The Complete Guide to Managing Excess Inventory Expert Strategies for 2026

Excess inventory (also called overstock or deadstock) is one of the fastest ways to drain cash flow without realizing it. You pay to store it, insure it, handle it, and eventually discount it—often after it has already lost market value. The good news is that managing surplus inventory in 2025 is very solvable with the right dual approach:

1. Move what you already have (fast and profitably when possible)

2. Prevent it from happening again with data, automation, and disciplined purchasing

This ready-to-post guide gives you a complete playbook.

Liquidate and Move Existing Stock

The goal of liquidation is not just “getting rid of inventory.” It’s recovering cash, protecting brand value, and freeing capacity so you can invest in winners.

Strategic Discounting & Flash Sales

Incremental markdown strategies
Avoid one big “panic discount.” Instead, use controlled markdown phases (example: 10% → 20% → 30%) on a timeline. This protects brand perception, lets you test price elasticity, and often saves margin compared to steep cuts.

Best practice:

• Start with smaller markdowns and targeted segments (email list, loyalty members)

• Escalate discounts only if sell-through remains weak

• Track margin impact by SKU, not only at category level

Flash sales for seasonal or trending items
Flash sales work because they create urgency. They are especially effective for:

• Seasonal products nearing the end of a season

• Trend-based items losing momentum

• SKUs with high storage cost or high risk of obsolescence

Best practice:

• Keep flash sales short (24–72 hours)

• Use limited quantities or countdown timers

• Pair with strong product positioning (why now, why limited)

Product Bundling

Pairing slow-moving items with bestsellers
Bundling moves excess inventory by attaching it to products customers already want. Examples:

• “Buy the bestseller, add the slow mover at 50% off”

• “Starter kit” bundles combining fast and slow SKUs

Increasing average order value without heavy discounts
Bundles can preserve perceived value better than aggressive markdowns because customers focus on total savings rather than “cheap” individual items.

Best practice:

• Bundle complementary items (use-case fit matters)

• Offer a clear outcome (“complete set”, “starter kit”)

• Test bundles on landing pages and in-cart upsells

Omnichannel Expansion

Many businesses only try to sell excess stock in one channel. That is a mistake. Overstock often sells when exposed to different audiences.

Secondary Marketplaces

• eBay (clearance, refurbished, discontinued, closeouts)

• Amazon (high exposure, strong buyer intent, bulk movement potential)

• Etsy (niche/creative, repackaged, bundles, handmade-adjacent)

Best practice:

• Use separate listings and positioning per platform

• Price with fees and shipping in mind

• Maintain consistent inventory syncing to prevent oversells

Inventory Buybacks or Returns

Supplier buyback programs
Some suppliers offer buyback (partial recovery) for certain categories, especially if you are a high-volume customer.

Return credits for unsold or seasonal inventory
Even if returns aren’t standard, you can negotiate:

• Return credit on future orders

• Swap for fast-moving items

• Restocking fee arrangements (still better than deadstock)

Best practice:

• Build flexibility into future supplier contracts (MOQs, returns, staggered shipments)

Charitable Donations

Tax write-offs
Donating excess goods can reduce taxable income (rules vary by country—consult an accountant). Donation is especially useful for:

• Unmarketable but usable stock

• Packaging-damaged but functional goods (when compliant)

• End-of-season items you don’t want discounted aggressively

Corporate social responsibility (CSR) benefits
Donation strengthens brand trust and community reputation—an indirect but real asset.

Best practice:

• Document donations properly

• Choose charities aligned with your brand values

• Communicate responsibly (avoid “virtue marketing” tone)

Remarketing & Repackaging

Sometimes inventory isn’t failing because it’s “bad”—it’s failing because it’s not positioned well.

Updated product descriptions and keywords
Refresh:

• Titles (clear benefits)

• SEO keywords and internal site search terms

• Feature-to-benefit language

Improved visuals and alternative use positioning
Better images, short videos, and a new angle (“here’s how people use it”) can unlock demand.

Best practice:

• Update listings before discounting deeper

• Test new angles: use-case, audience segment, problem-solution framing

• Add FAQs to product pages to remove buying friction

Implement Data-Driven Prevention Strategies

Moving surplus is only half the job. The real profit is made by preventing future overstock through smarter forecasting, lean replenishment, and better visibility.

What Counts as Excess Inventory?

Excess inventory is stock that exceeds realistic demand in the expected selling period. It often appears as:

• Slow-moving SKUs with rising days-on-hand

• Seasonal items after peak season

• Products nearing end-of-life

• Overstock caused by forecasting errors

• Inventory piled up due to supplier MOQs or long lead times

Rule of thumb: if you wouldn’t reorder it today based on current demand, what you have is likely excess.

6 Ways to Get Rid of Excess Inventory

Use this as a quick decision checklist:

1. Discount your products

Use controlled markdowns and flash sales to protect brand value and reduce carrying costs.

2. Bundle your products

Attach slow movers to bestsellers to increase sell-through and raise AOV.

3. Return your stock to vendors

Pursue returns, buybacks, credits, swaps, or negotiated terms.

4. Donate extra stock (and get a tax write-off)

Convert unsold goods into tax benefits and goodwill (with proper compliance).

5. Sell or trade extra stock to other businesses

Use wholesalers, liquidation platforms, or direct B2B trades to move bulk quickly.

6. Recycle or upcycle your stock into new products

Recover value by dismantling, repurposing, or converting to raw materials/components where feasible.

How to Automate Your Inventory Management

Automation reduces human error, improves visibility, and prevents over-ordering. In 2025, inventory automation is not only for large enterprises—SMBs can implement it with modern tools.

Economic Order Quantity (EOQ)

EOQ helps determine the optimal order size to minimize the combined cost of:

• Ordering (shipping, admin, setup)

• Holding (storage, insurance, capital cost)

• Stockout risk (missed sales)

EOQ is especially helpful when you have predictable demand and stable procurement costs.

Best practice:

• Use EOQ as a baseline, then layer in seasonality and volatility

• Recalculate EOQ when lead times or cost structures change

AI-Driven Demand Forecasting

Machine learning-based demand prediction
AI improves forecasting by detecting patterns humans often miss: promotions impact, product substitution, or regional demand shifts.

Analysis of sales history, social trends, and weather patterns
Modern forecasting blends internal sales data with external signals—helpful for seasonal categories and trend-sensitive inventory.

Best practice:

• Track forecast accuracy monthly

• Correct bias (over-forecasting is the most common excess-inventory driver)

Just-in-Time (JIT) Inventory

Demand-synchronized production and ordering
JIT aims to reduce excess by ordering closer to real demand.

Reduced reliance on large safety stocks
JIT works best when:

• suppliers are reliable

• lead times are short

• demand is stable enough to plan

Best practice:

• Don’t do “pure JIT” if your supply chain is unstable—use a hybrid approach with smart safety stock

Dynamic Safety Stock Management

Automated stock level adjustments
Instead of fixed safety stock, dynamic systems adjust buffers as demand changes.

Volatility- and lead-time-based calculations
Safety stock should rise when:

• lead times increase

• demand variability increases

And fall when things stabilize.

Best practice:

• Set service level targets (e.g., 95% fill rate)

• Review lead time reliability per supplier

Supplier Collaboration

Lower minimum order quantities (MOQs)
High MOQs are a major hidden cause of excess stock. Negotiation reduces risk.

Staggered delivery schedules
Instead of receiving all stock at once, stagger deliveries to match demand and reduce carrying costs.

Best practice:

• Share demand forecasts with suppliers (collaborative planning)

• Negotiate flexibility in exchange for long-term commitment

Internal Inventory Redistribution

Transferring stock from low-demand to high-demand locations
Before placing new orders, rebalance existing inventory:

• move from slow-selling stores/regions to fast-selling ones

• reduce “local overstock” while preventing “local stockouts”

Best practice:

• Use location-level sell-through dashboards

• Set weekly transfer routines for key SKUs

Monitor Key Inventory Metrics

You cannot manage inventory strategically without metrics. These KPIs help you detect surplus early and measure improvement.

Inventory Turnover Ratio

Frequency of stock sell-through and replacement
Low turnover signals overstock or weak demand. Track by:

• category

• SKU

• location/channel

Target turnover depends on industry, but the key is improving trend over time.

Inventory Aging Buckets

Aging shows how long inventory has been sitting.

Aging Categories

• 0–30 days (generally healthy)

• 31–90 days (monitor closely)

• 91+ days (high risk of excess/markdown)

Best practice:

• Set automated alerts when SKUs enter the 91+ bucket

• Trigger an action plan: remarket → discount → bundle → liquidate

Days Sales of Inventory (DSI)

Time required to convert inventory into sales
High DSI means cash is trapped in stock. Use DSI to:

• compare categories

• identify slow-moving SKUs

• evaluate effects of promotions

Forward Cover Days

Inventory duration based on recent sales velocity
Forward cover estimates how long current stock will last at current sales pace.

Best practice:

• If forward cover keeps rising while demand is flat, you are accumulating excess

• Use it to pause future POs early (before inventory becomes deadstock)

A Practical 2025 Framework

If you want a simple operating model:

1. Identify excess early (aging buckets + DSI + forward cover)

2. Remarket first (listing optimization, new angles, improved visuals)

3. Then discount strategically (incremental markdowns + flash sales)

4. Bundle to protect value (move slow SKUs with bestsellers)

5. Expand channels (marketplaces, B2B, liquidation)

6. Prevent recurrence (forecasting, dynamic safety stock, supplier flexibility, automation)

Excess inventory will happen occasionally even in strong businesses. What separates high-performing operations is the speed and discipline of response—plus the systems that prevent it from repeating.