Markdown, Bundle or Liquidate? How to Decide What to Do With Excess Inventory

Quick answer: Mark down when demand still exists and a lower price will move units within weeks. Bundle when the product adds value to something that already sells. Liquidate when the stock is large, aging or seasonal, or when markdowns have already failed. Compare options by net cash after fees, shipping, labor and months of carrying cost, not by price per unit.

Excess inventory has three main exits. Most businesses pick one by habit. The better approach is to compare the net cash each option actually returns. (If you are still working out how the stock piled up, start with 5 inventory mistakes that hold small brands back.)

When does a markdown make sense?

A markdown works when people still want the product and price is the main barrier. Signs that a markdown will work:

• The product still gets views or inquiries
• Competitors sell similar items at lower prices
• The product is not seasonal or close to obsolete

Keep markdowns time-limited. Repeated or permanent discounts teach customers to wait for the next sale and can lower the perceived value of your whole line.

When does bundling make sense?

Bundling works when a slow item naturally complements a fast one: a spare part with a tool, a case with a device, a refill with a starter kit. The customer sees added value, and your main product's price stays intact.

Bundles are slower to set up and do not clear large quantities. They are best for a few hundred units, not a full warehouse.

When does liquidation make sense?

Liquidation is the right choice when:

• You hold more units than your channels can sell in 6–12 months
• The product is seasonal, dated or about to be replaced (see what to do with discontinued products)
• Markdowns have already been tried without results
• You need cash or warehouse space quickly
• The labor of listing and shipping each unit is not worth it

Worked example: 1,000 units, $40 original price

Assumptions: 25% annual carrying cost on a $15 unit cost, marketplace fees of about 15%, and $6 shipping and handling per unit when selling individually.

The markdown wins on paper but leaves 300 units unsold and 9 months of work. Liquidation returns less but returns it now, with no labor. In practice, many businesses combine them: a short markdown for the most sellable share, then liquidate the rest.

Note: These numbers are illustrative. Replace them with your own costs and fees.

A three-question decision test

1. Will a lower price sell most units within 90 days? If yes, mark down.
2. Does the product add value to a bestseller? If yes, bundle a portion.
3. Is anything left after 90 days, or is the volume too large? Liquidate the remainder.

The bottom line

The goal is not the highest price per unit. It is the most cash, soonest, with the least damage to your brand. Run the numbers once, set a deadline and move the rest.

Ready to clear what markdowns did not move?

Nevra buys overstock quickly so you can free space and capital. See how we work as overstock buyers.

Nevra is a Sacramento, California–based inventory buyer and multi-channel e-commerce operator that purchases excess, closeout, returned and industrial surplus inventory from US businesses.

Frequently asked questions

What is the fastest way to get rid of excess inventory?

Selling it in one lot to a liquidation or overstock buyer. It recovers less per unit but clears stock in days or weeks.

Does discounting hurt my brand?

Frequent or permanent discounts can. Short, clearly framed sales usually do not.

How do I price a bundle?

Price it below the combined individual price but above the price of the main product alone, so the slow item adds visible value.

When should I stop marking down?

After two rounds without meaningful sell-through. At that point carrying costs usually outweigh the extra revenue.

Sources: carrying cost benchmarks (APQC / ISM via Six Sigma DSI).