When Does Too Much Dead Inventory Become A Problem?

warehouse closing factory shut down sell excess inventory

Dead stock inventory refers to your business's products that cannot be or have not been sold, and have been stored in the warehouse for an extended period of time. Having too much dead stock inventory is harmful to your business. It occupies valuable warehouse space that could have been used to store higher revenue-generating products. In order to sell excess inventory to closeout brokers, it can take a lot of hard work. It may seem easy to contact closeout wholesalers and simply get rid of everything. Dead stock inventory should be disposed of quickly as it is not generating revenue, which results in unnecessary storage costs. To help your business address the issue of dead stock inventory, we will examine the main causes of dead stock inventory and some ways you can go about stopping it. If you have plans to shut down a 3PL warehouse and liquidate the warehouse you should first have a good plan. Begin by doing a Google search for closeout websites, closeout brokers, liquidating inventory, buying closeouts, liquidate Amazon FBA or liquidate merchandise.

Dead stock inventory can occur as a result of miscommunication between your warehouse and management teams. Maybe you bought too much inventory and your sales team doesn’t know how to sell through it. Perhaps you lost your best customer and sales dropped of by more than 50%. Or maybe it is a simple communications problem. Your warehouse team might produce more stock then necessary if the management does not communicate the amount of inventory needed to meet customer’s demand. Whatever the case may be you can use closeout brokers and closeout wholesalers to help sell excess inventory and liquidate the warehouse. Another potential reason could if management is unaware of the existence of dead stock and therefore does not take it into account properly by reducing production or running deep-discount promotions.

One option your business can consider is to create listings on online B2B marketplaces selling excess inventory. Closeout brokers and closeout distributors often keep there eyes on this type of publication. These websites cater to thousands of companies looking to purchase products at a bargain, making them an ideal target for your dead stock inventory. Private deal sites sell closeouts at discount prices and offer their customers overstock and excess inventory extreme values. This is a great way to sell excess inventory.

Your business should streamline your purchasing process so your business only manufactures or orders what it needs. This is the number 1 way to get rid of the problem of closeouts and overstock inventory. You can start by creating better communication protocols to ensure the management and warehouse team are on the same page. Both sides should have the same information on current stock levels and the expected production needs. It is also a good practice to ensure there is a proper chain of command for senior management to approve any closeout inventory sales and excess inventory sales to prevent redundant orders from occurring and ensuring accountability. Closeout wholesalers and closeout brokers are generally available outlets for any excess inventory you are unable to sell. If you want to sell excess inventory and liquidate a warehouse, often a simple Google search will present different companies that may be able to help. You can try search terms like these: liquidate overstock, excess inventory buyers, closeouts, closeout distributors, closeout wholesalers.

Put simply, the definition of excess inventory is when supply outstrips customer demand. This results in slow-moving products with expensive holding costs. But if a business acts fast, it can prevent excess inventory from becoming dead stock. Strategies such as hosting clearance sales, product bundling, or diverting inventory to different store locations enable merchants can manage excess inventory effectively and even strengthen their bottom line. In sum, excess inventory isn’t exclusively bad – unless the business lets that stock sit idle and become obsolete. Dead stock is pervasive in retail for a simple reason; many companies don’t want to acknowledge that it’s a problem. Given the cost of buying the inventory in the first place, especially seasonal items, it can be hard to admit you’ve made the wrong call. It’s easier to hope that those products gathering dust on the shelf will be sold ‘one day’ than to change how you manage your inventory. But the cost of dead stock is far bigger than what’s being paid to your supplier.

3PL warehouse Space is at a premium when it comes to storing excess inventory, with warehousing costs currently up 5.5% in 2021 due to the escalating demand for online shopping. According to InsightQuotes’ Warehousing Cost and Pricing Survey, more than 60% of warehouse managers say they’ll be increasing their rates this year. Closeout companies and distributors with too much inventory will be paying high storage fees to store old inventory.

As a result of the COVID-19 pandemic and continuing supply chain disruption, we’ve seen closeout brokers take a more conservative approach to inventory management. Where merchants previously used a JIT (Just-in-Time) model to source inventory at very low reorder points, JIC (Just-in-Case) logistics has become the new industry standard out of necessity.

In a JIC approach, businesses deliberately keep large supplies of inventory on hand as insurance to avoid adverse circumstances, such as selling out of stock and facing difficulties in getting resupplied quickly. JIC offers retailers the advantage of maximizing sales opportunities and being much more resilient to supply chain shocks. However, this also means a much higher risk of inventory turning into dead stock.

If you’re going to keep larger quantities of SKUs, you need to have several strategies for how you’re going to keep this inventory moving. This includes marketing, storage, selling closeouts, disposing of dead stock and store displays to drive interest. Otherwise, excess inventory will quickly become dead stock.

Merchandise USA is an excess inventory buyer for closeouts of housewares, home décor and overstock inventory of sporting goods and candles. We huy all closeouts in every category. If you are shutting down a 3PL warehouse or expanding a warehouse we can help.