Know better about dead stock and overpower this issue smartly with the help of automation!
Running an eCommerce or warehouse management business can be a tricky affair, and especially if you’re new to it, it gets even more difficult to understand and predict the demand and supply ratio, which can directly affect your inventory or stock.
Due to the uncertainty of the eCommerce marketplace, the chances of storing piles of dead stock increase, which may be hard to get rid of.
But before getting into these any further, let’s first discuss what dead stock is.
What is Dead Stock?
The stock or inventory that doesn’t get sold and remains in the warehouse is referred to as dead stock. Dead stock turns out to be a major problem for the businesses that are into eCommerce. Another big cause for the same is to follow poor inventory management strategies and predictions due to which dead stock get stored more and more in the storehouse and remains there useless and all forgotten.
If you’re consistently facing the dead stock problem due to storing more inventory than demand, then you need to buck up and drag your attention to better up your inventory health according to the supply-demand ratio.
How Can Dead Stock Prove to Be Bad for Your Business?
- It occupies and takes a significant physical space in your warehouse.
- This occupied space turns to be useless as it can’t be utilized for other products.
- In turn, the warehouse costincreases along with the need for more storage space.
- It blocks cash inflow and affects the investment cost badly.
What are the Factors That Cause Dead Stock?
Sudden Drop in Demand
One of the major causes of dead stock is an unexpected lack of demand. As per the trends you have been following, you maintain inventory in advance, expecting that demand would go accordingly, but due to some unwanted aspects, the scene goes opposite, and your inventory turns into dead stock. For example, the current COVID-19 scenario has surprisingly affected the sales of many businesses.
Unexpected Inconsistency in Orders
While running an eCommerce business, orders are all the bread and butter. And while the customers’ orders don’t go according to expectation, it affects the inventory. If the order rate goes too high than expected, then you may get out of stock. On the other side, if the order rate decreases, then you may end up with dead stock.
Poor Quality of Products
This is one of the most obvious reasons for witnessing dead stock issue. Be it a physical business or an eCommerce one, the quality of products may make you a protagonist or antagonist in front of your customers. If the product offered by you would not meet the customers’ expectations, then you will fill your storehouse with irretrievable dead stock.
Ways to Getting Rid of Dead Stock
In this era, where even humans can relax by assigning their works to machines, there are definitely solutions to avoid the problem of dead stock. But of course, it will ask for the combined efforts of humans as well as super-humans, i.e., robots (automation).
Image Source: https://virtocommerce.com/glossary/what-is-a-dead-stock
That’s why PPS brings to you some ways to help you overpower the problem of dead stock:
1. Opt for an Advanced & Automated Inventory Management Tool
To get rid of the problem of dead stock, you first need to analyze how much access inventory you are storing. That’s why PPS offers a cloud-based inventory management tool to automate the processes for you by integrating inventories from multiple locations into a sole/centralized system while constantly tracking the inventory updates and changes on a real-time basis. This way, you can receive real-time updates from the automated tool and know how much out of your current inventory is dead stock. Thus, you can focus on higher-value stock items first and stock items further according to the frequency of movement. Additionally, you can use automated reporting to view an Inventory Aging report to further determine stock levels, trends, and how long inventory has been stored/sitting in your warehouse.
2. Research the Market Well Before Updating Your Inventory
It is always beneficial to play smart while you are running an eCommerce business. To play safe when it comes to inventory, you should research the market properly, and while doing the same, you should focus on ordering small quantities of stock first and check how they turn to perform. Even if the price per product costs you higher, you will still be on the profitable side if you are able to avoid dead stock this way. You can also organize surveys for your customers to know their opinions, demand, and preferences.
According to Jennifer Rosenberg, president of Indianapolis-based Acorn Distributors Inc. (Primaseller, Tips to Get Rid of Dead Stock):
“Deadstock is a cash flow killer. We make money by moving boxes, not by storing boxes”.
Dealing with dead stock may prove to be challenging, but it doesn’t turn to be impossible when you pick the right strategies and smart tools to help you deal with the issue. Advanced tools and inventory management systems offered by PPS can help you win the war with dead stock and let you maintain your cash inflow even if the market conditions go opposite to your expectations.