I’m selling more flip-flops this fall than I did this summer.
This may seem strange, but it is simple. I had a fairly large surplus of flip-flops in stock at the end of the summer selling season and had to face a difficult decision. Either I hold onto my inventory of flip-flops and begin delivering them to stores next spring, or sell them at a steep discount now contingent upon a business taking delivery and paying for them right away.
I have decided to sell them now rather than hold onto them. Have I made the right decision? Lets explore both sides.
Yes – Sell the Inventory Now!
As far as cash flow goes, the answer is a no brainer. It is better to sell them now at a steep discount (still making some money) than it is to hold onto them for 6 months and sell them at full price. Inventory is death. Holding onto any quantity of product for 6 months means that all the money invested in that product has no way of making me more money. Money needs to be continuously moving in and out of a company in order to make money. Without that money moving, I don’t make more money on that money for 6 months. So, if I sell it now at a steep discount, I can use that money to make new money – and 6 months from now I will have probably made more money off of that money than if I had waited to sell the flip-flops at full price.
No – Don’t Sell Now!
Although selling inventory at discount has obvious cash flow benefits, it may not be the smartest decision for the health and longevity of the brand. When I sell my products at a discount, the stores who buy it will sell it for a discount. These discounted prices may be interpreted in a variety of different ways – and how people perceive your brand depends on where the discounted products are sold and how it is merchandised. Unloading excessive amounts of discounted merchandise may undermine your relationships with your customers who purchase your product at full price – meaning they won’t buy your product at full price, or at all, next year. I have strategically unloaded my inventory in a manner I believe will not harm my brand. Furthermore, the products I am selling will not be available for purchase next spring, when the discounted products will be on sold. But only time will tell if this was the right decision.
Recently, many brands have reluctantly discounted their merchandise. Those that have not discounted their merchandise during the recession risk losing fans to brands that offer discounts – and when the economy improves, they may not be able to get their fans back.
What are your thoughts on discounted merchandise? Am I a making the right move?
