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What to Do with Excess Inventory: The Wholesale Action Plan

Posted by JOOR on Thu, May 21, '20

Wholesale has an inventory problem. And yes we know, that’s not exactly news. Even prior to COVID-19, UBS noted inventory growth for apparel, footwear and accessories had outpaced sales growth for four quarters running -- with many companies bringing in inventory sooner than usual to get ahead of expected tariff increases. Not to mention, demand forecast in general has perplexed the industry for quite some time. Add to this the delayed deliveries and mass order cancellations of Coronavirus Spring, and a perennially smoldering issue just became a five-alarm fire. 

Or did it?  

Although brands across price points and categories must now move mountains, (of product, that is,) with a 30% average global reduction in demand, they also have more options at their disposal than ever before. As long as decision makers can pivot creatively during this time of business unusual, solutions exist to bridge gaps and even to build opportunities.


Manage Expectations

No one anticipated the compounding crises of Spring-Summer 2020, but all must look forward with amended outlooks and goals and do so with the tools and assets they currently have available. Excess inventory counts key among these and, like any financial resource, companies can leverage it in multiple ways. For survival’s sake, many brands need to quickly liquidate as much inventory as possible to fund short-term expenses like rent, salaries, and next season’s collections. But available-to-sell (ATS) inventory that doesn’t go in the first wave of sales efforts isn’t necessarily a loss -- it can pay off for the longer term when invested in nurturing future relationships and strengthening brands.


Present a customized and rich virtual shopping experience

With brick and mortar at just the earliest stages of reopening and an unprecedented and unpredictable market ahead, retailers have a lot to navigate. They also have a lot of brands competing for their strained attention and resources.  

Even with the limitations of social distancing however, brands can successfully engage with their partners. Instead of sending an uninspiring spreadsheet, they can now rely on virtual showrooming to create immersive customized shopping experiences. This technology allows them to curate content in line with retail partners’ buying histories and preferences and present it with interactive features like dynamic ‘shoppable’ video, 360 degree imaging and zoom. Such presentations give the brands who use them an edge. They give buyers a ‘look and feel’ experience of the products offered, enable partners to collaborate in real time on final edits, and build shopping confidence. To gain traction with buyers and drive results, virtual showroom technologies should play a leading role in every inventory management tactic discussed below.


Act nimbly and count on a diverse selling strategy to move excess inventory fast  

The quick selling approach aims to extract maximum cash, while minimizing damage to the brand that discounting can bring. Of course, in the current climate promotional pricing may be hard to sidestep. But employing and combining a variety of approaches gets to the most lucrative results fast while lessening the downside. 


  • Use B2C promotional best practices in your ATS wholesaling.
    Since the great recession, consistent deep discounts have conditioned consumers to wait for regular storewide sales--eroding retailers’ and manufacturers’ brand equity and margins. Some of today’s new and successful brands ‘practice safe promotion’ to avoid this pitfall--building exclusivity, uniqueness, surprise and urgency into their discounted offerings. Mansur Gavriel’s color of the week’ specials, Rixo’s subscribers’-only and one-time only flash sale, single-day Instagram specials customers have to follow to find, item of the week deals, blast from the past archive peeks, etc., all motivate buyers to act fast on a time-bound opportunity -- and to interact digitally on an ongoing basis to see what exciting reward will come next. Such beachhead programs not only move immediate inventory, they motivate deeper and ongoing engagement with brands and higher dollar values per sale.

    Brands should consider adapting and applying such tactics to their ATS wholesale strategies wherever possible and, if they have their own D2C website, incorporating there as well.


  • Partner with liquidation specialists -- just don’t call it that.
    Similarly, to circumvent the appearance of intentional discounting and to preserve brand integrity, brands can partner with off-price players that cultivate exclusivity, special deals, and flash shopping periods around their sales models -- such as the members-only online pop-up events of Rue la la, Gilt, Haute Look, and Zulily. Third-party sites like YOOX and the Outnet that offer last-season’s luxe can also work, since customers assume the bargains they find there aren’t current collections. Even resale sites and drop-ship opportunities like the Real Real and Amazon can play a role when balanced with these other tactics -- as Danish ‘it-label’ GANNI has recently shown.


  • Fix one problem with another.
    In cases where manufacturing hold-ups have  triggered order fulfillment challenges, offer retail partners curated and dynamically presented substitutions from your on-hand surplus stock. Consider promotional pricing to sweeten the deal and get it out the door while it’s still in style.


  • Everyone loves a bundle.
    Package slower-moving products with more popular ones, and/or complementary products -- for example, offer a significant price break on a higher price point piece of canceled inventory, or even BOGO when the buyer purchases multiples of an easier-to-move piece. Or give pricing incentives for buyers to purchase both tops and bottoms from each complete curated look they consider.


  • Hide the discounting in incentives.
    Another worthwhile trick to borrow from the best of B2C: spend more, get more. Usually incorporating a time-bound element -- e.g., spend $250 by midnight, get a $50 giftcard; spend $500, get $100 -- this program can move excess inventory in multiple ways. 1) It encourages buyers to directly purchase more ATS products in pursuit of the giftcard/savings, 2) the excess inventory BECOMES the incentive/gift card (‘Spend $200, get $100 to spend right away in our ‘archive’), or 3) either choice is rolled into additional incentives, e.g. spend X amount by midnight, win the item of the week.


  • Make new friends, and keep the old.
    Pandemic lockdown might seem like a strange time to forge new trading partnerships, but as accelerated change unfolds it suggests the exact new alliances we need -- not to mention, diversification in general serves as great insurance against the next unknown.  Consider brands similar to your own in your digital platform community, and see who they trade with that you don’t yet. Reach out with curated ATS to any promising candidates. At the same time, consider new geographies -- places in Europe and Asia or other parts of the US that have already opened up. Or maybe new types of businesses, like online activewear boutiques, sustainability-themed subscription boxes, influencer-driven live social selling, or streetwear drop-ship sites. Any idea that relates to a defining aspect of your brand or product offering could be a great one. It’s exactly when people are stuck sitting at home in a box, that they need to start thinking outside of it!

Use excess inventory now to help build your brand’s vision

At the same time as you go for the quick bill-paying win, think about longevity -- what will help the company to grow in the direction you want, and what investments can you make to get there?


  • Reward partners.
    Fashion and wholesale is a hyper-connected ecosystem. As we reinvent our industry, models may change, but the importance of partnership to our mutual growth and success will not. Rewarding retail partners for their loyal partnership with inventory they can sell at a challenging time places value on that partnership -- and invests clearly in its future.


  • Incentivize referrals.
    Reward retail partners and/or buyers specifically for new business referrals -- either for those made previously or announce the company will be running a program for a given period of time.


  • Support a worthy cause.
    With millions unemployed, chances are local non-profits could get your excess clothes, shoes and/or accessories into the hands of people that could truly benefit. And giving back to the community -- locally and globally -- is not only the right thing to do, it’s the right thing to do for your business. Over 70% of Americans expect companies to act with social responsibility, and repay companies they deem ethical with brand loyalty.


  • Remake, reuse, recycle.
    Sustainability really matters to consumers and--more and more as a vital KPI -- to the brands who serve them.  True, the upcycling movement still has kinks to work out -- but learning by doing is a thing. And remaking even a part of fashion’s lost season into something useful and sustainable is a powerful statement of hope. One that will even conceivably discover best practices for this growing and important movement along the way.  

Putting an array of diverse and creative tactics in place should go a long way to solving current excess inventory problems. We do, however, need to look beyond putting out the immediate blaze. The issues that got brands into this corner go deeper than the current social distancing and lockdowns. As an ecosystem, our industry needs to get better at maximizing the valuable data resources we now have available, and prioritizing faster lead times and demand forecasting capabilities over immediate cost when making sourcing decisions.  

Look for our fuller discussion in an upcoming blog.


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