Inventory Aging: How Long Your Cannabis Products Should Stay On the Shelf Before Discounts
In the fast-paced cannabis industry, effective inventory management is critical to maintaining profitability. One of the most significant challenges for dispensaries is managing inventory aging, which refers to how long products sit on your shelves before they need to be discounted or sold at a loss. Understanding the ideal turnover time for cannabis products can help you optimize your operations, reduce waste, and improve your bottom line.
The Financial Impact of Cannabis Inventory Aging
Holding onto inventory for too long can lead to a cascade of financial issues for dispensaries:
Decreased Product Quality: Cannabis products, like flower or edibles, have a limited shelf life. As they age, their quality diminishes, making them less desirable to customers. This can lead to deeper discounts or unsellable products.
Loss of Profitability: The longer products sit on shelves, the more likely you’ll need to apply markdowns. High discount rates eat into margins, reducing the profitability of these products.
Stale Product Lineups: Aged inventory prevents you from bringing in newer, in-demand products. Customers expect variety and freshness, and stale stock can push them to competitors.
To avoid these pitfalls, it’s essential to understand the optimal shelf life of cannabis products and take action before they lose their value.
How Long Should Cannabis Products Stay on Shelves?
The ideal amount of time for cannabis products to remain on shelves varies depending on the product type, but here are the general guidelines:
Flower: Cannabis flower has a shelf life around 6-12 months when properly stored. However, after 90 days, it’s wise to assess its movement and consider discounting if sales have stagnated.
Edibles: Edibles have a shorter shelf life, typically between 6-9 months. Monitor their inventory closely, as expired edibles can lead to compliance issues.
Concentrates and Oils: These products can last 6 months to a year, depending on their packaging and storage conditions. Like flower, after 90 days, track their performance and start planning potential markdowns.
Using cannabis inventory forecasting software can help predict product demand and avoid overstocking. Regularly reviewing your inventory with a cannabis analytics and reporting dashboard allows you to track how well products are selling and when it’s time to adjust your strategy.
Strategies for Moving Cannabis Inventory Faster
If products aren’t selling within the desired time frame, you’ll need to take steps to move inventory before it becomes a loss. Here are some dispensary inventory optimization strategies:
1. Implement a Discount Strategy
One of the most common methods for moving aging inventory is to offer discounts. However, the key to a successful discount strategy is to time it right. Here’s how to approach discounting:
Early Discounts: Offer small discounts (10-15%) on products that are approaching the end of their ideal shelf life. This can help spur sales before a significant markdown is necessary.
Bundle Discounts: Group slower-moving products with popular items to encourage higher volume sales without steep markdowns.
Limited-Time Offers: Create urgency by offering time-limited discounts, prompting customers to act quickly and clear out older stock.
2. Optimize Inventory Turnover Time
Effective inventory turnover is the cornerstone of profitability. Regularly assess your product sales with tools like the cannabis sales performance dashboard to determine which items are selling too slowly. A good rule of thumb is to aim for inventory turnover rate that allows products to sell within 90 days. This helps you maintain fresh stock and reduces the need for heavy discounts.
3. Adjust Purchasing Based on Data
Rely on your cannabis inventory management best practices to make data-driven purchasing decisions. Too often, dispensaries over-order products that don’t match customer demand, leading to aging inventory. Use data from cannabis inventory control systems to forecast demand accurately and avoid overstocking products that are slower movers. By leveraging cannabis inventory forecasting software, you can better match supply with demand, minimizing the risk of product obsolescence.
4. Prompt Underperforming Products
Marketing can be a powerful tool to move slow-moving products before they need deep discounts. Use your in-store displays, email marketing, and social media to highlight these products, offering limited-time deals or educational content that piques interest. For example, showing the benefits or unique features of a product that isn’t selling well can boost awareness and sales.
5. Leverage Cannabis-Specific Software
Tools like FlyWheel provide insights into which products are moving quickly and which are lagging behind. By integrating cannabis inventory management software and cannabis logistics solutions, you can automate and streamline your inventory control process, ensuring the right products are on your shelves at the right time. This enables dispensaries to make quicker decisions regarding when to discount or re-stock based on accurate data.
When to Start Discounting Cannabis Products
The timing of discounts is critical to protecting your margins. While discounting too late can result in significant losses, discounting too early can erode profits unnecessarily. Here are some key points for when to start discounting cannabis products:
Flower and Concentrates: Start evaluating for discounts after 60-90 days on the shelf. If sales have slowed, it’s time to offer modest discounts.
Edibles: Begin monitoring edibles for discounts around 60 days, especially if their expiration date is approaching.
Merchandise and Accessories: These products may have longer shelf lives but consider markdowns after 120 days if they are not selling.
Using a cannabis sales performance dashboard helps retailers stay on top of aging inventory and identify when it’s time to act, minimizing profit loss.
Get Started with FlyWheel
Effective cannabis inventory management isn’t just about keeping your shelves stocked–it’s about ensuring products move at the right place to maximize profits. By understanding how long cannabis products should sit on shelves, leveraging data-driven insights, and applying smart discount strategies, dispensaries can optimize their operations and drive profitability. Implement cannabis inventory management best practices to keep your dispensary ahead of competition and ensure your shelves are filled with fresh, in-demand products.
Ready to get started? Reach out to us today: 240logistics.com/contact
Schedule your FlyWheel Demo: 45min w/ Brian H. - VP of Sales
