What keeps retailers up at night

Overstock issues can be downright frightening, but thankfully there's plenty retailers can do to meet them head on. Get to know the major causes of overstock and how you can help prevent them from happening in the first place.

It’s no secret that retailers are haunted by overstock — an issue that’s both costly and complex. But like the saying goes, we only fear what we don’t understand. Since that’s the case, the first step to improving your inventory levels is to get familiar with all of the major contributors of this common issue. Once you know which overstock culprits play a role in your business, you can use our tips to start banishing those ghastly nightmares for good.

Ghastly yet common causes of overstock 

While there are many issues that can lead to overstock, some of the most common and prominent contributing factors are poor visibility, low-quality data (or no data), and delivery issues.

Poor visibility

Not scared of the dark? Well, poor visibility across siloed teams and category specialists is frightening. And unfortunately, it’s an issue that causes inventory problems for too many department stores and other multi-location retailers. 

Here’s one example of what could go wrong — your inability to see and thus correct duplicate potential purchases could lead you to have far more of an item than its projected sales potential. For instance, let’s say you end up with products in identical or very similar styles, colors, or price points, like multiple shoes that serve the same end use and occasion in the same color. How many versions of baby pink Mary Jane platforms do your stores really need?

Ordering without the help of quality data 

When retailers aren’t supported with in-depth, historical data to see exactly what performed well (or poorly) in the past, it creates the right conditions for repeat mistakes and missed opportunities. Eek. Sizing complicates things even more. It would be close to impossible for your buyers to remember the right size curves to order in which regions or which stores across so many departments, categories, and styles. 

Similarly, bad reporting can be as limiting as having no data at all. If you only have access to poor quality data, you’ll still have a difficult time forecasting essentials like determining quantities for your buys.

Delivery nightmares

Unfortunately, even the most prescient buys can have poor sell-through rates if you happen to experience a nightmarish delivery scenario. For example, your inventory can arrive so late into the season that it’s no longer relevant based on seasonal considerations such as late Valentine’s Day deliveries or rain boots and trenches that show up after the rainy season. Products can also arrive later than peak consumer enthusiasm for a specific trend. If such products were bestsellers elsewhere but arrived late to your stores, you’d likely lose those sales to competitors (a threat to both short-term revenue and long-term customer loyalty). Scary indeed.

Still, let’s say your goods arrive late but they’re still relevant. If they’re core, staple items that always have high sell-through rates, it might work out okay. However, for everything else, it means considerably less time to sell those SKUs at their full retail prices which could seriously mangle your margins.

Other common causes of overstock include: 

  • Poor inventory management

  • Price competition 

  • Unsuccessful campaigns 

  • Shifts in consumer demand 

How to prevent potential overstock horrors (or stop them in their tracks)

Rethink your product mix 

Things change — your assortment planning should too. Develop a regularly scheduled time to check in with your assortment strategy. Is your current approach to fashion/trend-driven merchandise still the best fit? What about your approach to basics/staples? Finally, what is the ideal balance of fashion/trend-driven items vs basics/staples for your various retail touchpoints? 

While it’s essential to understand what customers want, it’s just as important to maintain your strong point of view. Your POV is an alluring element that inspires shoppers to return to your stores. Are your assortments on-brand with your vision as a retailer? What lifestyle, image, and price points have your customers come to expect? Are you making strong, edited buying decisions or are you offering shoppers many similar options across many similar styles? What do your assortments have to say?

image of NuORDER data reports dashboard

Use a wholesale platform that offers strong reporting

The right wholesale platform ensures you have in-depth data and insights to support and improve your buys over time. For example, NuORDER by Lightspeed gives buyers visibility into their top performers and slow sellers to help them sell faster and increase their sell-through rates.

Get your retail teams involved early on

With fierce competition across brick-and-mortar stores and e-commerce sites, speed has never been more important. So why wait for orders to arrive to move into action? As soon as you’ve finalized your upcoming buys, share the order details with the teams in your stores. When key team members have time to get familiar with merchandise before it arrives, it gives you a serious leg up on the competition and plenty of time to come up with the right marketing and sales tactics for greater success. 

image of NuORDER Assortments dashboard

Find a savvy tool to help you plan your assortments

Add a powerful assortment planning tool to your tech stack. For example, NuORDER Assortments has a feature called Rollups that shows you all of your assortments rolled together in a single visual. This gives you visibility into your entire assortment across categories and brands so you can spot any overbuying scenarios before finalizing your orders. Rollups are also interactive so your teams can collaborate for even more effective buying decisions. The Assortments tool also gives you access to integrated, automated size curves so you can size down to the door level, ensuring all of your stores are getting the most suitable sizing.

Overstock might have the power to wreak havoc on retailers, but there are plenty of solutions to put this nightmare to an end.

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NuORDER is dedicated to providing thoughtful, informative B2B eCommerce industry insights. Brands use NuORDER's platform to deliver a seamless, more collaborative wholesale process, where buyers can browse products, plan assortments and make smarter buys in real-time.