What’s worse than piled up dead stock? — It’s the products gathering dust because they’re not selling. Dead inventory is a cash flow killer that wastes money, space, and employee effort.
But don’t worry, there are ways out. There are smart strategies you can use to minimize dead stock build-up and keep your inventories fresh and profitable. All you need is some planning, system optimization, and a little creativity.
Let’s take a look at some proven ways to move stale merchandise out and maintain a lean, agile stock position.
Liquidating the dead stock
The first step could be figuring out how to offload those non-performing items as soon as possible. Because the longer they sit, the more value is lost. Here are some liquidation options:
- Hold a “Dirt Cheap Sale”
Set aside some space or open an online “dirt cheap sale” promoting all your solvent sellers at deep discounts. You can use creative signage like “Prices like never before” to draw customers in. It’s a great way to recover at least some revenue.
- Bundle up with fast movers.
Combine the dead stock items into bundles or kits with your faster movers. The idea is to make the stale items more appealing as value-added components. You can absorb more of the costs into anchor products.
- Ship it out
There are entire businesses that deal exclusively in surplus merchandise for export markets. See if you can find a liquidator willing to take your dead weight off your hands for a reasonable price.
- Donate it
If all else fails, you can potentially write off donated inventory as a tax deduction. Just document the lots carefully.
Once the deadweight is gone, it’s time to streamline your stock management process going forward.
Maintaining a fresh stock flow
To avoid dead inventory in the future, things should keep moving. In order to do that, you must align stock levels closely with demand. Here are some best practices to do that:
- Use stock forecasting software
A stock forecasting software analyzes past sales data, monitors current inventory positions, and builds prediction models to automate reordering. The software also takes care of seasonality, promotions, and other demand fluctuations.
- Regular audits
Conduct regular audit cycles to identify any creeping deadwood. Items not cycling through quickly get tagged for promotion or liquidation before piling up.
- Negotiate with suppliers
See if you can work out vendor agreements allowing more frequent/smaller restock shipments to minimize overages. Or go with consignment/dropshipping models where you don’t own the stock until it sells.
- Incentivize clearance
Implement a regimented product lifecycle where aging inventory gets cycled through progressive discounts until sold.
- Get creative
Consider offbeat ways to repackage, remarket, or even repurpose unsold goods. For instance, a clothing retailer could partner with a textile recycler for outdated fashion. With some proactive measures and outside-the-box thinking, you can minimize – if not eliminate – the scourge of dead stock dragging down your operation.
The ripple effect of dead stock
If you often face difficulties with dead stock, don’t underestimate its cascading impacts. That immobile stock affects multiple aspects of your business, such as:
- Eating up the cash flow
All that capital tied up in dead stock can’t be reinvested in new, productive inventory. You lose the ability to quickly pivot into hot sellers and trends.
- High holding costs
Every pallet, bin, or rack consumed by dead merchandise represents storage fees, utility fees, insurance fees, etc. with no offsetting sales revenue.
- Productivity drains
Workers waste time and effort shifting, consolidating, and reorganizing around dead stock to access live inventory.
- False data and prediction
Dead SKUs distort your perpetual inventory records, leading to ordering errors, stock-outs, and unsynchronized omnichannel fulfillment. Bad data undermines your entire supply chain.
- Brand dilution
Letting obsolete, dated, or poor-quality products linger on your selling floors degrades your brand’s perception of freshness and curation.
The negative impacts just multiply the longer those dead Stock Keeping Units (SKUs) stick around. Which is why a rigorous regimen for purging stale inventories regularly is so vital.
Summary
Dead stock in your business takes up storage space, drains the cash flow, and hinders productivity. Some ways to get rid of this problem are — liquidation through clearance sales, bundling with fast-moving products, offloading to liquidators, or donating for tax deductions.
To maintain fresh stocks in the store requires you to align the inventory levels with the coming demand. You can do this by using stock forecasting software, regular audits, negotiating with suppliers and implementing clearance lifecycles.
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