What Is Dead Stock And How To Get Rid Of It.
Did you know that, on average 20% to 30% of a companies inventory is dead stock inventory? But what exactly is dead stock inventory and why should my business be mindful of it? 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. There are closeout wholesalers and inventory liquidators that can help you with this problem. 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. Dead stock inventory should be disposed of quickly as it is not generating revenue, which results in unnecessary storage costs. To help your business sell excess inventory, we will examine the main causes of dead stock inventory and some ways you can go about solving this issue. A simple online search for companies that buy overstock and inventory liquidators will turn up businesses you can turn to for help.
To solve the problems of dead stock inventory, there are a number of short and long-term actions your business can take. In the short term; you can use various tactics to liquidate your surplus inventory and overstock merchandise or dead stock inventory. In the long term, you can implement strategies to prevent dead stock inventory from occurring. Let us first take a look at the short-term tactics before moving on to the long-term strategies. Keep in mind in order to sell excess inventory you must first identify the product or products that are slow moving inventory taking up warehouse space.
Identifying the root causes of dead stock inventory is the most important step to fixing it in the long term. Some common root causes include your product coming to an end of its product life cycle, changing customers trends, and the arrival of new competitors. Once you have identified the root cause, you can take steps to begin making changes to your purchasing and sales strategies to prevent future dead stock inventory. Your closeout business should streamline your purchasing process so your business only manufactures or orders what it needs. In the meantime, you can find companies to buy overstock inventory and slow moving products through phone calls or an online search. You can also create 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 orders to prevent redundant orders and inventory overstock from occurring and ensuring accountability. Closeout wholesalers and closeout distributors are always a good option for getting rid of too much inventory, but you will have to be prepared to take a loss and sell closeouts for less than cost.. Inventory liquidators will buy inventory in bulk and handle your entire liquidation stock for sale, but they will make you an offer below landed cost. This is because they have to make a profit on any excess inventory buys they make. Closeout buyers generally work on 25% to 35% margins, and this cuts into your selling price.
Another major cause for the accumulation of dead stock is improper or insufficient marketing and promotion of products. This eventually leads to low sales, and you do not sell the predicted amount. It is imperative to promote the product about the inventory you have. Your marketing research must match the product amount and quantity. If you have a low value and higher dose, you must be marketed on almost all platforms and significant target groups. If you sell only a useful product for a small target audience, you must stock the quantity accordingly. Any imbalance leads to having too much inventory and the need to have a bulk liquidation sale to overstock inventory buyers or closeout wholesalers who can buy excess inventory in large quantities. These companies specialize in excess inventory sales and liquidation stock for sale.
It happens with everyone! At times, your prediction can go severely wrong. And that is when you need to look back at your sales history and see any changes. Also, check for any seasonal changes. And most importantly, know the market trend changes every second! So, you need something more than just predictions. Also, listen to your intuition or gut. Deep down, know what your gut says. If you want to get rid of dead stock, then you first need to know how much overstock in excess you have. Today, cloud-based inventory management systems have made selling closeouts easy, allowing them to integrate all their inventory from multiple locations into a single system, offering inventory levels in real-time. This way, implementing inventory management systems into your business will offer easy-to-use tools to sort out exactly how much of your current inventory is dead stock. Once this is identified, you can begin the closeout process by reaching out to companies that buy liquidation inventory and surplus inventory. When approaching companies to buy overstock you will have to provide them with item descriptions, quantities and liquidation costs. This will start the closeout process in motion to sell your inventory.
Also, several inventory management software systems come with a specially inbuilt dead stock management system. Knowing your dead stock, you can make a list of those stock items in descending value. Targeting higher value stock items first allows you to cover the costs involved with dead stock in the shortest time. Apart from that, it is always advisable to segregate inventory concerning the frequency of movement and stock them accordingly. It is best to sell excess inventory before it becomes a big problem and takes up too much warehouse space. There are too many businesses forced to close 3PL warehouses because storage is too expensive. The same is true for online sellers with Amazon FBA long term storage fees being too costly. Warehouse liquidation sales are the fastest way to get rid of excess inventory and contribute to your bottom line before it is too late and you are forced to liquidate everything.
If some of your items haven’t been selling well, it may be time to give them a hefty discount for blowout sale. We recommend setting up a separate “clearance” or “final sale” section for these slow moving items, and discounting them heavily – 70% or more may be a good choice, depending on how much you paid for them. These kinds of deep discounts may be just what you need to build buzz among customers and sell more of these products. Overstock closeouts become costly when they stop selling and sit idle in the warehouse taking up valuable space. Closeout toys, sporting goods, and overstock housewares should always be sold to empty the warehouse for more profitable revenue streams. Even if you don’t make money or take a small loss on the sale, you can get rid of your unwanted items and make room for more stock. Also, make sure you change your return policy to disallow returns for clearance and “final sale” items. Doing so will help you avoid logistical difficulties, particularly if you will be discontinuing the item once it’s sold out. This way you get rid of dead stock once and for all.
If none of the other options we mentioned worked, or you just feel like doing some good, you can donate your unwanted items. For example, if you run an online clothing shop, you could take all of the items that are not selling well, and donate them to a local charity. Sometimes the best way to get rid of obsolete inventory is to give it away free, as long as the “buyer” pays shipping costs. Liquidation stock for sale is an ongoing problem for any business so it is best to have a plan for your closeout process and liquidation sale.
If you record this donation, you may be able to get a tax break. You can also use this as an opportunity to get some good PR for your business – you can write some posts on your blog and social media about your donation, and how much good it will do in the local community. You might even want to contact your local news station to run a story. A donation is a much better option than simply throwing your items away. You’ll build goodwill among your customers, get a tax break, and know that your dead stock items are being put to good use where they will be sold as overstock inventory or closeouts.
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. These long terms storage fees are too expensive to incur and it is best to liquidate the entire FBA stock. 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 audits and throws off the curve on your sales data. In other words, dead stock and liquidation inventory costs much more than the price of acquisition. Befitting its name, it’s a real tragedy and obsolete inventory should always be disposed of and liquidated at any cost.
Merchandise USA is a wholesale closeout buyer specializing in closeout home goods, closeout housewares, overstock lawn and garden, sporting goods and more excess inventory. We are liquidation buyers for all categories of products no longer selling that need to be disposed of and we buy Amazon FBA liquidation stock due to excessive long term storage fees.
