Clearing Excess Stock – how about bonus deals

Clearing excess stock is a major headache for those in retail & wholesale. Cash is tied up and we need to free it  to buy in the new seasons ranges, hence

Clear excess stock - use  bonus offers

Clear excess stock - use bonus deals

the original idea for end of season sales. Something I have been watching here in my neck of the woods is the ‘Buy One Get One XX% Off’ ( BOGO), or ‘Buy One Get One Free’, and it sounds like it’s wide spread throughout the world.

According to a recent article in the Globe and Mail, which mentioned an (undisclosed) article  in The Journal of Marketing, customers are spending large on these types of deals. Even when 2 items are not required the deal just sounds too good to many shoppers and they just have to buy.

Now… if this works…it is a win-win for us that are trying to clear excess stock!. We get cash in and clear hopefully more volume. Of course my proviso is the conditions and discounts that have to be offered to get the best buy in from the customer. Is 25% off the second item enough of an incentive? Mostly it seems here that the large chains are offering Buy One Get One 50% Off.  Now, as a small independant buisness owner I hate the thought of following the big boys, but this may be something that we can use to our benefit.

Note that the offer conditions are important. To make it work to our advantage the second item has to be of equal or lessor value.

Clearing excess stock without too much of a margin loss

So how good is your math? Say the customer wants 2 items at $100 ($200), so the price would be $150 after 50% off the second item. The total discount in percentage terms is 25%off. The real winner is when the first item is $100 and the second lower, say $50 ($150 total at full retail) the price is now $125 only a 16.7% total discount.

The word is that customers love this type of deal, it seems to work really well with  FMCG (Fast Moving Consumer Goods) such as groceries, fruit and veg etc where perish-ability is a big issue for businesses.

But how about your business? Do you think this could be a good strategy to clear excess stock?

I would love to hear if you have tried it and it it work! So please comment.

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Comments

  1. D C Rona says:

    Such a difficult decision – since to offer one customer a lower price than another will eventually alienate those who buy as they need as opposed to those who can wait for ‘bargains’. The need to make a profit and maintain a cash flow must be weighed against the need to keep customers feeling they are consistently getting good value – always a difficult balancing act.

  2. As a consumer, I’m fond of these deals when the second is at least 50% off. I’ve worked in retail for decades and it cracks me up that consumers have caught on to the term “BOGO” and use it now! (for several years, actually) Yes, they are popular!

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