Why Do Retailers Make Clearance Sales? Private Label Clearance Drop Strategy
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Clearance deals are like a La Tomatina or Valencia Fallas festival.
Things get crazy and all the people are having fun.
It is not like the Black Friday deals though, when they increase the prices the month before, so a minor discount seems more tempting.
Not all of them of course, but in most cases it’s like that.
The insane thing is that we do a clearance deal every month!
Yeah, every month.
In Private Label, we call it The Drop Clearance.
It’s very healthy for your inventory and the business's overall operations.
And a very smart marketing strategy, let’s know why.
Holding Inventory Cost
Let’s say you have a physical store or an online store.
You wholesale your stock using for instance Private Label Wholesale.
You rent a storage unit and keep it there or keep it in your house to package and ship by the company you’re contracting.
If you hold inventory worth $100K and 30% of this inventory didn’t sell out during the year.
So, when you’re closing the book at the end of the fiscal year.
You should calculate the opportunity cost of this.
It’s basically the opportunity you lost by not following alternative scenarios.
These scenarios might include something like putting the money in an S&P 500 index fund.
In the last year, the index performed at a 9.78% gain on a year-to-date basis.
That means you could have gained around $3000 passively If you didn’t pile up inventory.
It can be less in a savings account or more if you’re an angel investor in some friend’s business.
That is what makes inventory more like a burden than an asset.
Depending on your historical sales rates and the agility of your business model, you should reevaluate your stock quarterly if possible.
To be proactive about these scenarios.
New Emerging Trends
In the hair industry, the butterfly effect plays a vital role.
Some teen videos on TikTok (before it was banned at least) could make a new trend out of the blue.
The right atmosphere, the look compatibility, or the perfect aesthetics.
The secret formula for virality is not yet revealed.
So, one day you can see the attention towards frontals is decreasing in favor of closures.
People just discovered its convenience and the low efforts for maintenance.
Life can be treating Bob wigs good a day and the other day people are all about the Glueless wigs (well, they deserve it).
Recognizing new trends and exploiting them is essential to lead a hair business.
That’s when liquidating inventory to get cash or have extra room for new products becomes the solution.
Breaking the Ice
Imagine a shy customer who has been following you on social media or read a blog once on your website.
She lowkey admires your brand but never had the chance to buy something.
And out of nowhere, there is this wig at half the price.
It can be once in a lifetime opportunity to get a high-quality product at such a discount.
So, she bought it and now she admires your brand even more.
She knows now, how and when you deliver.
How efficient is your customer service, and how flexible is the refund in case she needs it?
It’s an easy way to acquire fresh blood for your business and a new customer base that contributes to your yearly revenue.
Social Proof Power
It doesn’t stop there.
A customer will tell a customer who will also tell another customer.
The flow begins to pour into your business.
And the word-of-mouth engine is working.
It’s a great trick to get people to review your products.
Because who will be mad for buying a bundle at a %60 discount or so?
This creates peer pressure which leads to more sales.
And people will start to value your brand more and form some kind of tribe as long as you keep it raining.
Private Label Monthly Drops
If you went to Private Label Clearance and signed up your email or phone number.
You will get notified once a Drop is dropped.
That means early access to hundreds of products at very good prices.
Believe it when you see a 150% standard kinky curly lace front wig for $99 instead of $250!
A loose wave transparent 4x4 closure for $20 instead of $64.
Or a Brazilian silky straight standard 13x4 frontal for $12 instead of $69!
It would be a mad world if people ignored 100% human hair at these prices.
Besides free shipping and express shipping if you need it.
These are limited quantities, and once they are out of stock, we bring in new and different products.
And let me tell you, this is really good for business.
Sign Up for the Drop Now.