Any e-commerce company has to maintain some kind of stock or inventory to fulfill supply in time. Making your customers wait is never a good thing to do in a business. It ruins your company’s credibility and thus decreases revenue. But the problem in maintaining an inventory is that it may never sell! That inventory or stock that may never sell is known as deadstock. The reason of the stock never selling may be that its expired, low-quality, or out of season. It only refers to the inventory that was never sold, but excludes orders that were returned. Before knowing how to control the deadstock, we should first know what causes it.
- Over-Ordering: At the time of ordering, ordering in excess is one of the most common reasons that cause deadstock. Ordering in access without knowing how much you’ll sell in a given period of time is the reason that accumulates deadstock.
- In a company, a data analyst’s role consists of a task in which they forecast future sales and revenue generation. They forecast how much inventory will be needed to fulfill future demand. Miscalculating future demand causes the accumulation of deadstock.
- A business can run out of a particular SKU before fulfilling the total number of orders of that particular SKU. This causes backorders and people in these cases tend to panic order and overorder the stock which causes deadstock.
Now listed below are some methods to control deadstock in a smart manner.
- Analyze and forecast demand: To tackle deadstock, companies must analyze their demand and forecast accurately. Historical sales data, market trends, and customer behavior analysis play vital roles in this process. Analyzing previous data and predicting demand allows businesses to adjust their inventory levels accordingly.
- Offering your customers a free gift is always an easy way to get rid of deadstock. This increases order value and it surprises your customer as well. Everybody likes a free gift, even better if it’s unexpected. This will create a positive customer experience and they are more likely to buy from your business again.
- Clearance Sale: One of the best ways of to get rid of deadstock is to host a clearance sale. People are more likely to buy something cheap that they may not even need just because it’s on a discount. But to make the sale successful, advertising your sale and products that are on discount for that sale is crucial. You may not generate profits from this but freeing up space in your warehouse while generating cash flow.
- Consistent Review System: Poor stock management is one of the reasons why deadstock happens. Establishing a review system to monitor inventory levels, sales performance, and customer feedback is essential. Set up regular inventory audits and sales analyses to identify slow-moving items and take corrective actions.
- Returning the stock is more of a direct approach of getting rid of deadstock. Contacting your supplier and asking whether they’ll buy it back or not is the way to do it. They may not offer you a full refund but they buy the stock at a discounted price. Selling the stock that may never sell is far better idea than keeping it and bearing its storage fees. Keep in mind that it is very likely that you’ll have to pay the restocking fees and the shipping cost.
- Inventory Management Software: It is a specific type of software made for the management of inventory in a business. It lets businesses efficiently track, manage and control their inventory levels and other related processes. Operations like inventory tracking, stock control, barcode scanning, report and analysis, sales and demand forecasting, etc., can be done using this software.
- Just-in-Time Approach: This approach involves maintaining the minimum required inventory levels to meet immediate demand. In a company implementing JIT requires a well-maintained supply chain and a strong relationship with reliable suppliers.