What is Dead Stock & How to Manage it?

Dead stock is a major concern if you are running an eCommerce shop. In this blog, you’ll learn the definition, causes, and how to avoid dead stock.

What is Dead Stock?

Inventory that doesn’t sell or remains in the warehouse is often referred to as dead stock. With businesses that don’t implement inventory management strategies on regular basis, dead stock can remain on warehouse shelves forgotten and useless. If you are constantly dealing with excess inventory, it could be a sign that you need to look after your inventory health to clear out your dead stock and prevent it from becoming a recurring problem.

How to Avoid Dead Stock

To avoid dead stock and its associated expense, consider doing the following:

  • Use inventory management software to monitor your stock timely and remove dead stock.
  • Do the market research before buying inventory and order smaller quantities initially to know how they perform, even if the price per unit cost is higher.
  • Survey customers to learn what other products they want.

What Causes Dead Stock?

There are several reasons why you may end up with excess inventory in your business. Here, we discuss the most common.

1. Ordering inconsistencies

Ordering inconsistencies arise when you order more than required stock at once, or when you order at the wrong time. This results in overstocking, which creates a high chance of ending up with dead inventory.

2. Poor sales

There are many reasons why you may grapple with poor sales in your online store. They include:

  • You are targeting the wrong market for your product
  • Selling obsolete products that are out of season, or out of trend. For example, trying to sell winter clothes in summer or Christmas.
  • Your products cost are high
  • Your competition is more appealing with great deals and offers.

Regardless of the reason, poor sales in your business may create a dead inventory on the shelves, and you need to rethink your marketing strategies to dispose of them as soon as possible.

3. Low quality or defective products

Selling low standard items or defective products that do not meet customer expectations can be a major reason behind your excess inventory. This will inevitably create dead stock in your warehouse.

What to do with Dead stock

There are several strategies you can use to dispose of your dead inventory and recoup some of the money. Here are some better ways to get rid of your dead stock and free space for new and more profitable opportunities, other than loading it in a garbage truck!

  1. Clearance sales: Target buyers by running clearance sales on your website at great discounts to clear out all the dead stock.
  2. Bundle and Sell it:  Group low-selling products with more current, top-selling items and offer the combination at a discounted price, lower than the cost of buying each item separately.
  3. Gift with purchase: Everyone likes free gifts! Start offering your dead stock as giveaways, incentives, or gifts with purchase is a great way to clear dead stock.
  4. Selling to closeout liquidators: Liquidators retailing are those companies that will buy your dead stock in bulk and resell it in their own shops, website, or online marketplaces such as eBay or Amazon, Flipkart at low prices.
  5. Return to your supplier: You can negotiate the price with your supplier to return the excess inventory. If they are unable to offer a full refund, negotiate with them to repurchase the inventory at a discounted price.
  6. Donate it: There are so many charities that are more than willing to receive your dead stock as a donation. Making a donation is a great way to build your brand’s corporate social responsibility (CSR). You will not only have given your excess stock to a worthy cause but also created a good impression of your brand.

Tenaxx Logistics Helps eCommerce Merchants Manage Inventory

Tenaxx is your partner when it comes to eCommerce inventory management. We provide 3PL, warehousing, and eCommerce order fulfillment services throughout Canada and the US to help you manage your inventory and order fulfillment process. Contact us to get a quick quote today.