Update: We originally published this article in 2010 with several ideas for selling leftover holiday merchandise. Some of those resources are no longer available, but excess holiday inventory remains a common challenge for eCommerce businesses. We updated the article with practical ways to recover value from unsold stock and reduce overstock in future seasons.
Excess holiday inventory can tie up cash, occupy valuable storage space, and make it harder to plan purchasing for the next selling season. The goal is not always to clear every product as quickly as possible. Merchants should first understand why the inventory did not sell, what each item still costs to hold, and which recovery strategy protects the most margin.
Review Why the Inventory Did Not Sell
Before discounting everything, review the sales and inventory data behind the remaining products.
Ask questions such as:
- Did the business purchase too much inventory?
- Did demand fall below the forecast?
- Did the products arrive too late?
- Were the prices too high?
- Did customers have trouble finding the products?
- Did certain sizes, colors, or variations sell better than others?
- Was the inventory limited to one sales channel?
- Did shipping costs make the offer less competitive?
The answers can help determine what to do with the current stock and how to improve purchasing decisions next season.
1. Discount Products Strategically
A discount can help move seasonal inventory, but merchants should avoid reducing prices without understanding the effect on margin. Instead of applying the same discount to every product, consider:
- Starting with a smaller markdown
- Increasing the discount over time
- Offering discounts only to email subscribers or past customers
- Creating a limited clearance section
- Promoting products with the highest carrying costs first
- Protecting stronger-selling products from unnecessary markdowns
Track how each discount affects units sold, revenue, margin, and remaining inventory.
2. Create Product Bundles and Kits
Bundles can make slower-moving products more appealing without relying entirely on deep discounts. A merchant might pair excess seasonal merchandise with:
- A popular complementary product
- A lower-cost accessory
- A related best seller
- Several smaller items sold as a gift set
- Products customers commonly purchase together
Bundles can increase the perceived value of an offer while helping the business move multiple units in one order.
Ordoro’s kitting and bundling tools help merchants track the components inside a kit while keeping inventory quantities accurate.
3. Sell Through Additional Channels
Inventory that performed poorly on one storefront may reach a different audience through another marketplace or sales channel. Merchants may consider listing suitable products on:
- Amazon
- eBay
- Walmart Marketplace
- Etsy
- A wholesale marketplace
- A local retail location
- A temporary pop-up or clearance event
Before expanding, account for marketplace fees, fulfillment requirements, product restrictions, and the time required to create and maintain listings.
A multichannel inventory management system can help keep stock quantities synchronized when products are listed across multiple sales channels.
4. Offer the Inventory to Wholesale Buyers
Retailers, resellers, discount stores, and other businesses may be willing to purchase excess stock in larger quantities.
Wholesale sales usually recover less revenue per unit than direct-to-consumer sales, but they may help a business:
- Clear inventory more quickly
- Reduce storage costs
- Recover working capital
- Avoid processing individual customer orders
- Make room for newer merchandise
Set a minimum acceptable recovery amount before negotiating with a buyer.
5. Use a Liquidation Service
Liquidation can be useful when inventory is unlikely to sell profitably through the business’s regular channels.
A liquidation company may purchase the merchandise directly or help connect the business with buyers. The recovery amount may be significantly lower than the original retail value, so merchants should compare liquidation proceeds with the ongoing cost of holding the inventory.
This option may make the most sense for:
- Large quantities of aging merchandise
- Products with limited demand
- Items taking up expensive warehouse space
- Inventory that would require heavy discounts to sell individually
6. Ask Suppliers About Returns or Exchanges
Some suppliers allow merchants to return, exchange, or receive credit for unsold inventory. The options depend on the original purchasing agreement. Suppliers may require:
- Unopened or undamaged merchandise
- A return authorization
- A restocking fee
- Return shipping paid by the merchant
- A return within a specific time period
Review supplier terms before placing large seasonal orders, not only after products remain unsold.
7. Repurpose Seasonal Products
Not every holiday product becomes unusable after the season ends. Some items can be repositioned as:
- General winter merchandise
- Gifts for birthdays or other occasions
- Products for a different holiday
- Customer appreciation gifts
- Promotional giveaways
- Components inside a new bundle
Consider whether the product itself is seasonal or whether only the original marketing and packaging made it feel seasonal.
8. Donate Eligible Inventory
Donating inventory may be appropriate when the products can benefit a nonprofit organization and other recovery options no longer make financial sense.
Merchants should confirm that the organization accepts the type and quantity of merchandise being offered. They should also keep accurate records and speak with a qualified tax professional about any potential tax treatment.
Donation can reduce storage needs and prevent usable products from going to waste, but it should still be treated as an inventory transaction and recorded properly.
Calculate the Cost of Keeping Excess Inventory
The purchase price is not the only cost associated with unsold merchandise. Excess inventory may also create costs related to:
- Warehouse or storage space
- Insurance
- Handling and recounting
- Damage or deterioration
- Product obsolescence
- Financing or tied-up cash
- Additional markdowns
- Disposal
An item may still have value, but holding it for several more months may reduce the amount the business ultimately recovers.
Prevent Excess Inventory Next Season
Clearing leftover merchandise solves the immediate problem. Better purchasing and inventory planning can reduce the likelihood of repeating it. Merchants can improve future planning by:
- Reviewing sales by product and variation
- Comparing forecasts with actual demand
- Setting reorder points
- Placing smaller initial purchase orders
- Reordering based on real sales activity
- Tracking supplier lead times
- Identifying slow-moving inventory earlier
- Monitoring stock across every sales channel
- Reviewing seasonal performance before placing the next order
Ordoro’s purchase order management tools help merchants organize supplier orders, track incoming inventory, and make purchasing decisions with better visibility into current stock.
Frequently Asked Questions
What is excess holiday inventory?
Excess holiday inventory is seasonal merchandise that remains unsold after the primary selling period ends. It may include products, packaging, gift sets, or variations that exceeded customer demand.
What is the fastest way to clear excess inventory?
Wholesale sales, liquidation, and aggressive discounts may clear inventory quickly, but they usually recover less margin. The best option depends on storage costs, product demand, and how much value the business needs to recover.
Should a business discount all excess inventory?
Not necessarily. Merchants should review demand, margin, carrying costs, and future selling opportunities before discounting every product. Some items may perform better as bundles, on another channel, or during a later promotion.
Can excess inventory be bundled with popular products?
Yes. Bundling slow-moving inventory with complementary or popular products can improve the value of the offer and help sell more than one item in a single order.
How can businesses prevent excess seasonal inventory?
Businesses can use historical sales data, smaller initial purchase orders, accurate inventory tracking, supplier lead-time information, and regular stock reviews to make more informed purchasing decisions.
How does inventory software help reduce overstock?
Inventory software gives merchants better visibility into stock levels, sales activity, incoming purchase orders, and inventory across multiple channels. This information can support more accurate purchasing and replenishment decisions.
Prevent Excess Inventory Before the Next Selling Season
Clearing unsold merchandise can recover some cash, but better inventory visibility and purchasing processes can reduce the problem before it happens.
Ordoro helps eCommerce businesses track inventory, manage purchase orders, monitor stock levels, create kits and bundles, and keep quantities synchronized across sales channels. Start Your Free Trial
