---
title: "How to Effectively Eliminate the Deadly \"Aged Inventory\" Products?"
description: "In recent years, FMCG business has become increasingly difficult, and distributors' profits are razor-thin. Once slow-moving or overstocked products lead to aged inventory that needs urgent handling, manufacturers and distributors face not just reduced profits but potential annual losses. This article explores the causes of aged inventory and how digital transformation in demand planning, display, and user profiling can help eliminate it."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-11-16"
language: "en"
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# How to Effectively Eliminate the Deadly "Aged Inventory" Products?

> In recent years, FMCG business has become increasingly difficult, and distributors' profits are razor-thin. Once slow-moving or overstocked products lead to aged inventory that needs urgent handling, manufacturers and distributors face not just reduced profits but potential annual losses. This article explores the causes of aged inventory and how digital transformation in demand planning, display, and user profiling can help eliminate it.

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In recent years, the FMCG business has become increasingly difficult, and distributors' profits are as thin as paper. During operations, once slow-moving or overstocked products lead to aged inventory that needs urgent handling, manufacturers and distributors face not just the issue of earning more or less profit, but the possibility of directly causing losses for the year's business.
So how does aged inventory arise in the market? I believe the main culprits include the following three aspects:
First: Unreasonable task pressure from brand owners, meaning that the task targets are disconnected from actual market demand, causing excessive inventory and resulting in aged inventory.
Second: Inaction by sales personnel. During market operations, sales personnel may make errors or lack execution skills, failing to follow principles like First-In-First-Out (FIFO) for products—a seemingly often-emphasized but easily violated rule—without giving it sufficient attention.
Third: Problems with the product itself. The product's attributes or selling points may not match the target consumer group; that is, the distribution points are not where the target consumers gather.
In a previous article, I mentioned that for manufacturers and distributors, the most critical aspects of digital transformation are two: first, improving business quality, and second, enhancing organizational efficiency. Today, let's explore how manufacturers and distributors can use digital operations and transformation to reduce aged inventory in the market, thereby increasing profits for both brand owners and distributors.
**-01- Digital Demand Planning Helps Increase Profits for Manufacturers and Distributors**
Regarding the issue of inventory pressure, there are two extreme viewpoints: **One is to push products into the distributor's warehouse, putting pressure on the distributor to drive sales through the entire channel; the other is for the company to simply cancel sales tasks and focus on consumers, creating scenarios for consumer communication and education, thereby satisfying B-end sales through C-end demand.**
I believe both are not advisable. The former is a pragmatic approach, while the latter is an academic one. Companies need to balance survival and development, so they must weigh pros and cons and maintain flexibility. All reasonable demand planning is the first step in inventory pressure.
Let me give an example.
A channel development director visits target markets to recruit distributors, inspects the market, and visits distributors. Once the intention to cooperate is confirmed, they discuss the initial payment amount: how much to pay? What products to ship? The first time is crucial; if mishandled, it can easily become a one-time deal. Therefore, digital demand planning is particularly critical. We determine demand from the following aspects:
**1. Initial distribution points and the proportion of point attributes**
For a blank market, the primary task is, of course, developing new stores. How many to develop? How to plan the development progress? How many points are planned to be developed in the first month? What is the proportion of each channel attribute among these target points?
Every number must be determined through thorough market research to be more realistic. This is the first step in demand calculation.
**2. SKU types and quantities for different channel attributes**
Fully understand your product attributes. The essence of point selection is where target consumers gather. Companies should define the target consumer profile, not simply as "young people aged X to Y," but precisely including gender, age, income, interests, active hours, residence, etc.
Therefore, choose products that best match the point's attributes. For initial store entry, more SKUs are not necessarily better; the higher the likelihood of sell-through, the better. It's better to sell out than to leave inventory at the store. So at this stage, determine the types and quantities of SKUs based on different point attributes. This is the most important step in demand calculation.
**3. Calculate demand, subtract costs to determine payment amount**
This step is relatively simple: the payment amount is the sum of (number of different points) × (SKU types per point) × (SKU quantity per point).
At this point, note that the manufacturer's support costs—early on, companies often provide significant support—should not be underestimated. The actual payment amount should exclude this portion.
**Summary: Digital demand planning may seem simple, but the difficulty lies in in-depth market research. Once you understand the market, making accurate product demand forecasts becomes easy.**
By the way, a reminder: Some experts mystify digital transformation, introducing many new concepts and terms. But just remember an old sales saying: "Let numbers speak for everything," and you can easily step into the threshold of transformation.
**-02- Digital Display Helps Drive Product Sell-Through**
What is the purpose of display? Of course, it's to drive product sell-through. Why do many companies spend a lot of market expenses on beautiful, brand-prominent displays, yet still face collective expiration? The reason is simple: for consumers, your product is "look but don't touch."
I personally dislike the display descriptions of some academic experts. I remember when I first entered the FMCG industry over a decade ago, there was a trend of "Westernization." I attended company display training that lasted two days, talking about the left-right hand principle and the optimal angle for looking up or down.
I took a big notebook of notes, seemingly organized and high-end, but in reality useless. Looking back now, it's even more laughable because it was detached from actual operations.
So how should companies approach display in digital transformation? I suggest starting from the following aspects:
**1. Non-leading brands should not do brand displays; instead, study category-related displays**
Leading brands in the industry should focus on brand displays, such as buying out floor displays and shelves, because consumers actively purchase their products, even coming to the point of sale with the intention to buy. So these companies aim to make their products easier to see and buy, while stimulating consumer memory and enhancing brand power.
It's worth emphasizing: **For category-related displays, choose target related products carefully, and digitally explore the additional benefits your product brings to consumers.**
For example, Want Want's Food Tech sells a product called "Jiao Dai Shuang Tiao," a mix of peanuts and chili, positioned as a beer companion. It should be displayed adjacent to beer. The question is: which beer? Consider the sales volume of that beer (sales equal traffic), and the overlap between the beer's target consumers and those of Jiao Dai Shuang Tiao.
This requires digital research. Before "attaching to a big shot," make sure it's not a "fake big shot."
**2. Related displays should be digitally empowered**
I have always believed that marketing is not a language, nor an art; it's simply mathematics. Anything that can be expressed with numbers should never be described with words. Numbers are more objective and less emotional in market feedback, and the same applies to displays.
In displays, express the number of facings, depth, shelf level, how many more facings than competitors or related products, etc. In merchandising, express your product's differentiation, such as how many more grams than competitors or related products, how much price discount, how much lower sugar or calories, etc. All need digital empowerment.
Whether a point is doing well should be determined by scores for different displays: how many points for the main display, how many for the secondary display, and what is the difference between this visit's total score and the last visit's total score (this is a true reflection of the salesperson's execution ability; without action, no score, and the results can be truly reflected in the terminal system). All need to be quantified to directly and clearly reflect market conditions.
At the same time, study the difference between high and low scores and the speed of product sell-through. This difference can judge the value of the display, making sell-through empowerment more precise.
**-03- Digital User Profiling Makes Consumer Communication More Efficient**
##  Regarding digital user profiling, Mr. Liu Chunxiong's article "Marketing Digitalization 10 Lectures, Lecture 3: The Soul of Marketing Digitalization is User Profiling" has a passage that can well explain:
## **1. Digitalization without user profiling is just a decoration. User profiling is the tagging of users to facilitate identification, and it is automatically recognized by computers.**
##  Only by accurately identifying users can we serve them precisely, like giving a pillow when someone is sleepy. Automatically identify users, automatically push instant information and policies, and automatically form new user profiles at the moment users change their shopping behavior. The power of digitalization can only be shown through user profiling.
**2. Does FMCG manufacturers' digitalization need user profiling? Of course! Only with user profiling can we be more precise.** For example, when a new product is launched, in the past, deep distribution meant full coverage. But now, with product upgrades, new product distribution needs to be precise.
If a high-end new product is launched, we need to find precise distribution terminals, which requires profiling the terminals.
Suppose the user profile for high-end new product distribution must meet three criteria:
**1) The terminal has the ability to recommend new products; 2) The terminal has a high-end user group; 3) The terminal has an advantage in that category.**
Based on the above criteria, profile the terminals, screen out those that meet the conditions for cognitive education (such as experience), and then distribute. Because the profile is precise, if sales are good after distribution, a more comprehensive distribution can be carried out.
3. For new product distribution, where does the data for terminal profiling come from? **There are two major sources: one is having your own terminal data, profiling based on historical data; the other is if you are just starting and have no data, you can find system platforms or third-party professional companies that will profile terminals based on other companies' data.**
Whether it's a manufacturer, agent, or new retail, as long as you are online and digitalized, you must have user profiling.
**Summary:** The digital description of target consumers is a key part of product sell-through. It is about accurately selling the best products to the right customers, thereby driving sell-through through purchase and repurchase. This is also the core content of reducing aged inventory.
**Final Thoughts:**
**The digital transformation of enterprises has penetrated every sales link of FMCG manufacturers and distributors. In today's increasingly competitive environment, profit is not "earned" but "calculated." The problem of aged inventory has always been a profit killer, and only through digital operations (transformation) can it be completely eliminated.**
Don't listen to discouraging words like "not transforming means waiting to die, transforming means seeking death." Be down-to-earth, step by step, and build your own digital transformation model for the two major areas of business quality improvement and organizational efficiency enhancement. I believe that one day in the future, you will be grateful for today's decision.


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