Dead Stock: What Is It and How Can I Avoid It?

Dead Stock: What Is It and How Can I Avoid It?

Managing your inventory can be a challenge. Some items end up performing much better than anticipated, resulting in a shortage of that particular item. Other times you expect an item will sell out, only to have it get a lukewarm reception. Predicting what has a high likelihood of selling now and in the future can be difficult and if you don't predict accurately, you'll likely end up with dead stock.

What Is Dead Stock?

Dead stock refers to inventory that isn't as popular with your customers, which means it isn't selling. It also doesn't seem likely that it will sell in the future, leaving you with inventory that seems impossible to move. This type of inventory usually sits in a distribution warehouse or a brick-and-mortar store's stockroom. It also typically has never been sold to a customer. For this reason, returned or exchanged merchandise doesn't count as dead stock.

A popular example of these types of products are seasonal items. New Year's merchandise can't be resold outside of the season, so they become dead stock almost instantly on January 2nd. Dead inventory, or supply that is obsolete or excess, also counts as dead stock. If your business doesn't have an inventory management system or warehouse management services to handle your supply, you could end up with a lot of it.

How Does Dead Stock Affect My Business?

Dead stock can be expensive for your businesses. You lose money by holding onto merchandise you can't profit from. As a result, you're losing out on the total cost for each item of dead stock in your distribution warehouse. They also occupy the space that more profitable and faster-selling stocks could occupy.

It's also expensive to hold onto products for a long time, as you have to pay for insurance, warehouse, utilities, and more. More items on your shelves also means more work to handle the inventory. You could have to hire people to oversee your surplus stock, representing additional expenses for your inhabit.

How Do I Avoid Dead Stock?

Luckily, there are plenty of ways to avoid dead stock. One way is to upgrade your inventory management through sophisticated tools that allow you to make smarter decisions about handling your stock. Some warehouse management services offer software that alerts you when your inventory is aging, allowing you to immediately tackle the issue.

Another way to avoid dead stock is to test your ideas more thoroughly before launching them. For example, you can release a limited-edition run of a product to test its reception among your audience. Although it may be expensive at first, it will save you a lot of money in the long run—if the idea fails, then you won't have invested too much money in units you were unable to sell.

Improving your internal communications is a great way to combat growing pains and keep inventory flowing. Sometimes, a lack of constant communication in your business can lead to dead stock. For example, your ops team must proactively share any updates with your marketing team to have almost instantaneous news on any developments in your products.

Work with a Professional Delivery Company

For some businesses, the key to unlocking even more profit is to avoid dead stock or repurpose it all together, such as providing it as a gift with a purchase. A professional delivery company knows the solutions your company needs to manage your inventory and keep only the most profitable stock. As storing unwanted items in a warehouse can be expensive, working with a professional will minimize costs on items, allowing you to focus on efficiency.

Warehouse Management Services by Comet Delivery Services

Comet Delivery Services is a logistics and warehousing company that specializes in warehouse management services. We offer numerous other services, such as trucking, logistics, same-day delivery, customized routes, container freight station, and many more. If you're a business owner that needs warehousing and distribution services, our company can help you fulfill all your inventory and logistics needs. Contact us today to see what we can do for you!

Call our 24 hour hotline: 1-888-266-3833 and find out how Comet can serve you and your customers.

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