Deadstock in Business

3 min read

Deadstock in Business

With every change of season, there will be an increasing amount of products in your store that will not sell. Deadstock refers to that merchandise that does not sell and typically will remain to stay on your shelves in the future too. If a company does not have proper inventory control or management, it is likely to accumulate obsolete inventory or goods that will not reach the customers. These goods take up valuable space and money which could be utilized elsewhere and create financial burdens to the retailers.

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Deadstock in Business


Is Deadstock Bad for Your Business?

Is Deadstock Bad for Your Business?

Deadstock comes along with carrying, storing and inventory holding costs in the form of rent, utilities, safety and equipment. You face an opportunity cost between the space to store these products and using this space to stock up items that will sell more.

Deadstock does not bog your business down but you will have to spend more money than anticipated while storing them. You no longer get to generate a profit on this merchandise because there is no demand for these products. You need more staff to maintain these excess inventories and that leads to increased labor expenses.


What Causes Deadstock?

Deadstock can be caused by poor planning and failed marketing. But what exactly causes the merchandise in your store to catch dust?

Faulty Products:

Faulty Products:

If your product is flawed due to poor engineering or an unattractive design, it is not going to sell. If you own a clothing store that has dresses marked as a size 10 but is actually a size 6, the customers will get annoyed and leave the product behind. These flaws can be easily rectified and these items are the least worrisome deadstock. You can simply change the labels and replace them with the correct sizes.

Poor Demand:

Your customers are not entitled to like whatever items you produce. These types of deadstock are difficult to deal with as you expect them to generate sales but they do not. You may have invested in this product too late and it may no longer be in trend or demand. The media may have rendered it as a useless purchase. If the product no longer appeals to your customers, you should quickly put it out of sight so it does not overshadow your other goods.

Uninformed Staff:

Uninformed Staff:

You need to ensure all your staff is fully briefed about the product in hand. If they cannot communicate the need for your product to your consumers, then the customer will be wary of it from the get-go. Why should they purchase it when the sellers themselves do not understand it? You cannot afford poor communication that might drive away your sales. Make sure your sales teams know exactly why your product is a relevant one!

Selling Doubles:

Selling Doubles:

You may accidentally create and invest in a product that is similar to one of your others. And if you brand the two differently despite having the same characteristics, this will cause confusion amongst your customers who will then shy away from buying either one of the two. You must always be aware of your existing products and get input from your personnel before sending your idea into production. But if this scenario arises, you need to educate your staff on the key differences so they can sell it to your customers as two individual products.


How Can You Get Rid of Deadstock?

While deadstock may dampen your sales, you may still recover some costs from them. These are some of the possible solutions for you to ponder over.

Revamp your inventory system:

Revamp your inventory system:

You can never forecast when the demand for these goods may rise again. An effective inventory system will give you the up to date information about the number of stocks you have and where they have been allocated.

Relocate your goods:

Relocate your goods

There is a likely chance that your goods are simply misplaced. The fall of demand for these goods may be because you are in the wrong place at the wrong time. If that takes place, you should move your goods to a location where there is a need for it. You can relocate with more accuracy if you conduct an online survey first.

Create hype:

Create hype:

Your goods automatically sell more when you offer discounts or create an interesting bundle with other products. You can also mislead potential customers by claiming you only have a few products left indicating your product is desirable in the market. You can also host a major sales event where you can showcase all of your deadstock. Even if you do not receive the revenue you projected, you at least make space for more profitable goods. Another thing that drives your sales is free shipping. The added transport cost often redirects the customers elsewhere.

Donate:

Charities all around the world will be willing to accept your donations and stakeholders of your company pay special attention to its corporate social responsibility. Conscious customers are willing to spend their money on companies that demonstrate a strong corporate social responsibility policy. A strong brand image not only drives your sales but also attracts probable investors.


Precaution is the best remedy for deadstock. You may clear out all your unused merchandise from your storage through these methods but there is no guarantee that you will not get stuck with deadstock again. It is imperative of you to establish an updated inventory system that allows you to get proper visibility of your goods and to determine when your products are going out of trend.

The reports you get from such a system will help you make reliable forecasts and focus on the more profitable goods. You will also be able to pinpoint which goods have been taking your storage space for the longest period of time-indicating an unwanted product- and eliminate them from your inventory.

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