Posts Tagged ‘excess inventory’
Liquidity Services Inc. in the Washington Post!
Wednesday, January 2nd, 2008
Liquidity Services Inc. is goWholesale’s parent company and last Saturday the Washington Post printed an article on the front page of the business section that features LSI as the top solution for major retailers to unload excess inventory and consumer returns following the holiday season.
Click here to read "New Life for Unwanted Gifts"
Tags: Announcements, consumer returns, excess inventory, goWholesale, Liquidation.com, liquidations, Liquidity Services Inc., LSI, Washington Post
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How to Deal with Product Turnover
Friday, November 16th, 2007
There are many ways that you can evaluate how well your business is doing. The most obvious, and most often used, is the big number: the dollar figure which indicates whether your business operated at a profit or a loss in a given time period.
But knowing this number alone will not help you to improve the bottom line of your business; in order to do that, you need to break your business down into smaller areas to look at specific steps you need to take to get that profit margin up.
One of the areas that can make a lot of difference in the end amount of money that your business makes is the area of product turnover. In this article, we’re going to look at ways in which understanding product turnover can help you grow a better business.
What Is Product Turnover?
The concept of “turnover” is familiar to most people once they enter business, even at the labor level. It refers to a specific number of identifiable factors “leaving” a business. You have probably heard of employee turnover; when that term is used, the factors leaving the business are the employees, and a high turnover is a bad thing.
However, there is another side to the turnover coin, and that is product turnover. In this case, the items leaving the business are the products the business is selling, and it is always calculated in the form of sales. So in the case of product turnover, a high number is a good thing!
You may also hear product turnover referred to in the pejorative sense; that is, a certain product has sat on the shelves for too long and has become useless or outdated, at any rate not a good candidate for sale at the prices you need to make a profit. In this case, the turnover will refer to the restocking of new products to replace old and outdated products.
However, this is not true turnover in the sense of marketing. True product turnover occurs when an item sits in storage, and is then sold. Outdated items will inevitably figure into any calculation to find the true product turnover ratio.
Calculating the Product Turnover Ratio
Calculating your product turnover ratio is fairly easy, especially if you are good at the record keeping side of things already. Just take your cost totals for goods over a specified time period (a week, month, year, and so on) and the average inventory for that time period as well.
Dividing the cost of goods by the inventory will result in your product turnover ratio. A small number means that the products you carry are not selling quickly enough.
The idea here is to make changes that will cause your product turnover ratio number to go higher. You can usually do this by coming up with a plan to meet the demands of your customers more effectively; a low number means your supplies are outstripping your demand, resulting in excess inventory.
Solutions to Consider
If you have a low product turnover ratio, there are a few things you can do to at make your costs back on those products:
* Have a clearance sale - You can clear out your unsold products by holding a clearance sale at the end of a specified period of time (like the end of a season, for example). By offering deep discounts and doing some heavy promoting on your website or in your store, you can at least make some money back if the products sell).
* Sell the products on eBay - Many businesses have an eBay store or occasionally sell products on eBay that they’ve overstocked. You can either sell it with the Buy It Now feature, or set the opening bid at a clearance discount and see how much it ends up selling for. With this option, however, you’ll have to include your eBay costs in your margin - this may result in a smaller profit.
* Liquidate - If you have a large enough excess inventory, you might consider liquidating the products in bulk. You can either sell to a wholesale liquidator, or you can sell them through an auction platform like Liquidation.com at a wholesale price per unit.
Product turnover is inevitability for any business - not all of your inventory is going to be sold. The trick is to figure out the best mix of products and best pricing so that you can keep your turnover ratio high, as well as maximize your profits.
Tags: advice, excess inventory, Generating More Sales, Leeia Ladipoh, liquidation, product turnover, Sales, tips
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