Dead Stock Inventory: How to Avoid This Business Cost

Even well-run wholesale distribution businesses can’t avoid dead stock. However, with the right inventory management tools and marketing campaigns, you can minimize dead stock, reducing the cost to your business annually.

Because dead inventory costs your business money and ties up valuable space in your warehouse, it’s critical to the success of your company to apply techniques that help you avoid this wholesale distribution pitfall.

To help, this article covers:

• What is Dead Stock or Dead Inventory?
   
• What Causes Dead Inventory?
   
• 6 Ways to Deal with Dead Inventory

What Is Dead Stock or Dead Inventory?

Dead stock refers to inventory in your warehouse that can no longer be sold. It might be perishables that are past their due date, goods that were damaged or even trendy or seasonal items that are past their point of popularity. Unfortunately, these are goods you’ve already paid for and they are costing you money every day to store them.

What Causes Dead Inventory?

Dead inventory occurs for multiple reasons. Items may pass their expiration date, rendering them unsellable. Goods can also be damaged in route to your warehouse or when items are received and stored in your warehouse. Sometimes, it’s just something you can’t avoid.

6 Ways to Avoid or Deal with Dead Inventory

1. Offer a Discount on Dead Stock

One of the easiest ways to rid your warehouse of dead stock is to offer a promotion or discount on those items. One highly-targeted way to do this is to run reporting to see which companies have purchased similar items in the past, and send them an offer or discount.

2. Bundle Dead Stock with Other Products

By bundling dead stock with other popular products, you might just be able to eliminate them altogether. For example, for trendy or seasonal items, you could bundle those with the latest and greatest trendy items to move them out of your warehouse.

3. Sell Dead Stock in Online Marketplaces

By selling products in popular online marketplaces like eBay, Amazon or Etsy, you tap into a huge, new audience that might purchase your dead stock. Because these marketplaces are more price conscious, offer them at a discount.

4. Request to Return Goods to Your Suppliers

Whether it’s damaged goods or excess stock, you may be able to return goods to their original suppliers. If you have a strong relationship with your suppliers, you might be surprised to find out what they’re willing to accept as a return. Your suppliers might know of other customers that are seeking these products out, so they may be willing to take them back. You may have to pay a restocking fee, but it will likely outweigh the cost if you continued to store them in your warehouse.

5. Use Demand Planning

One of the best ways to avoid dead inventory is to plan ahead. By looking at prior sales history and combining that with sales forecasts, you can more accurately order the inventory you need to satisfy demand. This strategy will undoubtedly help you avoid excess inventory that eventually turns into dead stock.

6. Use Inventory Management Software

Inventory management software helps you track inventory in real-time. This allows you to avoid over ordering or running out of inventory because you always know where you stand when it comes to inventory. Run a report in your inventory management software that gathers data on your oldest products and run a promotion on those items.

Conclusion

To continually fight the dead stock beast, you’ll need these short- and long-term strategies to help you reduce the amount of dead stock you carry. However, once you get the hang of it, you might find that you’re able to keep your dead inventory to a manageable minimum.

If you’d like to learn how Systum’s inventory management software can help you avoid dead inventory, fill out the form below.