Insights

Getting Started on Strategy

When it comes to generating cash from your at-risk inventory, there are steps you can immediately take to get you on the path to improving recovery returns.  

Selling to the secondary market is no different to selling to your primary channels; all you need is a winning go-to-market strategy. However, you have to start somewhere. First, take the lead and initiate a simple discussion with your inventory management team, highlighting the benefits of using an alternative wholesale sales channel provider. At the same time, it would be advisable to engage with your counterparts in sales and finance too.

Depending on the condition of the inventory you want to sell, if the product is brand new then your sales team may own the decision to sell the product into alternative channels. Meanwhile, if the products are returns then ownership may rest with your operations management team.

In the case of the latter, FreeFlow could well be the solution you’re looking for. The company provides automated processes and specialized services through a unique online private marketplace, helping to move stock quickly without compromising your brand integrity, pricing strategy or channel relationships.

By allowing its users full transparency and control, you can accurately measure value recovery on at-risk inventory and maximise profits.

Remember, developing a strategy to implement proactive inventory reduction programmes for excess active inventory will require the support of your colleagues. Meet with them separately, and the chances are that you will find them willing to investigate a no‐risk process to effectively address an age‐old problem.

Finally, identify inventory thresholds. Once you have key stakeholders (sales, finance and supply chain) in conceptual agreement, you can begin identifying the inventory trigger points and the resulting actions, frequencies and metrics.

Here are six steps you can take towards initiating a conversation that might allow your counterparts to understand how FreeFlow’s secondary market auction platform might maximise margins on consumer returns.

1. Categorize excess inventory by age buckets (e.g. 6‐12 months, greater than 12 months, etc.).

2. Review historical recovery trends and extrapolate the forecasted P&L impact, assuming all inventory is purged.

3. Seek business unit approval for recovery levels and set the suggested recommended reserves on each sku.

4. Set these recovery levels as reserve prices.

5. Go to market and release when reserve prices are met or exceeded.

6. If reserve prices are not met, seek approval for exceptions before creating orders on the system.

If you have a well‐established Sales & Operations Planning (S&OP) process, this should be the right process on which to base this programme.

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