The Excess Inventory Problem - Benjamin Bellwether

The Excess Inventory Problem

A Bellwether Insight

Photo: freestocks
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Welp, it’s that time of year again: return season. On a normal year, you could expect about 8% of customers will return something they bought in a physical store, and 30% from e-commerce purchases. This year it’s even worse. With the ‘rona making it impossible to get customers into our stores, we’ve seen more customers buy online (a 32.4% increase in November 2020 alone); and, they are doing it a little differently this year.

A recent Narvar survey found that 60% of shoppers are “bracketing,” meaning they are buying multiple styles, in multiple colors and multiple sizes knowing that they will return most, if not all, of it. Uh oh. That’s gonna be a problem. UPS & FedEx have already reported ‘record breaking’ returns, as much as 1.2 million in one day from UPS alone.

We recently dove into the downside of discounts, warning that the pandemic price reduction fever would just create disloyal customers. So, what is a brand to do? You’ve made your products durable, you’ve streamlined your evergreen core items, optimized your product pages, given as much information you could about sizing and convinced the customer the item will work out for them. But…the returns are still gonna happen. Here are some ways you can reduce, reuse, recycle, Rihanna.

Rental or Resale

Now may be the time to try out a rental program or resale program for excess goods. If it’s not a program of your own, have it go to resale sites like The RealReal, ThredUp or others. This will help shift the ‘look’ of the discount to something more positive. Seeing your clothing for less on a resale website is much better than seeing it hanging all sad on a sale rack. This can also marry well with your take-back programs, and further fulfill your circular lifecycle approach.

Re-market or Re-merchandise

Get creative with your marketing. Do a zoom fashion show. Take photos in the clothing around your home. Show how that outfit can go from day dining-table-turned-office to night sofa-turned-chic-new-cocktail-lounge. Don’t forget that we are consumers, we may have less money or refocused our spending, but we still like to buy things. Be authentic with messaging, honest with pricing and offer to help out charities focused on COVID-19 relief where you can.

Customization may be another option for re-marketing your clothing, especially with more users on social media during this time. Engage customers and hired influencers alike with this approach. If you have more basic items, offer to ship them with a customization kit of patches, pins, dyes or anything else you can get your hands on. Customers can have fun customizing, and you get a tag and a share. That, my friend, is a win-win.

Try also re-merchandising the items, or editing them slightly to adapt to a new season. This has been a trend during pandemic-era fashion weeks, so you can expect the trend of patchwork and ‘mash-up’ designs to peak in the next few seasons. Take two shirts and combine them to have contrast sleeves. Take two pairs of denim jeans and have the front be light wash and the back be dark wash. Get creative to save as much as you can. It is possible use every part of the garment to make unique, one-of-a-kind or limited-run pieces that we know your customers would love.

Re-ward or Re-route

This may seem a little bit unorthodox; but, bear with us. You have a customer with a return. Accept it, and then offer them 10% off (or whatever you work into your costs) an item, but that item is final sale. You reward with a discount, but you still make your margin.

If you can’t offer free returns to your customers, give your most loyal customers free returns with a loyalty program. The other benefits that keep shoppers coming back within your loyalty program (like exclusive discounts or early access to new items or sales), will far outweigh the expense of paying for the customer to ship a return to you.

If you are accepting returns by mail, send them to a store that will be the best at reselling or finding a use for the merchandise. You goal is to reduce shipping costs (and reshipping costs associated with sending unused merchandise to another store), while also reducing the time something may sit on sale. You wanna get. That. Money. Honey.

You may also look to re-route entirely. Find a reseller to partner with that’ll buy your excess inventory or even accept your returns directly. Resellers are poised to gain a hefty profit from the novel ways consumers are shopping, we are sure they will be looking for new ways to partner with brands for even more success.

Re-look & learn for the future

Be smart about how you review your analytics to optimize production. Make sure to take a look at your return rate. Are you getting high returns on specific products? Ask yourself: why? Do I need to improve the product? Or, should I work this number into what I think I’m going to sell?

Use this information to optimize your supply chain. Ask your vendors how you can partner to go below minimums, or have them hold fabric for later production. Be sure to explain the benefits to them. If you have an RTV agreement, getting smarter about units produced and when they are produced would help reduce items returned to them. You may also see a rise in margins from optimizing order sizes to only make what you know you can sell. These dollars could go straight into style development, which means more orders for your vendors.


For more information on increasing the durability of your products and how to build more sustainable process, check out our Sustainability Courses and free Sustainable Product Development Checklist.