Causes of Dead Stock and How to Avoid it

Causes of Dead Stock

Poor Inventory Management Practices are the number one cause of dead stock piling up on your shelves however, it is important to note that any business can find themselves with storage full of unwanted goods.

It isn’t always possible to predict buying and selling trends, and several economic factors can also take a toll. That is completely unavoidable. Let’s take a look at five most common reasons why companies end up with dead stock and figure out how to avoid those.

  1. Inaccurate Forecasting: Forecasting isn’t always perfect. Unrealistic expectations, flawed data and other such things, sometimes even beyond the control of the company, factor in. It happens to all retailers every now and then.

    How to Avoid? There are a variety of strategies that can be used including analyzing order history to get a better idea of demand, incorporating data from economic indicators for better forecasting and tracking competitors’ activities. You can even employ certain inventory management software that utilize machine learning for better predictions.

  2. Inconsistent Ordering Practices: You can get stuck with dead stock if you buy items at the wrong time or order too many at once.

    How to Avoid? One way to avoid inconsistency is to use any of the 30+ inventory management KPIs that are relevant to your business to ensure that your company orders the right number to replenish inventory and at the right time. Important KPIs include inventory turnover ratio, and reorder paint formula.

  3. Excessive SKU Count: One of the hardest challenges for any business is finding the balance between too many and too few product offerings. Stocking a wide variety may seem like a good idea but the more SKUs you offer, the more you have to manage and the more you have to sell.

    How to Avoid? To grow you must have a larger variety but there are ways to manage that properly. Routinely analyze your SKUs to identify which one perform the best and which are under-performing. The sooner you spot slow-moving products, the sooner you’d be able to spare yourself the cost and trouble of ending up with dead stock.

  4. Poor Sales: A product may not sell for any number of reasons; high cost, low demand, inferior quality, out of style etc.

    How to Avoid? The first step is to figure out why the product isn’t selling. You may need to become a better listener as far as your customers are concerned, perhaps adjust prices or revise your inventory management strategies.

  5. Lack of Customer Interest: It’s simple. If your customers aren’t interested in what you’re selling, there’s a high chance you’ll end up with dead stock.

    How to Avoid? Investing in market research and talking closely to your customers can help you figure out what their desires are. Listen, stock accordingly and the chances of you ending up with dead stock become lower.

We Buy Dead Stock

We have 15 years of experience in buying dead stock off of companies and exporting it to developing countries around the world all the while maintaining complete confidentiality and brand privacy. We are based out of Dubai with offices in Germany in Pakistan. If you’re a company struggling with dead stock, get in touch or fill out this form for a free valuation.