Holiday Leftovers? Here are 4 Ways Sellers can Minimize Excess Inventory

The past year presented a plethora of challenges for retailers. Among them were unpredictable shipment of supplies and waning consumer demand that left many with excess inventory. Amid the mayhem of the current holiday shopping season, online sellers are frantically working to move products. Despite these efforts, a glut of unsold inventory is threatening to put a damper on the new year. In fact, according to KPMG’s recent retail executive holiday outlook, 56% of retail executives are expecting an inventory hangover following the holiday period.

Why is excess inventory so bad? For one thing, it can lead to increased costs as companies may need to pay for additional storage space to hold the excess inventory. In addition, excess inventory can also tie up capital that could be used for other purposes, such as investing in marketing or other growth initiatives. Further, excess inventory can lead to lost revenue because products that are not sold quickly can become obsolete or go out of fashion.

Here are four tactics that retailers and ecommerce sellers can employ to eliminate excess inventory and mitigate the impact of the holiday hangover as they plan for 2023:

1: Diversify sales channels.
Having multiple channels to sell through allows sellers to reach a wider audience, which can help to increase sales and minimize excess inventory. A lot of sellers will start out selling on a single ecommerce marketplace, but then find as time passes that this marketplace gets more saturated — and more expensive to advertise on — making it harder to sell. As a result, the most successful sellers are now moving to alternate channels that help them diversify their audience and cut costs. Sellers are also setting up independent stores on platforms that can help automate the selling process and enable sellers to connect their stores to a broader range of marketing channels.


Ecommerce moves fast and sellers have to stay current with what’s new. That’s why it’s important to explore social media sites, particularly those that focus on video content. Savvy brands are starting to use short-video formats and livestreaming to social-sell their products. With more and more consumers turning to social media for their shopping needs, it is likely that social commerce will play a crucial role in the ecommerce market for years to come.

Having a diversified sales channel can also help sellers to better manage their inventory levels. For example, if a seller is using multiple channels to sell its products, it can track the sales and demand for its products on each channel and adjust its inventory levels accordingly. There are also software solutions and applications available to synchronize inventory across channels. This can help prevent the seller from overstocking a particular product.

2: Create a loyalty program.
The cost of acquiring a new customer is dramatically more expensive than retaining an existing one. In fact, depending on the source, the cost can be anywhere from five to 25 times more expensive. That’s why loyalty programs are so important, especially amid unsteady purchasing patterns.

Loyalty programs can help ecommerce companies retain customers — and shed excess inventory — by offering rewards and incentives to those who make repeated purchases. For example, a loyalty program might offer points or rewards for each purchase a customer makes, which can then be redeemed for discounts or other perks. This can encourage customers to continue making purchases in order to earn more rewards and take advantage of the incentives offered by the loyalty program. Indeed, loyalty programs can help ecommerce companies increase their average order quantity by an eye-popping 319%, according to Extu.

Ecommerce companies can also create special events or experiences for their loyal customers. For example, they might host a virtual event or webinar that is only available to members of their loyalty program, or they might offer exclusive access to new products or special discounts to loyal customers. These types of experiences can help to foster a sense of community among the company’s customers and make them feel like valued members of the brand. Experienced ecommerce sellers understand their customers well — where they are, what they like, how they shop — and build such programs to increase the customer lifetime value. 

3: Streamline communication with suppliers.
Opening a clear channel for communication between sellers and their suppliers ensures a seamless order fulfillment process, thus decreasing backorder and supply chain frustrations. This is especially important in the wake of continued supply chain uncertainties.

Regardless of whether demand for goods increases or decreases next year, it will remain critical for ecommerce companies to build strong partnerships with their suppliers and the factories that make their products. They can start by sharing their 2023 purchase plans with key suppliers to help ensure that they will have the right resources on hand. For instance, if you need a specific type of material or fabric for your product, you should tell the supplier how much you plan to buy over the next 12 months so the supplier can be prepared. Having a clear and efficient communication strategy can help the supplier ensure you have the materials you need — when you need them.

Having clear and consistent communication channels with suppliers also helps to ensure that suppliers are always aware of any updates or changes to the order fulfillment process. This can include setting up regular meetings or conference calls to discuss any issues or challenges that may arise, as well as using email or instant messaging to communicate in real time.

4. Negotiate better terms.
As part of the overall inventory management process, it’s critical for ecommerce companies to negotiate the most flexible terms with suppliers, especially when it comes to minimum order quantity (MOQ), which is the minimum number of units you have to order from a supplier in order to fulfill the order. Buyers may also negotiate better payment terms and flexible shipping schedules to help with the cash flow.

Some ecommerce platforms make this easy by verifying their buyers and suppliers with certain criteria that helps both identify qualified and meaningful businesses to work with. This qualification helps suppliers confirm the legitimacy of a business, thus making them more willing to offer flexible terms and even provider lower MOQs. This is important because even the biggest sellers want to test the market when they launch a new product and don’t want to overstock. So having the stamp of approval from a big ecommerce platform will make suppliers more likely to support you and offer the most favorable terms — even on minimum orders.

Final Takeaway

Even in these tough economic times, minimizing excess inventory is critical. It can help online sellers free up capital that can be used for other purposes, such as investing in new products or expanding the business. By better managing their inventory and avoiding holiday leftovers, sellers can operate more efficiently and effectively, improve profitability and boost their competitive position.

Min Yang is’s Director of Buyer Growth and Partnership. An expert in B2B ecommerce, marketing, retail, supply chain and business development, she leads’s Buyer Growth Academy — a series of livestream webinars and on-demand content to help small and medium-sized businesses grow and succeed. Yang joined in 2020 as Director of Business Development and Partnership where she built ecosystem partnerships and created integrated solutions for’s global buyers, including tools for drop shipping and supplier research.

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