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Dead inventory meaning8/12/2023 ![]() ![]() Even if you don’t make a profit on these items, they will no longer be taking up precious space in your warehouse. In order to use product bundling to shift dead stock, pair excess items with top sellers. You can also up the perceived value of a purchase by offering free gift wrapping or a bag or container – e.g., a makeup bag to put items in. The bundled price is often less than the total price a shopper would pay if they were to purchase each item individually. Product bundles involve grouping together multiple products – usually items with a common theme – offering them at a single price. ![]() Like free gifts, you can use product bundles to increase the perceived value of an order. (And this was despite the fact that the discount offer was actually the better deal monetary-wise). Rather than selecting a 33% discount off the regular price of a brand of coffee, consumers favored the ‘33% free’ offer. To illustrate how effective this can be, a recent study found that consumers valued ‘freebies’ above ‘discounted items’. It offers an added incentive to buy and ultimately should boost your conversion rates. Whether you offer giveaways with purchase promotions or go down the surprise route, this can be a great marketing tactic. This will create a positive customer experience and offer a high chance that they will buy from you again. Alternatively, you can surprise (and delight!) buyers with a freebie. Offering purchasers a free gift when you’re selling items increases the order value and gives shoppers a good reason to buy from you. Let’s find out how to turn slow-moving stock into cash. If you happen to run into a dead stock situation where inventory is taking up far too much space in your warehouse – and affecting your balance sheet negatively – there are some ways to salvage the situation. More staff equals more money on wages – money that isn’t going to improve the bottom line. Higher employee wages : More items on shelves means more maintenance, since e-commerce companies may have to employ more workers to manage the excess inventory.It’s estimated that businesses can pay up to 30% more than the stock’s value simply in carrying costs alone. This includes warehouse space, utilities, insurance, and so on. Storage costs : It’s expensive to store products, especially over longer time periods.There’s a high opportunity cost, therefore, to holding dead stock inventory. So it holds cash that could be invested in profitable best-sellers. Missed opportunities : Since dead stock products have no chance of showing up in front of customers, there’s no opportunity to make a profit, or break even.Money lost: You cannot generate a profit from the merchandise you’ve purchased, so you lose the total landed cost for each item. ![]() Inventory management software can help you identify a poor selling item, and identify the right reorder point for all products. It’s easy to lose track of how many units you have and accidentally place orders for products you don’t need – or lose track of incoming inventory shipments. Manually trawling through spreadsheets to track inventory can lead to errors in the replenishment process. This can happen when quality standards are not checked regularly and product specifications or packaging requirements are not being followed. Stock may not be selling because it’s of poor quality. Or perhaps because competing products are more appealing. This can happen if your target market is unimpressed with your product because of the pricing, or because it’s obsolete or out of fashion. The popular item can take away from the sales expected for the less popular item, leaving the retailer with dead stock. This can happen when retailers are selling different products that are too similar, and customers prefer one brand over another. Companies that use robust inventory management systems or software are far less likely to be left with excess stock on their warehouse shelves.ĭead stock can also be termed ‘dead inventory’, ‘obsolete stock’ and ‘excess inventory/stock’. So, we understand the meaning of dead stock, but how does it affect your business? It’s more of a problem for e-commerce businesses without any effective inventory control or inventory management in place. Goods that feature the words “New Year 2022”, for example, can only be sold for that occasion – they can’t be used after that date has passed and become dead stock instantaneously. Dead stock isn’t the same as returned stock, since it’s never actually been sold to a customer.Įxamples of dead stock inventory includes seasonal items. Dead stock items are generally housed in a warehouse or the storeroom of a bricks and mortar store. Dead stock is the inventory that retailers and e-commerce merchants fail to sell – stock which also has little likelihood of selling in future. ![]()
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