8 minutes read

Six effective ways retail businesses get rid of their dead stock

Key takeaways:

  • A typical retailer’s inventory can be made up of up to 40% dead stock
  • Don’t try to make money on dead inventory, just try to cut your losses
  • Make dead stock your priority. Challenge yourself to get rid of it as fast as possible
dead stock

Nothing holds back a retailer’s business like dead stock. Slow movers in your inventory are bad in so many ways. They hold your inventory space and your cash flow at the same time. More importantly, they hold you back from real growth. Our data shows that on average dead stock makes up around 40% of your inventory, which makes it a major obstacle to  your business success.

The fastest way to get rid of your dead stock is to change how you think about it. You have to stop believing that dead stock will eventually make you profits down the line. It won’t. The sooner you get over that, the less expensive this whole process will be.

The first question you need to ask yourself with dead stock is how to get rid of it with as little collateral damage as possible. Then you are on the right track to solving your issues.

1. Identifying dead stock in your inventory

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The method of identifying toxic inventory is quite straightforward. It’s called an ABC analysis, and it’s a simple tool used by small retail operators and large global retail megacorporations alike. It divides your stock into three simple categories by sorting all products by profit and making thresholds on that list.

There are several ways you can do this. This website contains a full reading on product segmentation, if you’re interested in the details. Suffice it to say here that product segmentation is the process which results in dividing your inventory into: 

  • Winners – The cash cows, the best-selling stuff that makes you the most money
  • Chasers – The products that make your retail business large and popular with your customers
  • Losers – Your dead stock, the stuff nobody wants to buy

Once you have finished conducting your analysis, you know what inventory is more or less trash. The next step is to dump it. There are several ways to do this, but to be true to the headline of this article, let’s focus on the most effective ones.

2. Asking suppliers for a buyback

Contacting your supplier with a request for a buyback is simple and fast. The price they offer (if they offer) may not be music to your ears, but remember, this is not a money-making game, this is a damage control game. Keep this in mind when negotiating. 

Don’t be afraid to ask for a buyback; you might be pleasantly surprised. There are several reasons why your suppliers might honor your request. First, they’re your partners, and they want to maintain a positive long-term relationship. Also, your supplier might know someone else who needs those products for sale. What might be dead stock for you could be a cash cow for other businesses elsewhere.

Your supplier might be happy, all things considered, that you made your buyback request, because they might find themselves in a situation where they need your items, because of production issues or for some other reason. It has happened before, many times.

3. Zero margin price promotions

Put your dead stock on sale at a massively discounted rate. Sacrifice all your margins in a campaign to get rid of your slow movers. Again, don’t worry about the loss. Instead, focus on all the other benefits of such a move. 

Your huge sell-off campaign might eventually lead to more traffic to your store or website, and it could actually attract customers to buy higher-profit goods. If that doesn’t happen, it could at least bring you new customers who learn about your business for the first time through this massive sell-off.

Also, use this opportunity to learn how your customers react to price discounts in general. Gather valuable behavioral data throughout the campaign, and use it in the future. You are losing money, so you might as well enjoy at least some benefits from it.

Identifying dead stock and ‘owning’ the process of getting rid of it is sad and stressful. We know. But think of it as improving your retail karma 🙂 After all, you’re just ‘cleaning out the garage’ of your business from a bunch of old stuff nobody wanted. It feels good to have a clean business when you’re done with the process. Think about that.

4. Sell your dead stock via bigger sellers

If the odds of selling your goods look bad, that doesn’t necessarily mean that someone else couldn’t sell them. Maybe your goods just don’t sell well within the scope of your business. Your customers are just not the right target audience, maybe. So instead of attempting to attract new customers to your dead stock, you can do it the other way around. Take your goods to customers elsewhere.

Major retail platforms are becoming more and more popular as marketplaces for other e-shops. We have seen this phenomenon happening around the world, and sure enough, there might be a big player in your region offering similar benefits, often on their website. To be clear, we don’t recommend building your business around these external marketplaces. It’s a zero sum game, and it will only increase your pain and agony – and losses – even more.  

But when it comes to deadstock, well, that’s a completely different subject. Remember, don’t try to make money on it, just try to lose as little as possible. With this perspective, selling your goods on external websites is worthwhile. 

Such tactics are popular, and it is no wonder that overstock.com has seen a 500% increase in share price in the last year or so. Dead stock is everywhere. It’s the low end of modern society, so don’t be hard on yourself when you try to get rid of it with a loss. You are not alone.

5. Make a bundle offer to get rid of your dead stock

Another way to sell out your dead inventory is to make a bundle offer with one of your popular products, as in “Buy these two and get a discount”. There are two ways to do this. First, you can make the bundles yourself, but then you are relying on your customers’ taste. The bundle itself might not be as popular as you thought it would be.

A better way to do it is to add some code to your e-commerce website and create bundle offers at checkout. It is only when the customer decides to buy something that you make that last-ditch bundle offer with a nice discount. This more electronic way is much more efficient and has obvious positive effects on customer satisfaction as well.

6. Any way to get rid of your dead inventory is a good way

When you started your business, you knew it wouldn’t be easy. You became an independent retail owner because you were brave enough to face the challenges that come with it. You knew that whatever came your way, you would find a solution. This is one of those challenges, a low point maybe, but something you will have to do eventually. Where there’s a will to get rid of your dead inventory, there’s a way. You just need to stay focused, determined, and open-minded.

Search for creative ways to clear your warehouse and make space for better-selling products. Set your mind on a mission that everything must go no matter what, and don’t be afraid to experiment. Try, even fail, but fail smart, then try again and succeed. Don’t let this dead stock inventory stand in the way of your success.

Getting rid of your dead inventory is never easy, but first things first. You need to understand what your dead inventory is. Inventoro is a simple online tool to help you identify your dead stock in a couple of clicks. On a simple one page design, you’ll be able to filter your dead inventory by warehouse, category, or even by single SKU. Try Inventoro for free and see for yourself. 

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