For most retailers, the beginning of the year is the time for liquidating old inventory. Because when brands have too much inventory on hand, they do not have room — or the cash flow — for the hot new products shoppers actually want to buy.
Moving stock at the right pace and the right price throughout the product’s lifecycle is a brand’s ultimate goal. Higher full-price sell through rates at the beginning of the lifecycle move merchandise that is new and popular and moves it at a higher margin. Targeted promotions and events throughout a product’s lifecycle reduces inventory while maintaining margin.
When it comes to deploying inventory reduction strategies, brands with DTC channels can leverage sale events throughout the entire product lifecycle to maximise revenue and preserve margin.
1. Pre-Sale
What It Is
Pre-sales let shoppers buy product before that product is physically in the warehouse. Brands can offer pre-sale items to select customer segments – like loyal shoppers or super fans – and then ship the order once the items have landed in the warehouse. Pre-sales capitalise on shoppers’ exclusivity and FOMO motivations.
Why Brands Love It
Pre-sales can prevent inventory issues before they start. These events allow brands to sell items at full price and use pre-sale data to forecast more accurately and adjust merchandise orders before taking delivery of inventory. Pre-sales also inform merchandising and pricing strategies. In addition, since pre-sale inventory is not available to ship immediately, customers expect to wait, easing delivery pressures on brands.
Tips for Success
Brands with DTC channels should segment and target customers who are most likely to respond to a pre-sale. A dedicated pre-sale site helps control traffic and allows brands to have site and sale-specific terms, conditions and shipping policies. Brands should test merchandising and pricing scenarios, collect data and use that data to inform decision making when the product goes live to the general public.
2. Private Stores
What It Is
Private stores are exclusive, gated online shops. Customers need a personal invitation to shop the site, which can be obtained from the brand, by referral from another shopper or by making an invite request. Some private stores have customer wait lists, and promotions are tailored to the specific customer segment.
Why Brands Love It
Private stores offer the height of exclusivity. In fact, many private stores are impossible to find on search engines, meaning only customers who are in the loop can shop from them. This increases brand loyalty and value, creating an allure that bargain shoppers and brand loyalists can not resist. In addition, brands can offer merchandise at full price and include non-discount incentives like exclusive online events with a designer or influencer. Selling at full price when excitement for the product is still high further reduces the need to liquidate at the end of the product lifecycle.
Tips for Success
There are many ways to create a private store. These stores can offer exclusive experiences, try-before-you-buy or generous return policies that are not available to the general public. Brands can also create private stores for employees or friends and family, where insiders can get the best deals on products that brands need to get off the shelves. Brands can also
3. Flash Sale
What It Is
Whereas typical sales last a few days, flash sales may last anywhere from a few hours to 24 hours. Discounts or promotions can vary depending on where in the product lifecycle the sale takes place. In addition, flash sales typically apply to a limited set of products, not the entire catalogue.
Why Brands Love It
Flash sales are a tried and true method and for good reason. By offering a very short-term sale, retailers can increase the consumer’s motivation to buy and offload a massive amount of inventory in just a few hours.
The average flash sale has the potential to increase transaction rates by 35%, and three-hour sales tend to generate the highest transaction volume.
By running a flash sale between seasons, brands with DTC channels can increase revenue, boost customer loyalty and unload inventory at an extremely rapid pace. These types of sales can also boost brand visibility by creating hype on social media and a sense of urgency across a wide customer base. Flash sales can be deployed at various points in a product lifecycle. That means discounts can be strategic and offered to segments most likely to buy.
Tips for Success
Drive results by keeping your flash sale short and sweet (two or three hours is best.) Segment your customer base and use website popups and dedicated flash sale storefronts to direct visitors to the sale. Offer the deepest discounts on the inventory you need to liquidate, and promote the sale using social media and email.
Read More: 7 Ecommerce Shopping Features to Consider for Growth
4. Online Outlets
What It Is
Like a brick and mortar outlet store, an online outlet store sells ageing inventory at a reduced price. An online outlet can be private or open to the public. These stores are typically marketed to a select audience of loyal customers or potential customers seeking a bargain.
Why Brands Love It
Online outlet stores provide all of the benefits of a traditional outlet, without the headache of running a physical retail store. They drive customer loyalty by giving customers the branded products they love at a more affordable price. They help offload inventory that is no longer in high demand, and can even be a way to move defective inventory.
Tips for Success
Advertise your online outlet to your most loyal or price-sensitive customers with emails, social media announcements and website pop-ups. Sell the inventory you need to move quickly by offering discounts well beyond the traditional sale.
5. Product Bundles
What It Is
Product bundling is when two different products are sold together for a discounted rate (in comparison to buying the products individually). Brands use throughout the year to move stale merchandise by bundling older products with newer products.
Why Brands Love It
Product bundling is a straightforward solution for brands that need to liquidate inventory quickly. 35% of Amazon purchases come from product recommendations, revealing the power brands have to suggest products. Bundling lowers carrying costs, opens up shelf space and reduces waste by grouping and shipping products together. It also revives dead stock and recoups investment on items that might otherwise hurt the brand’s bottom line. Product bundling also benefits the customer, giving them a simple, complete solution to their pain points and greater incentive to complete a purchase.
Tips for Success
Choose from several types of product bundling, including pure bundling (the merchant chooses which products are in the bundle), mix-and-match bundling (customers can create their own bundles before checkout) and mixed bundling (customers can buy the products separately or in a bundle). No matter how you sell your product bundles, remember to only pair complementary products, always matching stale inventory with an “anchor product” — the appealing item that will help move ageing inventory.
Move Inventory with ESW
Ready to move inventory and make room for new products while protecting the balance sheet? Reduce inventory at lightning speed with ESW. Our DTC ecommerce solutions power the world’s best loved brands with ease and speed. We help brands optimise the shopping experience in multiple markets, from design to day-to-day operations. Contact us to accelerate your global DTC strategy today.
