The New Year sales are over, but for many retailers there’s one big problem still on the shelves: excess stock.
After the holiday rush from a few weeks ago, unsold inventory can pile up – taking up space, tying up cash and putting pressure on your business.
In the UK, the average value of excess stock per merchant is £66,000, equivalent to 19% of overall inventory.
In fact, excess stock is now considered one of the biggest threats to online brands in 2025.
Why is overstock risky?
- It can severely hit cash flow. Tying up your money in inventory means there’s less available for paying bills, salaries, rent and for investing in new products. Poor cash flow means you might need to borrow money – and pay interest on it. It also means you may not be able to afford to take advantage of opportunities that could benefit your business.
- It takes up space. Inventory storage is a major expense. Every square inch of warehouse space occupied by excess inventory is a square inch that isn’t occupied by more popular (and more profitable) items.
- It hits your profits. Excess stock is often eventually liquidated – the heavy discounts needed to shift it can hit your profit margins hard.
- It can escalate fast. Retailers currently hold just 19 days of cash on average, and high-growth, low-profit models mean there is hardly any room for error. Just a couple of false moves when it comes to inventory can be all it takes to make a business run out of cash, and then ultimately go out of business.
- It makes you less agile. Modern e-commerce brands have to be able to adapt quickly to the ever-changing demands of modern consumers. If you’re overrun with unpopular inventory, you’re less able to respond flexibly to market shifts.
What’s causing excess stock?
There are a few well-known reasons why retailers struggle with too much stock.
Often, retailers end up with too much stock simply because they have overbought, perhaps due to seasonal trends or worries about supply chain delays. Without a proper inventory planning system in place, it can be easy to misjudge demand for seasonal or trend-driven products, leading to excess inventory that doesn’t sell as expected.
Economic uncertainty can also play a big role – when customer spending slows, stock that was meant to fly off the shelves can suddenly end up sitting in storage.
Another major factor is poor forecasting. Relying on guesswork or outdated manual systems can make it difficult to predict demand accurately, increasing the risk of over-ordering.
However, beyond these common causes, there are also hidden factors that lead to excess stock – but often go unnoticed.
The hidden causes of excess inventory
Even established businesses with a solid approach to inventory planning can struggle with overstock buildup due to ‘hidden’ factors that often go unnoticed. These include:
- Not using data properly. If your analytics and inventory planning tools aren’t connected, you’re making decisions without the full picture.
- Poor system integration. If your forecasting tool isn’t working smoothly with your ERP, you could be ordering too much or too little.
- Mismatch across sales channels. Demand for your products varies by region and platform. If stock isn’t balanced properly, certain items end up overstocked in the wrong places.
- Ignoring returns data. Returns can reveal a lot about customer preferences. If you don’t analyze them, you could keep ordering products that don’t sell well.
- Overstocking the wrong variations. Some sizes, colors, or styles sell faster than others. Without clear insights, you might end up with too much of what people don’t want.
4 ways to end overstock in 2025
In 2025, shifting demand and rising costs threaten to make excess stock an even bigger challenge. But with the right approach, you can stay ahead, free up space, and protect your profits.
Here are four options to help you stop overstock in 2025 and beyond:
1. Use inventory planning software
Investing in advanced inventory planning tools like Inventory Planner by Sage is one of the best ways to tackle excess stock and stay ahead in 2025.
As a top-rated inventory planning app, Inventory Planner is packed with features designed to help businesses save time, boost revenue and adapt to market changes.
With advanced forecasting and data-driven replenishment recommendations you can confidently and quickly create purchase orders, making it easier to adopt a ‘little and often’ ordering strategy that avoids overstock.
2. Use real-time data.
Real-time data is essential for staying ahead of consumer demand and avoiding excess stock. By keeping a close eye on live sales trends, you can adjust your purchasing and merchandising strategies before stock builds up.
For example, if a certain SKU shows a surge in sales over the past four weeks and you have plenty in stock, promoting it could help boost sales and move inventory faster.
Inventory Planner makes this process even easier. One of its standout features is always-up-to-date demand forecasts, which factor in supplier lead times, seasonality, promotions and historical sales data. These insights are translated into a simple, actionable buying report that makes sure you’re stocked up with the right products at the right time.
3. Bundle slow-moving stock.
Once you’ve identified which items in your inventory are slow movers (and don’t worry, Inventory Planner provides proactive alerts to flag these, so nothing slips through the cracks), bundling them is a smart way to clear excess stock. Pairing slow sellers with bestsellers can help move inventory faster while creating value for your customers.
The best inventory planning tools also highlight your top customers, giving you the insights you need to make targeted offers. Use this to your advantage by offering discounted bundles, using slow-moving items as free gifts for VIP customers, or rewarding new customers who spend a certain amount.
You can also add an upsell pop-up to include an excess item at a small additional cost, or create 2-for-1 or even 3-for-1 bundle deals to shift stock more quickly.
4. Sell through different channels.
Different products perform better on different channels and in different regions, so having a diverse mix of sales channels is essential. Outlets, marketplaces, and other platforms can help you move excess stock without resorting to heavy discounts.
To make this strategy even more effective, it’s important to use data to identify opportunities for selling items with a decent margin intact. Inventory Planner gives you a clear view of the performance of every item, in every variant, across all regions and sales channels.
With this insight, you can easily pinpoint which channels and regions to focus on as you work to shift your excess stock.
Top brands that have beaten excess stock
1. Boxraw knocks out £1m overstock with accurate forecasting
BOXRAW – a global boxing clothing and equipment brand founded in 2017 – racked up £1M in overstock after relying on spreadsheets and ‘gut instinct’ to place large inventory orders.
Since joining Inventory Planner, the brand has gained reliable forecasts and easy-to-understand buying recommendations, transforming its stockholding and eliminating overstock for good.
Izaak Amanna, Commercial Director, says: “We had shelves full of really niche products that only five per cent of the market wanted, but we were out of stock of the goods that 90% of the market wanted. Inventory Planner has been a game changer.
“Having complete oversight of our inventory has absolutely helped decrease our time out of stock, and it’s definitely helped us get in a much healthier place with cash flow.”
2. Bear & Moo saves 80% time and cuts $120k in stock
For Bear & Moo, a babywear brand based in New Zealand that specializes in eco-friendly items including cloth nappies, the price of rapid scaling was a major issue with overstock.
It meant that despite turning over more than $3M, the business stopped turning a profit and had to resort to frequent crash sales to clear stock and bring in cash flow.
Since putting Inventory Planner at the heart of its tech stack, Bear & Moo has transformed the way inventory is ordered, achieving an 80% time saving and freeing up $120K from excess stock.
Hannah Porter, Founder and Director, says: “Having the right tools in place makes such a huge difference… Sometimes you’ve got to spend money to save money. I’m so glad we discovered Inventory Planner when we did – now we can look to the future with confidence.”
3. Health brand Kos cuts back $1.5m of excess stock
Thanks to Inventory Planner’s powerful infights, plant-based protein and superfood company Kos has released $1.5M from excess stock.
Crucially, while Kos’s inventory shrunk, its sales grew – moving the brand closer to its goal of operating a negative cash conversion cycle.
Kevin Dalaeli, President and COO, says: “Like most brands, inventory is our biggest investment – and managing it well is critical for our cash flow.
“I’ve worked in retail for many years and I’ve seen the good, bad and ugly of how inventory is managed. Inventory Planner is the best tool on the market for businesses that want to get it right.”
Next steps
Excess stock doesn’t have to drain your profits or hold your business back in 2025. Smarter inventory planning can help you improve cash flow and protect your margins.
Ready to take action? Check out our guide, 11 Ways for Online Retailers to Reduce Inventory Overhang or watch our on-demand webinar for practical strategies to optimize your inventory.