Dead Stock. Death Piles. The names sound ominous. And that is for good reason.
Dead stock is the common industry name of items that don’t sell. It’s literally product that isn’t selling and is also taking up space in your warehouse and costing you money.
And when dead stock piles up and up and up with no end in sight because you don’t know what to do with it? That’s what is called a ‘death pile.’
A death pile is an accumulation of those dead stock items that get so out of control that you just don’t know what to do with. It can be enough to make even the savviest retailers throw up their hands in defeat.
Some Background on Death Piles
Shopify defines dead stock simply as inventory that doesn’t turn over, or doesn’t sell. They go on to say that for businesses not using inventory management software, dead stock can sit on warehouse shelves until it is forgotten and useless. The dreaded death pile.
Not only are you losing money by not moving product, but you’re also losing money by wasting valuable space in your warehouse. This is not a good situation to be in, especially considering the snowball effect that can result from the accumulation of more and more stock adding to the death pile.
Death Piles and Peak Season: A Perfect Storm
During peak season, death piles can add to the already excessive constraints in your warehouse. Think about it – peak season can mean that you’re offering special deals on certain merchandise. Some sellers use the season to put big discounts on slow sellers (things that can end up in the death pile anyways). Other sellers will discount their best selling items as a way to generate extra sales.
If you don’t get your death piles under control before peak season, you could potentially end up with a death pile that is harder to clean up. Without a clear inventory management strategy, this will never get accomplished. Ideally, you need to be able to formulate a plan that both cleans up dead stock as well as puts checks in place to prevent it from accumulating again.
Never To Fear. Smart Systems Are Here.
There is one surefire way to cut down on dead stock and the dreaded death piles that can result. Employ an inventory management software. And have a plan for how to implement and use it.
When evaluating which software is right for your business, the most important things to consider are integrations, ease of implementation (which helps buy-in), and of course, cost.
With integrations, it needs to work well with integrations related to accounting, marketplace and eComm, point of sale, channel management, shipping, ERP. In some ways, inventory management software becomes the hub of the entire operation since the items being sold are the centerpiece to an entire business.
It’s ideal to use a software that is easy to set up and be able to share data between the various software. This not only helps buy-in within your organization, but simply helps you gain efficiencies much more quickly.
Some software can come with sticker shock. But if you take a close look at what you can actually save in the long run, and what is at stake if you don’t, the costs begin to look much more reasonable.
It’s important to decide if you value a user-based pricing model, or an order or integration-based pricing model. Or, in some cases a mix of both. You’ll need something that works for your business right now, as well as the ability to scale to where you want to be,
Create An Implementation Roadmap
Businesses also need to create a game plan for how an IMS fits in with the rest of their operation. It’s important to think about things like how many employees will need to use it, who needs what access levels and special training, as well as what other departments it touches.
Once inventory software is implemented and helping you to manage things, you can use it to make the most out of some of the other dead stock reduction methods.
Based on real data, you’ll be able to see which products you need to order less of. You’ll also be able to more efficiently sell items to a liquidator if that’s what you choose to do.
How To Avoid Dead Stock In The First Place
As shown earlier, one of the best ways to avoid dead stock in the first place is to use a software that manages inventory.
Aside from that, there are several other creative methods that businesses can use. One is to pay close attention to industry trends and consumer trends that impact their industries.
This can be as simple as setting up Google Alerts about industries or products that are important to your bottom line. Once set up, you will get automatic alerts in your inbox about news items related to your business.
There are a multitude of other resources about consumer trends both free and paid.
One other idea is to survey your current customers (or a small subsection of your best customers) as to what items they like the most. Using a good sample group will give you insights into what matters to them. This can in turn translate into better purchasing decisions for you down the road.
Other Methods Of Removing Dead Stock
Most inventory management software offers kitting or bundling features, which can be used to unload dead stock in a few creative ways:
- You can ‘bundle’ dead stock items with other items and set the price lower than what it would cost to buy each item separately
- You can turn your dead stock into a ‘gift’ that your customers automatically get with another purchase.
If you choose to sell dead stock items to a liquidator, using an inventory management software will make that a much more painless transaction. Look at it this way, you already lost money on the dead stock, don’t lose even more by wasting your time figuring out what gets liquidated.
Many sellers have simply donated the dead stock to charity as a tax write off. Remember earlier when we talked about the importance of an inventory software that easily integrates with accounting software? Yep, this is a lesser known example of the importance of that integration.
We all know that dead stock and death piles can be daunting, but they don’t have to be. Using the right strategy, processes and software, even the biggest piles can be cleaned up.