Creative Inventory Liquidation Methods

This is the fourth part of a four-part article about dead stock.

If the distributor’s sales team can’t move the dead stock, it may be time to hire help. Some distributors will appoint a dead stock manager, whose responsibility is solely to sell dead stock. For example, distributors could bring in an industry retiree to work part time and be paid 10 percent of the revenue recovered.

“Unfortunately, a lot of companies will give the job of liquidating dead stock onto someone else that already has a full-time job, like a purchasing manager,” says Bader. “When it’s thrust upon somebody that has a full-time job doing something else, dead stock always falls to the back burner.”

When there’s not a suitable outside option for a dead stock manager, or if there isn’t money for the hire, some distributors will try bundling dead stock with top-selling products. The idea is to find a complementary product that can be bundled with the dead item to make a new package. It’s important to look for items that sell consistently. For example, if a distributor has a large quantity of toilet bowl cleaner it’s trying to liquidate, it can pair the toilet bowl cleaner with another restroom product and sell them as a bundle. The trick is to make the product difficult to pass up.

H.T. Berry has found another successful way to increase the appeal of its dead stock: selling the dead inventory to its existing customer base at a discount and notifying them via email.

“A good example would be if we have a contract cleaner that is already buying a pretty good assortment of items from us now, we’ll send that guy a blast email and put the specs on the email, put a picture of the product, the SDS sheet and basically say, ‘We have this, we can sell it at a discount, is there any interest, it’s a one-time buy-in, and it just might satisfy their requirements,’” says Nolan. “That’s been successful.”

And if the customer just won’t bite, swapping dead items with peers can also prove to be an effective method of dead stock liquidation for distributors. When it comes to stock, one distributor’s trash is often another distributor’s treasure.

“Just because a product doesn’t work in your market, it might be really good in someone else’s market,” says Bader. “Develop friendships with other jan/san distributors around the country and send them lists of product that might be interesting to them.”

Distributors should focus on colleagues with similar product offerings but in different markets.

“Send out emails to your friends who are distributors of similar products and say, ‘Hey, here’s 15 percent off of my cost, and I’m paying freight.’ Use your network of distributor friends to help you manage some of these bad decisions,” says Bader.

If distributors belong to a buying group, says Nolan, most groups have online portals distributors can use to trade dead stock with other distributors across the country.

Jan/san distributors with walk-in storefronts should entice walk-in customers by designating a clearance area for dead stock items. This gets the product out of the warehouse and frees up space for revenue-generating inventory.

A website can also function as something of a clearance bin. Distributors can direct customers to a dead stock list on their websites or even try their hand at selling items online via sites such as eBay and Craigslist, says Owens.

When all else fails, distributors should donate the dead stock to a worthy cause and take the tax write-off, says Owens.

Dead stock will be around as long as distribution exists. There are no easy or simple answers, but there are precautions jan/san distributors can take and strategies they can employ to help ease the pain and the cash burden. Accepting that the stock is dead is the first step.

Nick Bragg is a freelance writer based in Milwaukee. He is the former Deputy Editor of Sanitary Maintenance.