What is excess inventory? And what causes it?
Simply put, excess stock or ‘overstock’ is when you've purchased or created more products than you can reasonably sell, leaving items sitting in your warehouse gathering dust rather than generating revenue. It’s a common problem in e-commerce. A recent study found that manufacturers carry an average of $231,700 worth of surplus inventory.
This can be caused by a range of factors from inaccurately forecasting demand to lack of adequate promotion to supply chain issues. Ineffective inventory management is also a huge driver.
A shortage – not having enough stock to meet orders – can result in lost sales and angry customers. But overcompensating the other way, and holding too much inventory can be just as costly.
What’s the true impact of carrying too much inventory?
Excess inventory is expensive. Your business still has to pay ongoing storage fees, insurance premiums, and taxes. Worse yet, those products risk becoming obsolete or outdated before they ever reach a customer.
The numbers are sobering. Overstock adds 25-32% to a businesses' annual costs. Worldwide, overstock is costing retailers around $562 billion each year. This is indicative of a larger systemic issue of how most businesses are approaching inventory.
While building and running Syncio, we’ve had a front-row seat to the ins and outs of thousands of e-commerce stores. And what we’ve learnt is that the most successful ones don’t see inventory as just a backend logistics problem but rather a strategic opportunity and competitive advantage.
Breaking free from excess stock is a logical first step to unlocking this asset. It doesn’t just reduce your carrying costs – it creates space for your business to move faster, respond to trends more quickly, and invest in your growth rather than storage.
So where should you start?
Quick ways to manage excess inventory for immediate cash flow
If you’re currently looking at items collecting dust and accumulating costs on your warehouse shelves – these are the strategies for you.
Liquidate excess stock
Liquidating overstock is the process of selling leftover inventory at a heavily discounted price to a business that specialises in product liquidation. This is one of the quickest and most hassle-free ways to get rid of stock you can't sell. Liquidators will potentially take everything in one go, leaving your business with some quick extra money and reducing storage costs.
But while it’s immediate, liquidation isn’t a long term solution. It may not even be the best short term fix for your business, as it comes at a cost to your profit margins.
Next steps: If you are interested in liquidation, you could try services like SELL Inventory or Overstock Trader. Do your research and ask for a quote to ensure you’re getting a fair trade.
Implement strategic pricing
A good deal is hard to resist. Consider discounting the products you want gone by holding a flash sale or bundling products.
A flash sale, held for a specified 24 or 48-hour period, will create a sense of scarcity that is psychologically proven to increase the product’s perceived value. A limited-time-only offer can help push customers to the checkout quicker.
Product bundling is another effective option. By pairing in-demand products with slow-moving inventory at a lower price, you’ll create a value proposition that helps clear your shelves while preserving more margin than liquidation.
Next steps: Consider upcoming holidays or emerging trends you could plan sales around. For instance, you could bundle scented candles with dressing gowns for Mother’s Day. Or hold a summer sale as the weather warms up. You could also build hype with mystery bundles. The novelty is proven to drive sales. Just look at the recent success of toys that come in blind box packaging. People love a surprise.
Reward previous customers
In a similar vein, you could reward loyal customers by offering them exclusive deals on excess inventory. As well as driving extra sales, this tactic will build customer satisfaction and increase incentive to return to your store again and again.
We love this approach because it cleverly transforms a potential loss into a loyalty-building opportunity.
Next steps: Try segmenting your customer list based on past purchase behavior and create tailored excess inventory offers for each group. Or consider a tiered "early access" sale where your most valuable customers get first pick at the deepest discounts, creating both urgency and exclusivity in one move.
Donate stock
If storage fees start to outweigh the earning potential of overstock, it might be time to clean the slate and donate. Your products will go toward a good cause and you’ll stop paying those excessive fees.
Particularly for perishable items, like food, that can’t feasibly be sold in time before they expire, donation can be a great option. There are plenty of charities, like SecondBite in Australia, which specialize in picking up surplus food, otherwise destined for landfill, and delivering it to people most in need.
Next steps: Begin researching charities near you. Give the Goods is an Australian organisation that specializes in donating excess stock. Globally, World Vision connects overstock with people in need. They also provide a calculator tool so that you can compare the benefits of donation vs liquidation or disposal.
Why speed matters when you reduce surplus inventory
The key benefit across all these approaches is speed. We've found most businesses focus too much on the amount they’re “losing” by providing discounts rather than the true cost of holding inventory indefinitely. The calculation isn't just about the price – it's also about the opportunity cost of that capital and space.
Structural fixes to prevent overstock
The best way to deal with overstock is to create systems that prevent it happening in the first place. While quick fixes address symptoms, structural solutions target the root causes.
Automate inventory management
The problem: Most inventory issues stem from information gaps. You order more products because you don't have real-time visibility into what you already have, what's selling, and at what rate. Without these key insights, it’s impossible to make well-informed decisions about how much stock to purchase. You’re bound to end up with excess.
The fix: Automation bridges these information gaps and stops the overstock cycle. When we built Syncio, we designed it specifically to create a single source of truth for stock levels across retailers and suppliers. It automatically syncs up inventory between stores. This eliminates the information lag that leads to either excess stock or stockouts.
The win: The pattern we've observed is consistent: when businesses replace periodic, manual inventory checks with continuous, automated monitoring, their purchasing decisions improve dramatically. And the time investment is minimal – a few minutes of setup can save months of inventory headaches.
Forecast sales more accurately
The problem: Operating without a sales forecast is like navigating to a new place with no map. You need a forecast to guide you on what type and number of products you should be stocking. Otherwise you can easily end up in the wrong direction.
The fix: Analysing sales trends from the past is one of the best indicators of the future. Analyse what type of products have performed well, when and why. Keeping an eye on your competitors is also a good indicator of emerging industry trends. In today’s digital age there’s plenty of sales forecasting apps you can utilize too like Prediko or Bee Low.
The win: It pays to predict wisely. Businesses with accurate forecasts are 10% more likely than those without, to grow their revenue each year.
Account for seasonality
The problem: We all know there’s no use trying to sell Christmas decorations in February or winter coats in the summer. But what are you supposed to do with leftover stock that’s no longer in season?
The fix: If you’re a multistore with locations in different regions, you can strategically rotate stock depending on the season. For example, leading Australian fashion retailer KOOKAI has online stores across the US and UK. By centralizing and syncing the stock across these stores, they’re able to strategically move inventory to regions based on shifting demands, thereby significantly reducing the risk of waste.
You don’t need to be a global megastore to account for seasonality though. Regardless of your store’s size, you can purchase stock strategically by planning for peak times like Christmas, looking at previous sale and customer demand patterns and preparing for changing weather.
The win: By taking this timing into account, you’ll significantly re waste and end up with much healthier profit margins.
Build more reliable sales channels
The problem: Ineffective marketing and low exposure often result in overstock. Without reach to relevant audiences, it’s impossible to make enough sales to avoid stock buildup. But with rising ad costs, it’s difficult to break into new markets.
The solution: The long term fix is to create more reliable and diverse sales channels. The most effective way to do this is by teaming up with partner stores who can cross-sell your products on their storefront. You’ll have instant access to new markets. No marketing spend needed.
For instance, Syncio user ARCHIVIST is an e-commerce hub that re-sells overstock from luxury brands. It’s a discreet solution that retains the product’s luxury-feel. Through collaboration, they’ve created a system that’s profitable to everyone and protects against wasted stock.
We see Collaborative Commerce – when stores team up to share resources, products and audiences – as the future. That’s why we established Syncio Marketplace, a platform where you can discover a network of 900+ quality brands, products and retailers to connect with.
The win: Leverage the audience and reach of other stores to diversify your sales channels. Enter new markets, increase sales and prevent wasted stock. It’ll be your most powerful and accessible marketing tool.
Wrapping up
While there are plenty of ways to sell excess inventory quickly, overstock still comes at a cost.
We’ve found that excess inventory is a symptom of structural issues that need addressing at the root.
By automating inventory management, you can make better stock decisions in future.
And by teaming up with partner stores, you’re giving your brand more opportunity to make sales. Protect your business against inventory issues by getting real-time visibility across your stock with Syncio and building a network of partners through Syncio Marketplace. Say goodbye to excess inventory in two simple steps.
