3 Key Causes Of Dead Stock Inventory That Costs Your Business

3 Key Causes Of Dead Stock Inventory That Costs Your Business

Deadstock is the items that have been or cannot be sold.  The inventory that has never been worn, used or sold for a long period of time.  The business that doesn’t use a good inventory management system can end up having dead stock inventory.  It can cost your business money, not only in the inability to recoup the investment of inventory itself, but also space in the warehouse. Here are the main some reasons why deadstock inventory management is important.

1. Low demand

This kind of dead stock inventory is the hardest to deal with.  You may have bought it expecting that it to sell, but unfortunately, the customers didn’t like it.  Maybe because the product is not so popular, rendered obsolete by the new products or the product’s appeal was not strong, to begin with.  However, the best thing you can do in this situation is to minimize the losses by discounting the price and moving merchandise out as fast as possible.

2. Defective product

These products have something wrong whether it is poor design or engineering. Defective products are not so troubling type of dead stock inventory as these products can be fixed or replaced. You can always contact the manufacturer and also request a return authorization for the merchandise where there are defective products. The vendor will probably issue a credit for the inventory stock.

3. Not accepting reality

Discounting should move the dead stock but if a retailer doesn’t act, the items will have dust, costing you money. The retailers can hold on to dead stock inventory expecting that it will sell.  It may be because they think that the retailers have the merchandise is worth more than what the consumers are willing to pay.

If the price is kept high under the assumption that the customers will change the mind, then it can lead to products not being sold at all. He might base the actions on the costs they paid to procure the merchandise and profit projections that led to stock the items.

For instance, a high-end computer has been on the market for some time will face competitor devices and then it will become outdated.  The retailer may try to stick with the original price and think that the customers will pay the amount even when options are available. This is where the dead stock inventory takes up space in your warehouse or shelves which could also be used to fill items that are in greater demand.  So, it’s good to free up space by discounting the dead stock to focus on profitable products.

Using good inventory management system can alert you to problems that can help you to identify dead stock inventory. Try to order small quantities when ordering some new items until you know how they perform even if the price cost is higher. First, learn what the customers want as research like this is really valuable. At Bustleboard, we always try to understand the requirement at first. You can place an ad with us or request a quote. We will take care of your dead stock inventory.

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