← The Ultimate Guide to Inventory Accuracy
How to Identify and Liquidate Dead Stock
Inventory is essentially "cash" sitting on a shelf. When that cash doesn't move, it begins to rot, not physically, but financially. Dead stock refers to items that haven't sold in a significant period (usually 6–12 months) and have no future prospect of selling. Every day dead stock sits in your warehouse, it costs you money in "holding costs," insurance, and lost opportunity for newer, faster-moving products.
The "Dust Test" vs. Data Reports
While you can often spot dead stock by the literal dust on the boxes, a professional inventory count provides the data necessary to take action. By comparing your physical count against your sales velocity reports, you can generate a "Slow-Moving and Obsolete Inventory" (SLOB) report. This report is the first step in reclaiming your warehouse space.
The Hidden Costs of Keeping Dead Stock
Many business owners hesitate to get rid of dead stock because they don't want to "take a loss." However, keeping it is often more expensive. You are paying for:
- Real Estate: That pallet of 2022 calendars is taking up a spot that could hold your best-selling product.
- Labor: Your team has to move, count, and clean around dead stock during every audit.
- Depreciation: Especially in tech or fashion, the longer you wait, the less the item is worth.
Strategies for Liquidation
Once your professional audit has identified the dead stock, you have several options:
- Product Bundling: Attach a slow-moving item to a popular item as a "free gift" or discount.
- Flash Sales: Run a "clearance" event specifically to move obsolete SKUs.
- Donations: Many businesses can receive a tax write-off by donating dead stock to non-profits.
- Inventory Buy-Backs: Some vendors will buy back unsold stock at a fraction of the cost.
Preventing Future Dead Stock
The best way to handle dead stock is to never buy it in the first place. Regular, accurate inventory counts allow you to see the "tapering off" of a product's popularity in real-time. By spotting the trend early, you can stop reordering before you're left with a mountain of unmovable goods.