How to Dispose of Obsolete Inventory

Obsolete or excess inventory is frustrating. When you have too much inventory that isn't selling, it takes up valuable space and you have to protect it from damage. Free up space by selling as many of the products as you can. Get creative and make the items attractive to customers by offering sales incentives. If you still have stock left over, return it for credit, donate it, or sell it for scrap. Of course, the best way to manage obsolete inventory is to prevent it from piling up in the first place. Monitor what's selling well and don't automatically re-order products.

Method 1

Method 1 of 3:

Incentivizing Sales

1
Give your salespeople incentives if they sell the inventory at the regular price. If you have a sales team that helps customers, offer them a bonus for selling a certain amount of obsolete inventory. This can motivate them to focus on these products before selling newer inventory.^{[1]XResearch source}
- For example, you might give a percentage of the sales or a fixed bonus on their next paycheck.
2
Offer closeout discounts to customers to make some profit. Make the inventory more attractive to customers by cutting the price. Market the discount as a percentage off or highlight the new closeout prices. Although you won't make as much profit, you'll clear up valuable space and won't have to worry about what to do with the goods.^{[2]XResearch source}
- You might discount goods every quarter or after each season.
- The amount you discount depends on your business's finances. You might discount a small amount if you're hoping to recover most of the cost or you might prefer to make a sale at a steeply-discounted rate.
- Decide in advance if you want to stagger the discounts. For example, if you don't want to mark it down by more than 60%, start your first sales push at 20% off. Then, mark the goods at 30% and so on.
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3
Bundle obsolete inventory with fast-selling items to sell a lot of goods quickly. If you really want to free up space and get rid of a lot of inventory at once, group items together for one price and offer the bundle at a reasonable rate. Customers like feeling that they're getting a deal and it's a great way for you to move product that might not sell on its own.^{[3]XResearch source}
- For example, pair 1 item that sells well with 2 products that are part of your obsolete inventory. Price the bundle so it's cheaper than buying each of the items separately or market the regular item so the other item is free.
- Remember to make it clear that you won't accept returns or exchanges on discounted or bundled sales.
4
Create a discount sales event to bring in more customers. Set up a warehouse sale, closeout event, or garage sale that's limited to a day or two. Advertise the event and make it open to employees and the general public. Market a few doorbuster sales to get people interested and promote the event in advance to create some buzz.^{[4]XResearch source}
- Again, make it clear that all sales are final so you don't deal with the hassle of returns.
5
Sell the inventory to a scrap dealer if you can't find customers. If you have inventory that's got a lot of metal, call a local scrap dealer and ask if they'll pay you to haul it away. Negotiate the value of your inventory if you want to charge the scrap dealer for a small fee.^{[5]XResearch source}
- Some scrap dealers may charge you if they come and pick up the inventory, so be clear about costs when you set up the deal.
- You may make a slight profit if you can negotiate a good deal or it may cost you if you have to pay to have it hauled away.
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Method 2

Method 2 of 3:

Getting Rid of the Inventory

1
Return the inventory if your supplier accepts it. Some companies accept obsolete inventory and will give you a refund. If you're not sure, contact the company and ask them about their refund policies. The company might issue a credit for future purchases, for instance.^{[6]XResearch source}
- You'll probably have to pay for shipping and handling, but it will be worth it to clear up space and get a little value for the products.
2
Use the inventory to make new products to sell. Go through the obsolete inventory to see if you can use it for a new product. You might be able to strip it down to parts or components for new items. Keep in mind how much it will cost you to rework the inventory to make it profitable.^{[7]XResearch source}
- If you think it will help sales, market the new products as "upcycled" or "repurposed."
- For example, if you're selling a seasonal gift basket that's past season, take the items out and update the basket for the current season or sell the items separately.
3
Trade the inventory with competitors or partners if you want to swap goods. Contact other businesses that sell similar inventory and ask if they'd be willing to trade inventory. Be open to negotiating so you clear out obsolete items and get new products to sell. Trading is a great way to improve your relationship with competitors.^{[8]XResearch source}
- Remember when businesses are helpful and trade with them again if they ask you to clear out some of their obsolete inventory.
4
Liquidate or auction off the products to move inventory quickly. Auctions are a great way to dispose of a lot of inventory in a short amount of time, but it will cost you to set up the auction and staff the event. If you'd rather take a hands-off approach and possibly make a little money, work with a liquidator. You'll negotiate a price and they'll dispose of the inventory for you.^{[9]XResearch source}
- Keep in mind that you won't get a cut of the sales from the liquidator since you'll be paid for the products upfront.
5
Donate the inventory and claim it as a tax write-off if you can't sell it. You might run out of options for selling or trading the products, so find an organization in your area that could use them. Then, work with your accountant so you can claim the goods as a write-off for the business taxes.^{[10]XResearch source}
- The inventory has to be in good condition and useful for the charity. Ask them for a receipt when you donate the items and file it with your accountant.
6
Recycle or trash the inventory if you can't get rid of it any other way. If you've tried to sell the products, return them, or trade them without any luck, recycle or throw the inventory away. Although no one likes to do this, remind yourself that it's taking up room that could be used for products that are selling well.^{[11]XResearch source}
- You'll also save time from counting obsolete inventory and protecting it from damage.
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Method 3

Method 3 of 3:

Preventing Obsolete Inventory

1
Review your inventory at least once a year so you know if products are piling up. If you're a large company with a lot of products, you might devote 1 week a year to counting and tracking your inventory. For a smaller business, you might do this more frequently like once a quarter. Tracking your product numbers helps you see what products you have a lot of so you don't continue to order them needlessly.^{[12]XExpert SourceArt Lewin
EntrepreneurExpert Interview. 11 June 2021.}
- Over time, you can compare your inventory numbers to get an idea of how well a product sells. For example, if you always seem to have too much of 1 type of stock, cut back on ordering it so you don't have excess.
2
Track which products are slow to sell. Create a sales tracking system so you can monitor when items sell and the price they sold for. Review this information periodically, especially before you order new stock.^{[13]XResearch source}
- This is especially important if you're offering new items and aren't sure how customers will respond.
3
Decide when a product is obsolete so you know when to push sales. Obsolete inventory can mean different things for different companies. You might consider a product obsolete after you haven't sold it for a set period of time or if the product doesn't make you a certain amount of money. Consider a product obsolete if you haven't sold any since your last inventory, for instance.^{[14]XResearch source}
- For example, a product might be obsolete if it's costing you more money to store and promote than you're making in sales.
4
Stop automatic re-ordering so you don't create too much stock. It's easy to accumulate too much stock if you automatically re-order without checking your inventory numbers. Turn off the automatic re-ordering and see how quickly the products are selling before you decide to replenish them.^{[15]XExpert SourceArt Lewin
EntrepreneurExpert Interview. 11 June 2021.}
- Items might accidentally get ordered if more than 1 person does your ordering. Try to streamline the ordering process so 1 person coordinates purchases.
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Where can I send my unsold inventory?
Art Lewin
Entrepreneur
Art Lewin is an Entrepreneur based in Los Angeles, California. He specializes in business, sales, marketing, and real estate investing. Art is the CEO and Founder of four companies based in Los Angeles: Art Lewin Bespoke, Healthy Choice Labs, SFR Properties, and Professional Business Network (PBN). Art is known globally for his exclusive custom-made and ready-to-wear business wear designs. Some of his notable clients include royal family members, politicians, and Hollywood stars including Hugh Hefner, Sylvester Stallone, Johnny Carson, Steve Allen, and William Shatner.
Art Lewin
Entrepreneur
Expert Answer
Invite wholesalers to pick up your excess inventory. You can also advertise it to drop shippers.
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Tips

If you don't have the time to effectively manage your inventory, give the task to an employee. Offer them an incentive if they meet inventory expectations over a certain period of time.
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