can be a great way to sell a lot of excess products in just a few hours. By notifying customers through email or social media well in advance, brands can build a sense of anticipation that customers won’t be able to resist.
  • Clearance sales: Because they clear stock fast, periodic clearance sales are one of the very best liquidation strategies. Clearance sales tap into those customers who are actively looking to buy last-season, discounted products, which can help drive sales and profits. A good rule of thumb is to offer discounts on inventory that has not sold for 3-6 months. Lean on email and social media marketing to promote the sales. Brands can also create a permanent clearance section on their website that offers discounts on stale and excess inventory.
  • Specific-items sales: Launching a sale that is aimed at a specific product or type of shopper can narrow the focus on slower-moving items. As with other event sales event strategies, brands can generate interest about specific-item sales through personalized email campaigns or social media. This way, brands can eliminate stock while delivering a personalized customer experience.

Bundle Products

Bundling slower-moving inventory with popular items is a smart way to move excess inventory. Brands can then market just one item and not two (or more), and customers will feel like they are getting more for their money. Bundling products also gives an incentive to customers to buy even those products they would not have bought otherwise. Here are three effective ways to bundle products:

  • Bundle complementary products. If one product is not moving, pair it with similar items that are. Complementary products can be grouped together and sold at a slightly lower price than if they were purchased separately. This way, slow-moving products can be sold without taking a hit on profits.
  • Bundle multiple units of the same product. Bundling the same type of product but in different colors or sizes can help them sell faster. Creating 2-packs, 3-packs or 6-six packs of the same items can give customers the sense of getting more for less. This strategy works especially well for small products. 
  • Bundle slow-moving products with best-sellers. Pair hard-to-sell products with popular items to dramatically increase the chance of a sale. Customers who would ordinarily buy the popular product will feel like they are getting something extra.

Include Them as Freebies

Freebies are a great option for easily liquidating excess products. Giveaways can be used as an incentive to collect email addresses or entice customers to spend a certain amount on other products. Think, “Spend $75 on winter cardigans and get a free scarf.” Or, “Sign up to our mailing list and get an exclusive fleece hoodie.” The goal is to give customers something so the eCommerce brand gets something in return that benefits the business. As an added bonus, giving products away for free can also have a positive impact on brand recognition.

Reexamine Marketing and Advertising Strategies

Slow-moving products may be a function of the marketing strategy. Shifting marketing strategies to put slow-moving items in fresh focus may get items moving. Giving them prominent website placement can make old products seem shiny and new and generate fresh interest. Using new keywords in product titles and descriptions or posting new photos showing people using the product could also help.

When all Else Fails

When the usual liquidation strategies fail, there are still ways eCommerce brands can unload excess inventory. Donating products to charitable causes helps those in need and boost positive brand awareness. There are plenty of worthy charitable organizations that are more than happy to accept donations. Most of these organizations will also provide a receipt so donated items can be used as a tax deduction.

Another potential solution is to contact suppliers to see if they have provisions for returns or exchanges. If an eCommerce brand has good relationships with their suppliers, they may be willing to work out a deal. While this represents a last-ditch effort, it never hurts to ask.

Liquidation Is Inevitable

Slow-moving and excess stock is an issue that every DTC eCommerce retailer needs to deal with at some time or another. It is simply the nature of retail. So, knowing how to turn old products into profits is an essential part of any eCommerce business. Excess stock may be an inevitability, but smart inventory control and liquidation strategies can help rein them in.

Do your liquidation strategies include eCommerce events like flash sales, clearance sales and specialty stores? Need to improve inventory management? Scalefast can help. Talk to a Scalefast eCommerce expert today to learn more and schedule a demo.

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