What is Dead Stock?

Inventory is meant to be sold. Any unsold inventory can pile up over time eating into space in your stockroom or warehouse. Let us take a luggage store as an example, you have an inventory of a boy’s handbag in your luggage store that doesn’t sell and doesn’t have a high likelihood of selling in the future. We refer to that inventory of the boy’s handbags as dead stock.

Deadstock by definition is a stock of products that are not likely to ever leave the shelves in your shop.

A common error of your retail businesses is not taking any action to obviate their stock, meaning these products still occupy space within the warehouse and slowly drain valuable finances which might be allocated towards business growth.

How software for shop management can avoid dead stock?

RHBUS shop management software has features such as demand forecasting and inventory forecasting to help find that balance. Sellers can stock accordingly by predicting product demand and certain sales. This will change in complexity counting on your business age, the capital, and your existing data, but taking the time to forecast sales will help you to streamline your inventory management and reduce costs. The shop management software can also automate process flows to avoid human error and oversight.

How to Clear Dead Stock Inventory?

Discount

Give out massive discounts keeping in mind this unwanted stock is draining resources, this sort of discount usually helps you in giving you a fresh start in terms of acquiring or getting a new set of products that are more suitable for the present market and your business and customers.

Bundle product

Bundle your product with other fast-selling products, in case of bundling products we need to make sure that the cost of the package is such that the cost of the bundle is lower than if products are purchased individually. This would help you get customer satisfaction and also help you get rid of dead stock from your inventory.

Treat Your Staff

This is one the easiest way to get rid of dead stock, you may give the dead stock to your staff as a performance bonus, festival bonus, or just as a sign of gratitude.

This would help in boosting the employee morals and employee satisfaction along with the added benefit of getting rid of dead stock.

Give it off for free to Charity

If your dead stock is such that it cannot be given in discount, bundled, given to staff due to reasons such as the product is made for an event and the event is canceled, the product degraded or damaged in storage and the refurbishing cost is high. We can give it to charity, this would help us in creating a positive brand image in the society.

Conclusion

Well, if you follow all of those tactics, will your dead stock get away completely? Nope, there’s no certain answer thereto, but the above steps can assist you to identify loopholes and keep dead stock in restraint or check. You’ll have to revisit these strategies on an endless basis and adjust them to support your business needs and market conditions.

Does Dead Stock or Slow-moving stocks affect the Business?

Dead stock or Slow-Moving Stocks are referred as stocks which are not moved or laid for long term in warehouse and over the period of time those stocks will be become obsolete and useless.

“According to the studies the well-run companies are also have anywhere from 20-30% of inventory as dead stock. These dead stocks can affect in the business profitability in long term”.

#Reasons for dead stock:

1.      Low Demand in market – When demand is less in market & stocks are more in Warehouse, the stocks will become slow-moving or dead stock.

2.      Inaccurate Forecasting of demand & supply – while purchasing the products from the vendor, know the sales trend of the product in stores. If anything is ordered excess that may become obsolete in warehouse

3.      Communication between Warehouse team & Sales team – if the company doesn’t have livestock reports with the sales team, that may cause in under the utilization of the items in warehouse.

4.      Lacking Inventory Management systems – inventory systems are very much important in a company to know the stock in hand, procurement of stocks & sales trends in the market. These 3 aspects will give the clear knowledge on the company inventory costing. These 3 things may go out of reach when there is no inventory management in an organization.

#Impact on business by dead stock:

1.      Cost of Warehouse & Space utilization: if the cost of the warehouse is increasing that means the working capital /return on investment Cash held up in non-selling inventory is what we call non-working capital. The investment should be working to bring profits which can be re-invested to buy fast-moving stock that will generate even more profit.

2.      Offers on old products – This will reduce the profit of the company by giving offers on the product. These costs are often hidden cost for the company.

3.      Opportunity Cost or Carry cost – the company is spending money on a dead inventory item & the held-up money that can’t be used to procure an item that will sell and gain profit. This will indeed make loss to company by reducing the sales by not procuring the fast-moving products.

4.      Lost sales cost of inventory – when there is high demand for product & low inventory levels in a company that will directly affect the Gross profit of the company as the products can’t be sold when there is high demand in the market.

#Liquidating the dead stock:

1.      Bundle it with other products. Combine and sell it with related products at a discount

2.      Purchase Return – By returning the stocks to the vendor will circulate the stocks to others who can make use of it.

3.      Promotions & discounts on Product- apply discounts on outdated products, combo offers with fast moving products & higher loyalty points can be given to slow moving product.

4.      Organised the stock in warehouse where staff can easily find the slow-moving product easily. So, that the items can be disposed after the certain time of doing purchase & also, by adopting the inventory management system in the organization can help making of it.