In a perfect world, you’d never be on our website looking into an inventory liquidation…. your production models would match up with demand, every new product launch would be a hit and you’d only sell to customers that operates with the Swiss watch precision of your own planning team!
Ah, we can all dream, can’t we?
When you find yourself with more inventory than you want to move through your traditional channels, you’re up against the clock. Sure, dealing with this closeout may not be your primary responsibility and it’s easy to kick the can down the road. But the earlier you tackle the inventory problem, the better off you’ll be.
Look at the chart above and you’ll notice roughly five decision points that determine the value you’ll get from your inventory:
Long code date and good retail/distribution relationships? Obviously this is where you want the product to go.
Enhanced 170(e)(3) Charitable Deduction
What? Donate my long-coded product to a food bank? Very generous tax code for certain corporations can make this a great financial decision… in addition to building up karma.
As code date shortens, you need to start looking to discount retail channels or other institutions. How you place your inventory closeout not only affects the value you get, but how well you can protect your brand.
Food Bank Donation
As your code date gets very, very short – too short for most alternative channels – food banks are great need of product. You can still qualify for a charitable deduction here and you’re doing a ton of good.
It goes without saying that this is the worst outcome. Sometimes you have no choice, especially if you wait until the last minute – which is why time is everything with food.
Of course every situation is different but in most cases, the faster you act the better the financial outcome.