Whether you run an
online store or a brick-and-mortar store, when it comes to inventory
management, knowing how much you need in-depth analysis. Therefore, it does not
matter how well you manage the inventory; chances are you will over-order them
repeatedly. And when you have overstock items, you will be left with dead
stock. So, the next question is, what is dead stock. If you are looking
for home improvement products in Texas, visit BDSTX.
Dead stock is the
inventory that retailers and e-commerce merchants cannot sell, and there are
very chances that this stock will also have little chance of selling in the
future. Dead stock items are generally housed in a warehouse or the storeroom of
bricks and mortar store. Dead stock isn't the same as returned stock since it's
never been sold to a customer.
In some cases, it is
very easy to find the dead stock. For example, if you have a crate of rotten
apples, which you cannot sell, it is dead stock.
On the other hand, it
can be hard to find the difference between slow-moving goods and dead stock.
For instance, it may be hard to sell clothing items. And in this case, the
inventory remains unsold for a year as dead stock for accounting purposes.
Why Is Dead Stock a
Problem?
The obvious reason
that dead stock is an issue is that you lose money when you invest in inventory
you never sell. Therefore, what you spend on that inventory is wasted, and your
bottom line is impacted BDSTX, which offers wholesale liquidation in Texas, is your one-stop-shop for overstock goods.
But there are also
expenses incurred from having dead stock items taking up valuable warehouse
area and using up storage costs. It means you have less money and
literal room to invest in inventory. So ultimately, dead stock
means a loss in opportunity cost and everything else.
What Are the Causes of
Dead Stock?
1. Inaccurate
Forecasting
When it comes to
inventory management, forecasting plays a crucial part, and doing it minimizes
the likelihood of excess inventory. Unfortunately, businesses, especially new
and emerging retailers, usually forecast incorrectly. Purchasing the right
inventory amounts is impossible if you don't know the demand for your
products.
There should be level
planning to do accurate forecasting. Then, by doing the analysis, you can
compare the results of each forecast.
2. Poor Ordering
Practices
You'll be at loos if
you're not using good ordering practices, no matter how accurate your forecasts
are. For instance, if you are considering making a huge purchase of an item
that is selling like a hotcake in the market, seriously consider if the demand
will still be there when the order hits shelves to avoid overstocking.
3. Poor Sales
Even if you have made
the right forecasts and have made perfect orders, there are chances that the
product will still be able to sell due to many factors. For example, price
points and marketing play a massive role in a product's success. If your
product is thrown away in the back of the store, it's not likely to sell well,
no matter what it is.
How To Get Rid of Dead
Stock?
Although getting rid
of dead stock is not easy, here are a few tips.
Creating product bundles helps you achieve your goals. It is particularly good for slow-moving or dead stock. You can push the unwanted stock much faster by pairing your less-desirable items with fast-movers.
2. Try Heavy Promotions
When you have dead stock on the shelves, you want to get rid of them quickly. Offering a clearance sale along with heavy discounts will help make the rotation of the inventory, even when you are losing the profit margins.
3. Donate the Stock
You can donate your
dead stock if nothing of the other options works. The most prominent example of
dead stock donation is the NFL's donation after the Super Bowl.
Every retailer will
encounter dead stock at some point. However, you can utilize the data to
minimize the likelihood and have strategies ready to deploy when it does
eventually happen. For example, BDSTX, a wholesale Hardware and Tools in Texas, purchases merchandise by truck or pallet load from brands, big
retailers, and other suppliers.
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