How to sell illiquid goods?
07.03.2023 13:30
Despite the military and economic difficulties, business in Ukraine is not stopping, but rather actively changing and adapting. At the same time, entrepreneurs have many questions about how to sell goods, in particular, how to sell illiquid goods that have been stuck in a warehouse or on store shelves.
Let's take a look at the reasons for illiquidity and what steps should be taken to sell it.
What is illiquid goods?
Illiquid goods are non-selling goods that have not been sold for a long time. These include products:
- products with an expired shelf life,
- with defects,
- products that are not in demand,
- products that are seasonal, i.e., sold in a certain period of time.
What leads to illiquidity of goods?
The reasons why a product may become illiquid are the same for everyone, including:
- changes in demand,
- opening of new competing stores or the emergence of new technologies that make the product unnecessary,
- production errors, manufacturing of a defective batch of products,
- improper storage of purchased goods in warehouses, which causes them to deteriorate,
- miscalculations in determining the volume of goods, purchase of large batches of goods,
- incorrect display and positioning of goods, when customers simply do not notice them among the store's assortment.
How to find illiquid goods in the Torgsoft accounting program?
If you keep full-fledged management and warehouse accounting in Torgsoft, then reports will help you find poorly selling goods:
- Analysis → Analysis of stale goods. This report will allow you to see the goods that have been in stock for a long time: sort the items that were in stock at any date of the analysis start (for example, from September 1, 2020), or set the maximum number of sales (for example, no more than two items were sold). You can set a discount for such goods, add the item to the revaluation act, immediately print a label with a reduced price, or return it to the supplier if the terms of cooperation allow you to return illiquid goods, for example, when you take the goods for sale.
- Analysis → Analysis of balances by terms of sale and storage, by type of goods allows you to analyze how long after arrival the goods were sold.
- Analysis → ABC and XYZ analysis. The report shows data on the product range, analyzing the volume and uniformity of sales. Thus, you can determine which products are needed in the warehouse in sufficient quantities and which, on the contrary, can be removed from the assortment.
ABC analysis is a method of studying the assortment based on the Pareto law: 20% of the products generate 80% of the efficiency, and the remaining 80% of the products generate only 20%. With the help of ABC analysis, you can determine the contribution of each product to the store's profit, and categorize products:
Category A - priority products: 20% of goods that generate 80% of revenue. Products of group A provide the main turnover of the company. Therefore, it is necessary to ensure the constant availability of such goods in the warehouse. It is common practice to create an excess inventory for Group A goods.
Category B - ordinary goods, from 80% to 95% of the total turnover. Group B goods provide the company's main turnover, and they also need to be in sufficient quantities at all times.
Category C - goods that do not sell well and account for 95% to 100% of the total turnover. Such goods can be defined as illiquid and removed from the assortment.
Use ABC and XYZ analysis for the assortment that is constantly in stock.
To related analyzes, you can also add an analysis of balances by supplier and due date to get an idea of how long the product is in stock after arrival. Also pay attention to: "Analysis of sales by type of product", "Analysis of revenue by supplier", "Analysis of sales by season", "Size sales ranking", "Sales intensity analysis", etc.
How to sell illiquid goods?
Selling an illiquid product is usually based on two fundamental points - the analysis of illiquid goods and the strategy for its sale. After finding out the reason for illiquidity or its category, proceed to action. Use the following methods:
1. Discounts on non-selling goods. Discounts always attract customers. This is the quickest way to get rid of excess goods in the warehouse, but not the best if the product has certain flaws. In this case, it is better to make a markdown and inform the buyer about the defect. Don't make too big a discount if your product hasn't lost its decent appearance.
2. Markdown is a reduction in the price of goods of inadequate quality. If the product is marked down, tell the buyer why the price is lower than a similar product without a defect. By law, such goods cannot be exchanged or returned.
"Most entrepreneurs use discounts, sales or promotions. If the goods are defective, they are marked down, without the possibility of a refund. If there are no defects, but there is simply no demand, then good discounts or good conditions of the promotion help. For example, when an illiquid product is bundled with a locomotive product. In the Torgsoft program, ABC and XYZ analyzes are used to determine the non-selling goods. They allow you to identify the products that bring the most income and those that are stale and require special measures to sell," says Yana Rybas, Head of Sales.
3. Write-off. This is a case of official use of the goods and complete liquidation of the batch if the goods were damaged.
"Let me tell you about the write-off of goods using the example of the Torgsoft product. We sell commercial equipment, some of which travels with us to exhibitions and is used to present our work in the office. Such "on-site" equipment is written off from the warehouse and is not available for sale, as it has lost its presentation and has become second-hand. Another case of write-off is possible due to independent reasons, for example, some problem in the warehouse that has damaged the goods, and now they are not subject to sale," Yana Rybas continues.
4. Use of different sales channels. In addition to traditional sales channels, such as stores, online stores, and social media, use other channels, such as fairs, trading platforms of related businesses, where your target audience is also present.
If your business is present on social media, post an ad for an illiquid product with an appeal such as: "full sale of the last batch of goods with discounts of up to -90%", "liquidation of winter clothes".
Promotions work well: "1+1=2", "get a 20% discount on two items in the check", "a unique offer for products that will expire soon", etc.
Social media is a powerful tool for both promoting a product and selling it quickly in the event of a lack of demand. Users are more willing and quicker to respond to discounts they see in an advertisement or social media post. This means they are ready to buy illiquid goods at a discount without even realizing it.
You can also put illiquid goods at a discounted price on OLX, where the marketplace's audience is mostly looking for goods that are cheaper than in a store.
5. Appeal to wholesale buyers. If you are unable to sell illiquid goods to retail buyers, try contacting wholesale buyers who can buy goods in large quantities.
"I have a friend who sells women's clothing. As soon as the season ends or the style becomes irrelevant, she calls her regular customers who prefer to wait but buy clothes at the maximum discount, practically at cost. As a rule, these are large families. The women literally "flock" and take all the clothes in a group in the style of "everything for 50"," Olga Kovalenko, editor.
6. Market assessment. Before you start selling illiquid goods, find out which products are in demand and which are not. This will help you understand why your sales are falling and why your products are not selling. Try to find competitors with illiquid goods and determine how they solve this problem.
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