Dead stock is the inventory stock that sits forgotten in the back shelves and far recesses of your warehouse. It is not likely to ever move from where it rests and slowly drains valuable resources.
Every bit of warehouse space dedicated to dead stock is a lost opportunity, as you can’t keep more quantities of your top selling inventory stock items. Clearing dead stock can free up that space to increase revenue potential.
Ridding yourself of dead stock
There are a variety of ways to rid yourself of dead stock, and retailers can get creative with clearing stock. Profit margins might take a hit, but it’s costing you to hold onto dead stock and at the very least you might recoup some of the purchase price paid.
Bundle dead stock with more current items, selling the combination at a discount. You can move a high volume of items quickly and get that dead stock out of the warehouse. Retailers in Japan have come up with a very popular lucky dip concept. Named the ‘Lucky Bag’, retailers are bundling past-season collections, sometimes with more current items, into a mystery bag that shoppers will queue to purchase.
Everyone likes free stuff, so a giveaway or a gift with purchase encourages customers to spend a little more to qualify. Not all customers will want to pay full price for an item they don’t like enough, but the perception of good value for money through gifts and discounts is a great incentive to get customers buying.
For retailers, the chances are that some of your dead stock has value to a charity or not-for-profit organisations. Donating unwanted items generates goodwill with community groups and by documenting the transaction with receipts from the charity, you may qualify to deduct the market value of the inventory from taxes after donation.
Do you have a returns policy with an option to return dead inventory stock back to your supplier? Although you are having trouble moving the stock, if it’s current enough your supplier may be able to move it on elsewhere. If this is an option, be prepared to that you may make a small loss returning dead stock back to suppliers.
Stop dead stock in its tracks
After you’ve successfully cleared out all the dead stock from your warehouse, it’s time to reduce the chance of being stuck with dead stock in the first place. To solve this problem, you need reliable inventory management software to know what products you have, where they are and those ones that aren’t moving.
Improve inventory control by consolidating inventory processes into an integrated system that accurately counts, tracks and records inventory movement in real time. Online inventory management software can help improve forecast management and inventory planning accuracy; it provides a complete picture to support strategic direction. Overall, this allows you to make inventory decisions before inventory stock becomes dead stock.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.