When a forecast misses high, there’s cash on a shelf and a strong temptation to run a sale. The sale clears the stock. It also discounts everything else in those orders, and teaches your best customers something about your prices.

Where the cost goes

Say a brand normally sells $100,000 a week at full price and is sitting on $40,000 of excess inventory at retail value in one product line. A week of 25% off sitewide lifts revenue to $150,000. Suppose the overstock line sells $30,000 of that. The other $120,000 includes the orders the store would have taken anyway, which would have brought in $100,000 at full price and now bring in $75,000: $25,000 given away on orders that needed no discount. Some of the extra sales were pulled forward from the weeks after. And the customers who bought at full price last month have learned to wait for the next one. That last cost is the subject of The First Offer, which covers discount training and the sale calendar; read it before your next clearance.

A sitewide sale clears one product by discounting every product.

Clear it where it’s wanted

Excess stock is rarely excess to everyone. It’s usually excess to your forecast of new-customer demand. The people most likely to want more of it are the people who already buy it.

1. Offer existing buyers a stock-upA private offer to past buyers of the product: a multi-pack, a bundle with something they also buy, or a gift with a larger order. No public price change, no code on coupon sites. This is the same move as the last-chance stock-up in chapter 8, pointed at a surplus instead of a retirement.
2. Use it to seed the next repeat productPut the overstock in orders from customers who haven’t tried it, as a sample or a gift with purchase. It costs you stock you’d otherwise mark down, and a few of those customers become its next regular buyers.
3. Bundle it with a repeat anchorA slow product attached to a product people reorder moves without changing either list price. Check that the bundle doesn’t become the only way anyone buys the anchor.
4. Sell off-channelOutlets, liquidators and closeout buyers take stock away from your own customers’ view. You’ll get less per unit, and you’ll keep your prices intact where it matters.

Two things never to do

• Don’t ship short-dated product to subscribers without saying so. A subscriber who gets a serum with two months left, or a pet food near its best-by date, has had the product changed on them without notice. That’s a reformulation in all but name (chapter 9).
• Don’t overcorrect across the board. After a markdown, cut the unknown layer from chapter 5, not the certain one, or next quarter’s overstock becomes a stockout on the product your regulars need.

Do this

• List every product with more than six months of cover. For each, count past buyers you can legally email or text. Where there are enough of them, send a private stock-up offer before anyone proposes a sitewide sale.