{"id":7932,"date":"2023-05-26T10:00:00","date_gmt":"2023-05-26T10:00:00","guid":{"rendered":"https:\/\/www.shipbob.com\/au\/?post_type=blog&p=7932"},"modified":"2025-08-05T02:02:44","modified_gmt":"2025-08-05T02:02:44","slug":"surplus-inventory","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/au\/blog\/surplus-inventory\/","title":{"rendered":"Innovative Strategies for Handling and Avoiding Excess Inventory"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is surplus inventory?<\/a><\/p>\n\n\n\n

Downsides of excess inventory<\/a><\/p>\n\n\n\n

How to prevent excess stock in the first place<\/a><\/p>\n\n\n\n

How to reduce inventory<\/a><\/p>\n\n\n\n

How technology can help with reducing excess inventory in 2023<\/a><\/p>\n\n\n\n

Manage inventory and fulfilment with ShipBob<\/a><\/p>\n\n\n\n

Inventory surplus FAQs<\/a><\/p>\n<\/div>\n\n\n\n

When it comes to ecommerce inventory, you can have too much of a good thing. <\/p>\n\n\n\n

Merchants need enough inventory on hand to meet demand, and some safety stock<\/a> just in case. But sometimes, as you try to avoid stockouts<\/a>, you might accidentally end up with more inventory than you can sell.\u00a0<\/p>\n\n\n\n

While excess inventory isn\u2019t always an urgent concern, it can cause a lot of problems when left unchecked. For that reason, ecommerce merchants should know what to do with surplus inventory \u2013 and how to avoid it altogether.  <\/p>\n\n\n\n

In this article, we\u2019ll cover what surplus inventory is, how it harms ecommerce businesses, tips for getting rid of it, and techniques for preventing it in the first place.  <\/p>\n\n\n\n

What is surplus inventory?<\/h2>\n\n\n\n

Surplus inventory, also known as excess inventory, refers to excess stock that your company holds. In other words, it\u2019s any amount of product that your business has beyond the amount you need to meet demand and your safety stock.<\/p>\n\n\n\n

Downsides of excess inventory<\/h2>\n\n\n\n

Many businesses will choose to keep a bit of excess inventory as a buffer in case of sudden demand spikes (especially during holiday seasons<\/a>). However, holding too much surplus inventory can be an expensive and complicated problem for your business. Here are some of the main downsides of having surplus inventory.<\/p>\n\n\n\n

Increased storage and holding costs<\/h3>\n\n\n\n

Inventory holding costs<\/a> are already a big cost centre for ecommerce businesses, and holding onto excess inventory will only raise those costs over time. <\/p>\n\n\n\n

The more stock you have, the more you will have to spend on inventory storage systems<\/a>, warehousing space, and labour.<\/p>\n\n\n\n

Usually, selling inventory<\/a> usually helps offset these costs \u2013 but because surplus inventory is often unsellable, your business ends up wasting money to store inventory that will never generate revenue. <\/p>\n\n\n\n

Risk of inventory spoilage leading to unnecessary waste<\/h3>\n\n\n\n

Products that sit in the warehouse for prolonged periods of time depreciate in value. Moreover, they are at risk of getting damaged or expiring (particularly if products have a short shelf life), and susceptible to inventory shrinkage<\/a> if they remain unsold for a long time. <\/p>\n\n\n\n

As a result, your business will have to deal with higher levels of abnormal spoilage<\/a>, leading to unnecessary waste. <\/p>\n\n\n\n

Reduced profitability<\/h3>\n\n\n\n

When your company has excess inventory, it means you have capital tied up in products that you\u2019re unable to sell. <\/p>\n\n\n\n

On top of this, the surplus inventory is taking up valuable storage space (or shelf space, for products sold in-store) that could have housed more popular, fast-selling SKUs. <\/p>\n\n\n\n

This makes it harder to stock up on items that are currently in demand which could potentially lead to higher sales and more profit for your business. <\/p>\n\n\n\n

Moreover, the older products will depreciate in value over time. This means you\u2019d have to lower prices if you want to get rid of the excess inventory. In some cases, you may even need to sell the old stock at a loss, which will severely cut into profit margins and damage your company\u2019s bottom line. <\/p>\n\n\n\n

Inventory obsolescence<\/h3>\n\n\n\n

Even if your excess inventory doesn\u2019t necessarily expire or go through spoilage, there\u2019s also a risk of it going obsolete if it sits on the shelves too long. <\/p>\n\n\n\n

Obsolete inventory<\/a> refers to products that are no longer sellable or usable, often due to changes in demand and lack of market value. This could be because trends have evolved or new technology is introduced, rendering the current product useless or inconvenient, or if the product naturally has a short life cycle. <\/p>\n\n\n\n

Whatever the cause may be, inventory obsoletion may cause you to lose revenue, since your capital is tied up in inventory that won\u2019t sell. <\/p>\n\n\n\n

Increased waste from packaging<\/h3>\n\n\n\n

While your surplus inventory sits unsold on the shelves, there are packaging materials<\/a> simultaneously sitting unused because of those slow-moving items. <\/p>\n\n\n\n

In addition to disposing of the surplus items, you will also need to find a way to dispose of the packaging material for those products. This adds to your overall waste production, setting your business back in terms of sustainability<\/a>.<\/p>\n\n\n\n

Increased carbon emissions from unnecessary transportation<\/h3>\n\n\n\n

Transporting inventory to your warehouses creates a lot of carbon emissions<\/a>, which adds to your overall environmental impact. <\/p>\n\n\n\n

However, the transportation of excess inventory is unnecessary, and only adds to your carbon emissions, increasing your environmental impact even more. <\/p>\n\n\n\n

Businesses can reduce their impact by procuring the right amount of inventory at appropriate intervals. <\/p>\n\n\n\n

How to prevent excess stock in the first place<\/h2>\n\n\n\n

Because excess stock can cause issues for a business, it\u2019s best to avoid it altogether. Here are some practical solutions to improve inventory control<\/a> and reduce the likelihood of having surplus inventory.<\/p>\n\n\n\n

Forecast inventory<\/h3>\n\n\n\n

Accurate demand forecasting<\/a> is key to preventing surplus inventory. When you work with more accurate predictions on what SKUs<\/a> will sell and how fast, you can reorder just enough inventory to meet demand, rather than guessing how much you\u2019ll need and accidentally ordering too much.\u00a0<\/p>\n\n\n\n

To hone your demand forecasting, try using inventory forecasting<\/a> tools to track and analyse:<\/p>\n\n\n\n