What every seller should know about dead stock

As a seller, you know that every product sitting on the shelf without movement can be an issue. You hope it’s not dead stock—a silent profit killer—lurking in your inventory.

If it is dead stock, you should know that it can be avoided and managed. And by learning how to identify, reduce, and eliminate dead stock, you can help your business stay competitive and boost sales performance.

In this guide, you’ll learn:

• What dead stock is and how it affects your business
• Effective strategies to avoid dead stock
• Ways to deal with existing dead stock
• Amazon tools that can help prevent and reduce dead stock

What is dead stock?

“Dead stock” refers to unsold products that have been sitting in your inventory for an extended period and are unlikely to sell without intervention. It can include products that are outdated, damaged, or simply not in demand. It can sometimes also be referred to as “dead inventory,” “excess stock,” “excess inventory,” “obsolete stock,” or “obsolete inventory.”

Dead stock vs. slow-moving inventory

It can be helpful to distinguish dead stock from slow-moving inventory. For example, dead stock is inventory that has stopped selling entirely. In contrast, slow-moving inventory consists of products that still sell, but at a slower pace.

How you deal with dead stock is also different from how you handle slow-moving stock. Dead stock needs proactive measures like organizing clearance sales or making donations to free up space and capital. Slow-moving products might only need a price change or marketing strategies to boost sales velocity.

Why is dead stock bad?

Dead stock is bad because it can lead to financial loss, increased storage costs, opportunity costs, and risk of damage or becoming outdated.

• Financial loss: You only make back your investment in inventory when you sell products. This means unsold products result in missed revenue.
• Increased storage costs: Keeping dead stock comes with costs for storage, labor, and insurance, which can tie up business capital.
• Opportunity costs: Money tied up in dead stock could have been invested in more profitable inventory.
• Risk of damage or becoming outdated: Unsold products can go bad or become outdated, which only makes their value drop more.

Benefits of managing dead stock

With effective inventory management strategies, you can turn this hidden profit killer into an opportunity for growth. Here are a few benefits of managing dead stock:

• Reduce financial losses: Effective management strategies, like clearance sales or donations, can help minimize financial losses due to dead stock.
• Boost sales performance: Identifying and addressing the root causes of dead stock can help you optimize your inventory and boost overall sales performance.
• Enhance cash flow: By freeing up capital tied up in dead stock, you can help increase cash flow and reinvest it in more profitable inventory.
• Gain a competitive advantage: Proactively managing dead stock can help give your business a competitive edge by freeing up resources to invest in new products or improving existing ones.

What causes dead stock?

Dead stock can happen for various reasons, like overordering, lack of demand, poor market research, and product quality issues.

• Overordering or overproduction: Expecting more demand than what actually sells can result in extra inventory.
• Poor inventory management: Poor tracking and demand forecasting can lead to piling up on products that aren’t selling.
• Changing trends and seasonality: Products that were once popular may fall out of favor, especially seasonal products.
• Product quality issues: Defective or unsatisfactory products may fail to attract customers, leading to unsold inventory.

How to avoid dead stock

Here are three inventory-management strategies and seven tips that can help prevent dead stock.

3 inventory-management strategies that can help avoid dead stock

1. Just-in-time (JIT) inventory management: This strategy involves ordering products shortly before you need them, minimizing storage costs. It can help reduce the risk of dead stock and ensure you have fresh products available.
2. First-in, first-out (FIFO): This strategy ensures that older inventory is sold before newer stock. It can help prevent inventory aging and reduce the risk of becoming obsolete.
3. Economic order quantity (EOQ): This strategy determines the best order quantity that cuts down on total inventory costs, including holding and ordering costs. It balances ordering frequency with storage costs, helping maintain ideal stock levels without overcommitting resources.

7 additional tips that can help avoid dead stock

1. Conduct market research: Before ordering products, spend some time researching current trends. Look at what’s popular and what customers are buying. And check out competitor listings and read customer reviews to gauge interest.
2. Test new products with small batches: When introducing a new product, start with a small batch. This approach can help minimize risk and test the waters before committing to a larger order.
3. Monitor your sales: Watch your sales data to understand which products are moving and which are not. Use tools and reports to track these trends regularly. They can help you make informed decisions about reordering or discontinuing products.
4. Regularly review inventory: Make it a habit to review your inventory regularly to identify slow-moving or non-selling products. Doing so will help you identify potential dead stock and take necessary action sooner.
5. Set up alerts: Use inventory management tools to set up alerts for low stock and overstock situations. This proactive approach can help you react quickly, ensuring you only order what you need when you need it.
6. Adjust inventory levels: Adjust your inventory based on your research, sales trends, and seasonal periods. And avoid overstocking by ordering smaller quantities more frequently. These adjustments can help reduce the risk of dead stock and maintain a healthy cash flow.
7. Stay flexible and adapt: The market can change quickly, so stay flexible and ready to adapt your strategy as needed. Being open to change can help you react to shifts in demand and avoid accumulating dead stock.

7 ways to deal with existing dead stock

When you can’t avoid dead stock, consider these seven ways to deal with it:

1. Bundle products: Pair less popular products with more popular ones in attractive bundles. This strategy increases the perceived value and encourages customers to buy less popular products that complement bestsellers.
2. Try micro promotions: Instead of waiting for big sales, run smaller promotions like offering free shipping or a small discount on dead stock. This strategy can entice customers without significantly affecting your profit margins.
3. Hold bigger discount sales: Organize clearance sales to attract bargain hunters. Reducing prices can help you move unsold stock quickly, freeing up space and cash flow.
4. Explore alternative sales channels: Expand to other sales channels or social media. This approach could help you reach new customers and move inventory that’s not selling from your current site.
5. Return stock to suppliers: If possible, check if you can return unsold stock to your suppliers. This approach might not always be an option, but it’s worth exploring to reduce your inventory.
6. Offer donations: Consider donating unsellable products to charities. Not only does this method clear out space, but it could also offer tax benefits and help boost your brand’s image.
7. Discard dead stock: Sometimes you have no choice but to dispose of dead stock for various reasons. While this option isn’t ideal, getting rid of unsellable inventory can free up space and prevent further losses. And when possible, consider environmentally friendly disposal methods, like recycling or repurposing.

Amazon tools that can help with dead stock

Sellers have two primary fulfillment options when it comes to selling in the Amazon store: Fulfilled by Merchant and Fulfillment by Amazon (FBA). Fulfilled by Merchant means you store and ship products yourself, while FBA outsources fulfillment to Amazon. Each of these options provides you with access to Amazon tools that can help you manage your inventory effectively.

Fulfilled by Merchant

Fulfilled by Merchant comes with a suite of tools that can help you fulfill orders directly. They can help you manage your inventory and delivery processes with precision and efficiency. They can also help keep your stock levels in sync and make order processing smoother across different sales channels.

Manage All Inventory dashboard

The Manage All Inventory dashboard in Seller Central is a tool that helps you to search, view, and update listings, using filters like SKU, product name, and ASIN. By applying filters and sorting options, you can pinpoint which products aren’t selling as expected and take corrective actions, like adjusting prices or quantities.

Multi-Location Inventory

Multi-Location Inventory lets you sync your inventory across different locations in real time, ensuring that stock levels are always up-to-date. By making more accurate delivery promises based on the nearest inventory location, you can delight customerw and boost the chances of selling older stock faster.

Veeqo

Veeqo is free multi-channel shipping software by Amazon. It allows you to sync your inventory across multiple ecommerce channels so that your stock levels are consistent and up-to-date everywhere you sell. This real-time syncing helps prevent overstocking and reduces the risk of dead stock by keeping you informed with ongoing stock takes and low-stock alerts.

Veeqo also provides valuable analytics and forecasting tools to help you understand what products are selling and which aren’t, enabling smarter purchasing decisions. By centralizing your inventory management and offering insights into sales data, Veeqo makes it easier to identify slow-moving products and take proactive steps to minimize dead stock.

Fulfillment by Amazon (FBA)

With FBA, you can access inventory-management tools that can help you keep track of how long your products have been in Amazon’s fulfillment network and take action before they become dead stock.

FBA dashboard and IPI score

The FBA dashboard and your Inventory Performance Index (IPI) score can offer valuable insights for managing stock.

The FBA dashboard can give you a clear view of your inventory, showing you key metrics like sales, shipments, and even opportunities to improve your stock management. The IPI score measures how well you’re managing your inventory. It considers factors like excess inventory, sell-through rates, and stranded stock, providing actionable insights to improve efficiency.

FBA Inventory dashboard

The FBA Inventory dashboard offers a comprehensive view of your inventory, helping you keep track of what products you have and their condition. With features like recommended actions, you can quickly see what steps to take for products that aren’t selling well, like reducing prices or creating promotions. The dashboard also lets you filter and analyze data, so you can identify excess or aged inventory and make informed decisions to reduce it.

FBA Donations program and inventory removal

The FBA Donations program and inventory removal services are good ways to handle existing dead stock. These options can make it easy to keep your inventory fresh and minimize losses from products that don’t sell as expected.

The FBA Donations program allows you to donate unsold products to US charities, helping people in need while freeing up space in your inventory. It’s a positive way to give back and manage excess stock.

Similarly, you can use inventory removal options to either return products to yourself or have Amazon dispose of them, ensuring you’re not paying for storage on products that aren’t selling. You can also set up automatic inventory removal. This option handles the return or disposal of unsold products automatically based on the criteria you set, keeping your inventory nice and tidy.

Avoid and manage dead stock effectively with Amazon FBA

Sometimes you can’t avoid dead stock. And unfortunately, it can tie up your resources, lead to increased storage costs, and reduce your cash flow. In short, it can slow down your business.

But with programs and tools from Amazon, you can be equipped with the insights you need to prevent and manage dead stock. With FBA, tools like the FBA Inventory dashboard and IPI score can help you track and manage your inventory efficiently. And with donation programs and removal services, FBA provides the strategies and tools you need to move dead stock and keep your operations running smoothly.

Take advantage of FBA to help optimize your inventory and grow your business.

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