It is no secret that everyone loves finding deals and saving money.  One of the best ways to find deals is to search for distressed inventory. Distressed inventory, also known as expired stock, is inventory with the potential to be sold at a normal cost has already passed, or will shortly pass. Products that have reached or will soon reach their date of expiration and outdated products are all great examples.  In fear of these items going unused, this inventory is sold at discounted prices.  Music and clothing that are no longer popular and outdated consumer electronics are a part of this category.

The idea dates back to grocery stores and the sale of their perishable goods nearing expiration.  Fruits, vegetables, breads and premade foods are commonly aggregated on the discount food rack given their limited shelf life. Instead of risking that these items expire, grocery stores heighten the probability of a sale by putting the items on a rack in which shoppers can easily locate and purchase food that will soon expire.

Traditionally distressed inventory has been sold at discounted rates – typically using a discount rack or something similar.  However, a recent trend has third parties aggregating distressed inventory and creating a marketplace for discounted products.  Many bargain shoppers find these marketplaces particularly enticing because they can buy discounted products without having to search on multiple websites.  In the past, many fashion companies including Gilt used distressed inventory to get their platform launched.  Recently, Gilt began offering their own product inventory because they did not have enough distressed inventory to scale their business.

This model was also used in the early days of Old Kings Lane Furniture.  Like Gilt, Old Kings Lane began with this model but quickly realized that their model of distributing distressed inventory wasn’t scalable, so they began producing their own products.  Distressed inventory is also used to offset costs, and Denver-based startup Havenly uses distressed inventory to provide their customers the ability to decorate their homes affordably.  “It’s a great strategy, pioneered by people like One Kings Lane, where we can access beautiful products at lower prices – furniture can be expensive, but last year’s stock is more likely within the reach of our customers” said CEO Lee Mayer.

Havenly’s co-founder and CEO Lee Mayer during our interview at Galvanize.

In the travel industry, you can find last minute all-inclusive vacation deals, cruise discounts, and even last minute deals on hotel rooms through Hoteltonight.  This smartphone application has been successful in distributing nearly expired hotel rooms by aggregating last minute deals on hotel rooms 24 hours or less in advance.  Hoteltonight raised $35.85 million in funding from US Venture Partners, Accel Partners and Battery Partners.  Since its launch in 2010, the app has been downloaded by 6 million users worldwide.

Private aviation is no stranger to this concept.  Distressed inventory is referred to in the industry as empty legs, or dead head flights.  This doesn’t mean that the jet is unsafe; it indicates the jet will be flown without passengers on board. This occurs because the jet needs to be repositioned to cater to the current customer base.   These flights are typically offered to customers at discounted fares between 10-60%.  Although this sounds great in theory, until now there has been no efficient way for charter companies to distribute empty legs on website similar to Kayak or Expedia.  The result is a substantial amount of empty leg flight -segments totaling one-third of all chartered flights.

All in all, distressed inventory creates a great way to find a great deal. Distributing this inventory is a way to recoup costs and expand customer base.  By providing discounted inventory, particularly in aviation, customers can get a taste of flying on a private jet without any upfront financial commitment.  Although historically these deals have been very tough to find, Fresh Jets is making it easier than ever.  Interested in learning more?  Check us out here.

This article was written by Johnny Sengelmann, Co-founder and COO of Fresh Jets.  Fresh jets aggregates private jet schedule and pricing information in real-time matching inventory to the travel needs or business and individuals instantly.