by Charlie Casey
Prices for virtually everything have risen sharply over the first part of 2022. Some of the items we know and love are back on the shelves in excess, while others still remain hard to find. In fact, some of the biggest retail stories of the year have centered around the surplus of inventory.
In May, it was widely reported that retailers were not able to accurately predict what shoppers would be interested in buying in mid-2022, particularly in the fashion sector. Even Target has noted that its inventory is too high and will be cutting prices to move merchandise. Surplus inventory can be a costly situation for ecommerce merchants.
Here are a few strategies that retailers can employ if they find they are suffering from over-stocked shelves:
Run Bonus Point Promotions on Products That are in Low Demand
One tactic to use to move the extra inventory is to direct customers towards particular purchases by running double or bonus point promotions on items that are not being purchased. This strategy will help push slow moving items off the shelf without impacting the bottom line. Retailers will see the added benefit of simultaneously speeding up a consumer’s next purchase by giving them extra points to use on future purchases of their choice.
Turn Excess Merchandise into Free Gift Rewards for Loyalty Members
Another way to clear excess stock is to offer surplus products as free gift rewards for loyalty program members in higher tiers. This will surprise and delight them, and may also give them a chance to try different items they may not have considered before, increasing the chances that they will return and make repeat purchases.
Create a Members-Only Area for Special Offers
Create a members-only area on your site where you offer excess inventory to your loyalty program members at a discounted rate. Ensure that your most valuable shoppers understand the exclusivity of the offering so that they visit the page often, and tell others about it, too.
Move Merchandise with Loyalty Programs
As inflation continues to climb, new shopping behaviors are beginning to take shape. Consumers are not halting their shopping, but instead shifting their habits, looking for quality and value. At the same time, excess inventory will continue to be an issue in these uncertain times as retail brands adjust to changing consumer behavior and macro-economic challenges. The more retailers begin to better understand what their current and potential customers want, the more the competition will intensify as shoppers compare different brands and their offerings. Taking a look at excess inventory and utilizing it in creative ways to incentivize shopping is an important strategy to help stand out against the competition.
Creatively using a loyalty program to entice consumers to circle back to a brand to access excess inventory in addition to what they want to buy is a win-win. Create a points structure that allows customers to earn and redeem points within a reasonable timeframe so that they are seeing immediate gains for their spend. Or find ways to incentivize purchases that are linked to the excess inventory.
By utilizing these strategies, retailers can avoid both product waste and the erosion of product margins. It is time for ecommerce shops to take stock with a renewed emphasis on loyalty programs in order to retain customers and solve supply headaches, simultaneously.
Charlie Casey, CEO and Co-Founder of LoyaltyLion, a data-driven loyalty and engagement platform that powers ecommerce growth. Proven to increase retention and spend, LoyaltyLion is trusted by thousands of fast-growth ecommerce merchants worldwide. Prior to founding LoyaltyLion, Charlie joined the Foreign and Commonwealth Office as an Economics Advisor before becoming a consultant at Deloitte.