Dead stock comprises unsold products lying in your store or warehouse for a longer-than-expected time. Unsold goods are detrimental to the business since they consume space, and increase warehouse holding costs, both of which add up to a bad investment. Recovering the amounts used to buy the dead stock requires that the items be sold otherwise, the invested sum could be lost in its entirety.
Even the high revenue-generating businesses could still end up with dead stock due to ordering inconsistencies, a sharp decline in sales due to unavoidable things such as pandemics, defective products, and so on. If, like every other business, you wish to avert dead stock issues, be sure to apply the tips below.
How to avoid Dead Stock
- Work with a business tool that can alert you when stock items remain unsold for longer than usual.
- Consider placing orders for smaller quantities for items you’re not so sure about their demand, regardless of the quantity discount offered by the supplier.
- Check-in with your customers through surveys and find out about the products they want before stocking or restocking.
- Only deal with products that are backed by solid industry research regarding their demand and durability to avert financial losses.
But what if you’re already faced with dead stock? If this is the case, here’s what to do.
How to deal with Dead Stock
- Bundle it. Lump up the dead stock with the current fast-moving items and sell them at discounted prices. This will enable you to move large volumes of the discounted dead stock alongside the fresh inventory much faster. Sure, it might eat into some of your profits but it’s best to sell the dead stock items at a discount than to have them tie down your capital indefinitely. You could also use the dead stock as giveaways – for example, consider advertising an offer of gifts for any purchase above $150. Everyone loves free things and this incentive will certainly ramp up your revenues.
- Return the items to your supplier. You’ve attempted to discount and sell off your dead stock but your customers don’t seem to be biting. It might be time to think of the unimaginable – return the stock to your supplier. And before you think this is a crazy idea, listen: your supplier is connected to other wholesalers or retailers and probably knows a few that can move those items much faster than you. It might be wise to explain everything to them and offer to sell the items back at a discount. If possible, try not to sell them below their cost to minimize losses.
- Donate the dead stock. This is your last resort as a business and you shouldn’t just view it in monetary terms. Sometimes giving away or participating in charities could prove beneficial to your brand, in the long term. People like to transact with “human” businesses and showing support to the less fortunate could portray yours as a caring company to the masses. Again, the gains from this strategy may not be realized immediately but you’ll surely feel its impact soon enough.
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