After three years of supply chain logistics and shipping delays, retailers have too much inventory sitting on shelves, and consumer demand continues to be in flux as inflation maintains a strong grip on budgets everywhere. This means the way consumers shop has drastically changed as new financing options rise in popularity.
Buy Now, Pay Later (BNPL) vendors like Klarna and Afterpay are helping consumers ease the burden of inflation on their slimmed-down budgets. In fact, research shows that BNPL payments surged by 85% during the week between Black Friday and Cyber Monday last year. Furthermore, nearly 60% of consumers prefer BNPL over credit cards thanks to the simple approvals process and little-to-no interest.
Below are four ways ecommerce and online retailers can get rid of excess inventory while maintaining brand image and using trends consumers are relying on.
1. Zero in on incentives that don’t reduce margins.
Retailers operating successful business models are able to cycle out current inventory to make more room for new in-store and online inventory. And consumers have become accustomed to waiting for these sales to happen — meaning Black Friday and Cyber Monday sales are at an all-time high each year. This doesn’t mean sales should happen at a total loss for business. Additional strategies retailers can take in addition to having sales include offering free shipping, BNPL partnerships or bonus rewards points at off-peak times to get consumers in the door after the holiday rush subsides. Advanced marketers will focus on new forms of data to understand ways to surgically offer their incentives, instead of sitewide promotions that may reduce their margins.
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2. Offer bundles to boost order values.
Another strategy for retailers to address overstock issues is by bundling popular items with items that don’t perform as well and offering the group of items at a lower price point. Grouping excess items with new – or best-selling – products is an effective way to keep the brand image intact while clearing the shelves. This also can help increase the average order value (AOV). Food vendors like McDonald’s do it all the time with their value meals. Another example is Nintendo, which found that both cost-conscious and high-end consumers see value in purchasing bundles on their gaming consoles.
3. Turn excess products into freebies.
When retailers are faced with overstock, they can look at offering overstocked products to consumers as freebies when they spend beyond a specified amount. This can be an effective way to get rid of excess product and incentivize consumers with a low-effort way to test out a new product. We also see successful examples of retailers like Kellogg’s and Swarovski offering free gifts with purchases of their best-selling items, like cereal or tennis bracelets. As such, partnering with a BNPL vendor can increase the chances of consumers purchasing big-ticket items — and freebies might be the missing item that seals the deal.
4. Build goodwill by donating overstocks.
Consumers care about whether the places they shop at are charitable. And the more a company donates, the more consumers are interested in shopping there. And younger consumers — like Gen Z — are driven by values, and they want to put their dollar where it matters. Donating pieces of overstocked inventory builds goodwill that can be shared in a campaign across social media and other brand profiles. Aside from charitable giving, brands like Patagonia and Uniqlo are proving the value of their products by offering low-cost repairs or store credit for recycled clothing.
Strategizing the best way to shed overstocked inventory isn’t just great for the bottom line; it can also aid in your customer experience strategy. More than half of consumers rank a good customer experience higher than price — and a good customer experience can go a long way when consumers feel the need to self-justify spending habits in 2023. Meeting consumers where they’re at, with BNPL or other financing options, can prove that your brand is on-trend with what consumers are looking for and provides a flexible post-purchase option to give consumers breathing room.
Reducing excess inventory is a struggle, which almost every brand is dealing with following the unpredictable nature of consumer demand and supply chain challenges. As inflation continues to impact budgets, the purchasing power of consumers is limited. It’s time to leverage your overstocked inventory to create a better customer experience, lift your average order value and reach higher sales without taking a loss on the bottom line or your brand image.
Dan Silver is the Chief Marketing Officer at Session AI, a pioneer and leader of in-session marketing. He has extensive experience leading marketing at a number of successful marketing and advertising technology companies like GroundTruth, PlaceIQ and DataXu, with expertise across branding, product marketing and demand generation.
