Well-organized inventory management is crucial for building a successful retail strategy. In the post-pandemic world, optimal warehouse space is necessary to meet the budget bottom line and grow profits. Often, shippers face inaccurate or inconsistent inventory management, which leads to overstocking or understocking. While understocking is a rather common issue, overstocking often results in deadstock.
Deadstock is rarely a topic of conversation in the retail industry. However, it can have equally damaging consequences for the products’ distribution. Considered an ongoing struggle for sustainable manufacturing and supply chain management, overstocking and keeping deadstock is definitely not a bonus to any company. If your business faces the challenges of an excessive product bundle, it is time to review your inventory management strategy.
What does deadstock mean?
The term “deadstock” implies extra e-commerce inventory, which means that products that are no longer sellable for various reasons are accumulating in a warehouse facility. These products are called ‘dead’ because they weren’t sold and are no longer being sold at a retail price. The more deadstock you have, the more money is spent. Apart from that, extra inventory is also expensive to store because you have to pay for the warehouse and overdue fines. Even though the deadstock contents are not sold, you still have to keep inventory control of the stored items’ quantity and condition.
What causes deadstock?
It is difficult to accurately forecast market demand. Essentially, some under and overstocking will lead the retail business. Accumulation of dead inventory is a result of systematic stock mismanagement. Therefore, carefully analyzing your current inventory management practices might give more insight into the key reason you keep accumulating deadstock.
How to get rid of deadstock?
If you already have plenty of products left on your warehouse shelves, there are a few ways to get rid of them. Firstly, it is reasonable to analyze the items’ appearance and functionality. If they’re still up-to-date and can regain certain popularity among your buyers, it’s worth selling them with a discount. Also, it is easier to sell products during holidays, so consider offering deadstock goods in terms of big sales like Black Friday.
Consider sending headstock products to your customers as gifts or add them to their main order. Organizing a trial on your online marketplace can be a win-win situation: you’ll eliminate deadstock units and simultaneously launch a customer appreciation program. According to numerous surveys, many buyers feel more devoted to retailers offering free gift purchases. In addition, this strategy significantly contributes to your brand recognition process.
Another way to dispose of excessive items is by applying for charity donations. It may not be as profitable as arranging a sale, but this is a great opportunity to expand your target audience and deliver your product to those unable to afford it. Besides, participating in charity programs can help you gain the customers’ trust and make your business attractive for future partnerships.
How to avoid deadstock issues?
The main step to prevent inventory leftovers from staying in the warehouse is reevaluating your inventory management strategy. This includes the following considerations:
- Accurate demand forecasts. A detailed analysis of your sales statistics will allow you to spot the most profitable items. This is how you know what products are worth keeping in stock at all times. Likewise, less popular items can be ordered in smaller amounts to reduce the deadstock risks. Also, get to know your audience better by gathering feedback and suggesting product rating options. It is equally beneficial to follow the latest market trends to supply highly demanded goods and constantly stay competitive.
- Setting preorders. As soon as you complete the demand prediction, you can start practicing preorders on your trade platforms. Setting preorders can give you a clearer picture of the order quantity so you don’t overstock your storage facility. Moreover, the preorder strategy will give you an interesting insight into your customers’ purchase wishlist.
- Upgrading inventory management software. Modern logistics takes advantage of a whole range of software options that helps to effectively supervise the inventory. The inventory management software will immediately notify you about product quantity changes. This is especially useful for retailers keeping their stock in warehouses since they always remain updated on their items’ volume.
Ultimately, updating your inventory management takes a long time and effort, which will certainly pay off. Keeping your stock under control will grow your profits and productivity and present your company as a sustainable market player.