For retailers, “dead stock” is very much the horror show it sounds like. Even hard-to-sell stock is better; at least there’s still some life in it. But dead stock isn’t just unsalable; it also eats up storage fees and virtual shelf space, offering nothing in return.
In this guide, we explain everything you need to know about how to avoid dead stock or get rid of it. Let’s start by understanding the problem: what is dead stock?
What does dead stock mean?
Dead stock means any products that can’t and won’t sell. Note that dead stock is different from poor-performing stock, where sellers still have a chance to sell the product. But with dead stock, there is virtually no chance.
The most common example of dead stock are seasonal products after their season is over. Sure, you can put leftover Halloween or Valentine’s Day candy on clearance, but what about trick-or-treat bags and Valentine’s Day cards? Those holiday products during periods of zero-demand are typical dead stock.
Other examples of dead stock include defective items or goods declared hazardous after they were manufactured. Sometimes the public’s opinion on merchandise changes based on current events, like if a celebrity falls from grace. Sometimes dead stock is easy to predict, like products that must be sold before an expiration date.
Dead stock can even be more innocent, such as when Product A is too similar to a superior Product B, and it just makes sense to always buy Product B instead. Another all-to-common example is outdated and obsolete products, where there is no benefit to buying the older version, not even a lower price.
Why is dead stock so bad for my business?
Regardless of the cause, dead stock is a problem that goes beyond sales. For starters, you can’t recoup their initial cost. You already paid for the inventory, but you can’t make that money back.
To make matters worse, that unsold stock continues to cost you storage fees for however long it doesn’t sell. Fulfillment services like FBA charge per item or space, so you’re throwing away money on items that will never sell. If you manage your own warehouse, that’s still shelf space you could be using for better products, not to mention how it slows down inventory audits and throws off the curve on your sales data.
In other words, dead stock costs much more than the price of acquisition. Befitting its name, it’s a real tragedy.
How do I get rid of dead stock?
If you’re unfortunate enough to acquire dead stock, naturally you’ll want to get rid of it as soon as possible to avoid storage fees. If lowering the price doesn’t work, try these other expert tips.
Give them away for free
Giving customers gifts for free is a time-honored retail tradition for building loyalty. If an item doesn’t sell, just give it away as a “thank you” present to show that you value your customers. You can even incentivize larger purchases by offering the gift once people exceed certain order amounts. Just be aware that you can’t do this with all dead stock — it doesn’t work with items that are either useless or hated.
Try including them in a bundle
Similarly, you can combine dead stock with more successful products and sell them as a bundle or kit. Pairing dead stock with the right product can even change people’s associations with it, making it appear more valuable or desirable. Bundles and kits work best when they share a theme, so grouping together unalike items won’t have the same effect. For more advice on selling product sets, read our guide How to Market Kits to Drive Purchases.
Donate it to charity
Sometimes it’s best to just cut your losses and get rid of dead stock before it hikes up your storage fees. Rather than throwing it away, the smart alternative is to donate it to charity. Donations improve your reputation among shoppers and make your brand seem more responsible and considerate, plus they can potentially be tax write-offs depending on where you operate and which charity you give to.
Sell it to another retailer
Our final method is to sell dead stock at a dramatically reduced cost — not to consumers, but to other retailers. As you may have seen in our pocket guide to the best ecommerce models, selling goods to other retailers is quite common in product sourcing, namely the wholesale and liquidation models. Brands targeting different markets than you may have better luck unloading the goods, or maybe someone wants to use them for parts.
How can I avoid dead stock to begin with?
Of course, it’s easier to avoid dead stock than to get rid of it. Take these precautions to reduce your chances of buying items you can’t sell.
Use inventory management software
Dead stock is an inventory management issue, so implementing specialized software deals with this and other related problems. Inventory management software like ecomdash tracks your products for you, digitally and without human error, then compiles all the relevant data and analytics you need to make better business decisions.
The software can also alert you when a product’s demand is waning, so you don’t reorder too much. Furthermore, you’ll be able to better identify shopping trends and customer preferences with inventory reports, putting you in a better position when choosing which products to sell.
You can also set up alerts for time-sensitive products to change up your sales strategy before it’s too late. Moreover, you can see in no uncertain terms how much storage fees for individual items cost, so you calculate the best solutions down to a cent. As software built to solve inventory management problems, there’s plenty of solutions to choose from.
Don’t be stubborn
It may not be your fault that your products turned into dead stock, but if you see the signs and ignore them, there’s no one to blame but yourself. Often retailers will stand by their bad purchasing decisions because they don’t want to admit they were wrong, but all this does is incur storage fees for longer.
If you see a certain product under-performing, deal with it as soon as possible. Noticing a mistake and correcting it in time is just as admirable as not making a mistake in the first place.
Test before diving in
If you’re not sure how well a product will sell, you can always test the waters first. Usually, retailers will order only a small amount of a new product to test how it performs — small enough that your company can afford it if it doesn’t sell.
Occasionally, you can dropship the product from another source to test it. Dropshipping mitigates the risk for you, but still reveals how it performs on your site. If it does well, you can order stock straight from the manufacturer at any time.
If you don’t have the funds to test new products, a simple customer survey can also help you gauge interest. While they’re not as reliable as cold, hard numbers, surveys can still provide new insight and ideas you wouldn’t have discovered on your own.