Dead Stock: What It Is and How to Handle It

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.

1.      Create Bundles

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. 

Wrapping up

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.