Managing Surplus and Short Dated Inventory: Why it Matters to CPG Brands
Every CPG brand ultimately faces the problem of overstock or unsold inventory at one point or another. It’s a very common and inevitable problem; tracking customer demand and consumer trends is difficult and will never be 100% accurate. Because of this, it’s in your best interest to have a game plan in place for how to handle unsold inventory, especially if it’s short dated.
For the average brand, between 20-30% of all stock is unsold, and many don’t recognize the hidden cost of surplus and overstock inventory until it is too late. Managing an overstock problem is expensive and emotionally draining. Short dated inventory is particularly stressful.
Overstock challenges for brands
Following are some challenges brands face with overstocks and the costs associated with them.
Discounting
Many brands start with discounting to tackle their overstock problem. However, perpetual discounting is harmful long term. It’s cannibalizing and contributes to brand dilution. Discounting, clearance and sales need to be done with strategy in mind not just as a reaction to inventory that isn’t moving. Discounting on online platforms like Amazon is especially harmful: consumers pick up on brands who consistently discount and you may not recognize the damage to your brand’s image …
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