Why you need to clean out your inventory
If you’re a reseller with hundreds or thousands of pieces of inventory, whether it be clothing, shoes, toys, video games, electronics, or anything else, then you’re bound to feel buried by it once in a while.
When I first started reselling I didn’t like to get rid of any inventory. I felt like I was throwing away profits because I already spent money to buy the item. So might as well just keep it. Maybe it’ll sell.. Right?
You have limited space for you inventory. By choosing to hold onto something that’s not selling, you’re missing the opportunity to replace it with something profitable.
Because of my limited space, I like to go through my inventory twice per year. Each time I try to get rid of at least a couple hundred old items- this frees up enough space to look for better, more profitable things.
Used clothing is cheap and plentiful, so the small loss of potential profit when you get rid of something is worth it because the space you free up in your inventory is more valuable.
I like to keep in mind the Sunk Cost Fallacy when I’m considering what to get rid of.
Avoid the Sunk Cost Fallacy
Like I said before, when I first started reselling I was hesitant to get rid of any inventory. My thought process was something like this- I already spent money on this item, might as well keep it to try and get my investment back.
This is logical, but it’s a perfect example of the sunk cost fallacy. Just because I paid for something isn’t a good enough reason to keep it. Most of the time it’s better to cut my losses and make room for inventory that will sell.
And remember, there’ll always be more inventory. I helped my friend move this past weekend, and he gave me all of these nice dress shirts for free!
Also, with spring here, you’ll start to see yard sales during the weekends. Yard sales are gold mines for profits.
The point that I’m trying to make is you shouldn’t worry about getting rid of a lot of your inventory. There’s always opportunities to get more.
You probably have a lot of stale inventory you can get rid of to make room for new stuff, but then the question is- How do I know if I should keep the item, or purge it?
Should I keep it or get rid of it?
If an item has sat for more than 6 months, then I consider getting rid of it. But there are a few things I keep in mind when deciding.
My two main thoughts when looking at an item is how big and bulky it is, and it’s potential profit.
I’ve dealt with shipping huge things in the past, and it’s not fun. The main reason that I like clothing is that it’s easy and cheap to ship.
The next thing I look at is the number of watchers an item has. Watchers don’t automatically equal sales, but they are a good way to gauge interest in your item. If an item has even one watcher, then I’ll usually keep it.
After I unlist the stuff, I bring it to Goodwill or Savers to donate. Savers is especially nice because if you fill a donation cart you get a 30% off coupon.
But, I do keep keep a lot of things that I’ve had for more than 6 months.
What if I keep it?
If something is potentially profitable, a good brand, and not taking up a lot of room on my shelves, then I’ll usually keep it.
If you’ve had something for 6 months and it’s not selling, but you want to keep the item, then you should at least edit the listing.
I like to lower the price, offer free shipping and returns, change up a few pictures, and maybe add a few more keywords to the title- all of these strategies have worked to get things to sell.
Here are two examples of recent edits that resulted in sales.
Both pieces sat for a few months. A couple days ago I lowered the prices and changed the first pictures, and they both sold today. I could’ve gotten a few more dollars for each piece because Adidas and Levis are desirable brands, but it’s better to get the sale even if it’s at a lower price.
The point I’m trying to make is that you shouldn’t worry about getting rid of a lot of your inventory. There’s no point to keep things that aren’t selling because they might sell eventually.
The main benefit
Making room for new, more profitable items, and getting rid of clutter are just two of the dozens of benefits that come with purging your inventory.
The main benefit is it gives you the opportunity to reassess and reflect on your business. I initially focused on reselling clothing because it’s cheap, has good returns and is easy to store and ship.
I made this decision 18 months ago when I was donating a bunch of stale inventory to a Goodwill. After lugging golf clubs, dozens and dozens of pairs of shoes, stuffed animals, and piles of DVDs and CDs to my car, I made the decision to focus on something easier to deal with.
This time around I realized how far I’ve come. It used to take me 6 hours to photograph measure and list 30 things. Now I can do it in less than 3 hours.
It’s also given me the opportunity to reassess my business plan. Clothing is great, but I need to expand my inventory if I want to have more consistent sales. That’s why I’ve been focusing on eyeglasses and scarves recently.
Whether you resell clothing, make your own jewelry to sell, or flip books, eventually you’re going to need to get rid of a lot of stale inventory.
Remember the sunken cost fallacy, and clean out your shelves. You’ll be surprised with the new ideas you come up with for your business when you make room for them.