How to Reduce Inventory: 11 Proven StrategiesHow can you reduce inventory in your ecommerce business without selling?

Learn 11 proven and real strategies that will help you meet customer demand by reducing inventory.

1. Get rid of old inventory In inventory management, obsolete goods mean products that have completed their life cycle. Basically, these are dead inventory that has a very low chance of being sold. If left idle, this asset requires resources and can be very difficult to manage. Therefore, using additional sales tactics such as repackaging goods, seasonal sales, and charity will help you get rid of accumulated inventory, increase revenue, and optimize your product offering.

2. Recycle and utilize unsold inventory Get rid of unsold and accumulated inventory through recycling. By using this approach to getting rid of residual inventory, you can introduce sustainable practices that will positively affect your brand image and attract environmentally responsible customers.

To implement this direction, you need to:

●      Work with recycling companies that can recycle specific products.

●      Work with foundations and organizations that can help you donate to charity—what cannot be sold or recycled can be useful in this direction.

●      Offer customers a return program—namely, a discount on new goods if they return used or old products.

3. Implement just-in-time (JIT) inventory approach In inventory management, when using the JIT model, goods are delivered when production starts and in no case earlier. In order for this process to be justified, it is necessary to have a close relationship with suppliers. Thus, you will be able to have minimal stocks in the warehouse and satisfy customer demand as it arises.

4. Use dropshipping What if you want to sell a product without storing it? In such a case, the solution is dropshipping, which has a share of $225 billion in the global market and can increase retailers' revenue by 50%.

How?

Instead of purchasing and storing large stocks of goods for sale, you cooperate with a supplier who takes care of the inventory and delivery. This sales format reduces the cost of various needs and frees capital from the costs of storing and managing physical inventory.

With dropshipping, you don’t need to worry about inventory or shipping your products. It’s a great way to test different products and see what sells without a huge investment. When someone buys a product from your ecommerce store, the order goes directly to the supplier, who ships the product directly to the buyer.

5. Better demand forecasting Supply forecasting involves combining and analyzing data from a variety of sources, such as sales dynamics, volume, key market trends, consumer behavior, and external factors such as supply chain characteristics.

Of course, some intuition is also needed, but the more information you have, the more accurate your forecast will be.

When you calculate demand, you can stock up on exactly the right quantity and type of product that will meet customer demand when it’s needed. Such a calculated and careful approach to inventory reduction contributes to the efficiency of your business and the availability of a stable income.

6. Product bundling and packaging Product bundling and packaging involves grouping products and selling them as a single product. Placing less popular products with popular ones helps the seller increase the speed of sales, reduce inventory, and the number of unsold goods.

7. Study ABC analytics ABC analytics is an inventory management strategy that allows you to determine the value of inventory based on its importance to your business.

Categories A, B, and C help the seller focus on high-value products. This strategy is based on the Pareto principle—in fact, you can get 80% of your revenue from 20% of your products.

8. Use leading inventory management systems Inventory management is a lot like a game of Tetris—everything matters, timing is everything, and the right tools can help you win.

The right inventory management software will increase the efficiency of your business by automating tasks, collecting real-time data, and optimizing supply chain processes. This will ultimately reduce costs and increase revenue.

9. Inventory automation The causes of problems in the inventory management process can be various. However, the most common is human error. We are not computers—sometimes we have bad days, we are sleep-deprived, and therefore we make mistakes. These mistakes are very costly (about 30% of business revenue).

However, there is one thing you can control: tools that help your team do their job better. Automated inventory management systems reduce the amount of manual work and increase forecast accuracy by up to 100%.

The accuracy of this process directly affects inventory reduction, with the following key benefits:

●      Optimizing repeat purchases

●      Identifying low-turnover items

●      Improving demand forecasting

10. Strengthening supplier relationships in the supply chain  One of the key parts of effective supply management is having strong relationships with suppliers. With the help of active communication and collaboration, a seller can optimize production schedules and reduce shipping costs.

11. Reduce lead times Based on the above, it can be said that reducing lead times means reducing inventory. Close relationships with suppliers help businesses reduce inventory by accelerating production and delivery. This results in free inventory and improved cash flow.

Conclusion:  With good inventory management software that automates and consistently manages the system, with the right technical tools, demand forecasting, and close relationships with suppliers, it is quite possible to effectively manage the process by reducing lead times.

Use these recommendations and turn your warehouse into a source of income instead of a “money pit.” The ecommerce market is developing rapidly—so you should develop too.