Deadstock refers to inventory that you have stored in a warehouse that doesn’t move or sell. While every e-commerce business has seen some SKUs move faster than others, deadstock, for one reason or another, are products that don't sell.
Sometimes, when vendors think they may run short of certain SKUs to fulfill their orders, they order more of that SKU from their suppliers than they can sell at the velocity it is currently moving. Then, because consumers' tastes change and another product is introduced that consumers prefer over the product that has been overstocked, that product suddenly stops selling and sits on the shelf. For example, phone chargers and accessories can become obsolete the minute a new phone is introduced that uses a different charger or cases in new dimensions.
Deadstock can also happen when businesses are not working with inventory management technology that allows them to track their sales and analyze data so that they can predict sales for upcoming sales cycles making it easier to understand which SKUs they don’t need. That being said, there are times when you simply can’t tell whether a product will sell or not. Arrangements can sometimes be made with suppliers to return products that aren’t selling well before they become deadstock. Ineffective marketing of products or products that your sales staff doesn’t know how to market may end up as deadstock, as well. In addition to not selling, deadstock ties up capital that you could use to purchase more products that do move well. On top of that, as deadstock accumulates in your warehouse space, you may be required to pay fees for extra storage space and long-term storage fees.
Whenever possible, e-commerce businesses need to make every effort to prevent deadstock but when it happens, it’s even more important to learn what can be done differently moving forward. If Phase V Fulfillment can be of help in keeping your e-commerce business from facing deadstock situations, do not hesitate to contact us today to discussing partnering with us.