What is Dead Stock?
Inventory that doesn’t turn over – that doesn’t sell – is often referred to as dead stock. With businesses that don’t use inventory management software, dead stock can remain on warehouse shelves forgotten and useless.
Dead stock costs businesses money. They can’t recoup the costs of unsold goods that they either manufactured themselves or purchased from another company. In addition, storing dead stock costs money and takes up valuable warehouse space that could be used to house more of a company’s top-selling products.
How to Avoid Dead Stock
To avoid dead stock and its associated expense, consider doing the following:
- Use inventory management software that can alert you to issues so they can be addressed in a timely way.
- Order smaller quantities when offering new products until you know how they perform, even if the price per unit cost is higher.
- Survey customers to learn what other products they want.
- Base new product offerings on industry and customer research rather than gut, intuition, or personal interests.
What to Do With Dead Stock
While some dead stock will need to leave storage in a garbage truck, there are ways to recoup some of the initial investment in some situations. Possibilities include:
- Selling to close out and liquidation retailers
- Donating to charity in exchange for a tax write-off
- Giving it away as a gift with purchase
- Bundling it with other products offered collectively for less than the cost of buying them individually
- For apparel, selling dead stock to consignment stores
Alternative Definition
In certain circles, dead stock has also come to mean products that are no longer available for sale. When used in that context, the phrase is usually spelled as one word: deadstock.
Sometimes, merchandise that is no longer available is coveted simply because it can’t be found in stores. In those situations, it can sometimes be sold for a premium price. Sneakers, which are often sold on brand imaging more than on shoe function, are popular “deadstock” items that can be found for sale online and identified in searches as “deadstock.” Vintage apparel is also a popular deadstock category.
In most product situations, however, dead stock refers to inventory that wasn’t sold and needs to be disposed of to make room for money-making counterparts.