Have a great understanding of animal corpses, and knowing what you can do about it can help you stay ahead of your e-commerce competition. Ecommerce is a dog-eating dog world where every penny counts, but our definitive guide to dead inventory will help you get the results you need.
What is dead stock?
The first step in taking control of your dead animal situation is understanding exactly what it is. Dead stock is your e-commerce inventory that didn’t fit into a shopping cart. It will never sell, unless you do something about it (more on that later).
Regardless of your ecommerce line, you’re sure to encounter returns of damaged or unwanted merchandise, but it’s different from dead inventory. Simply put, dead inventory is something that has never been bought, and it creates potential problems for you.
It is something that all ecommerce operators have, whether their business is new or old, large or small. It could be that a company has up to 33% of dead stock. This number can be even higher in the fast-paced world of e-commerce, where trends change rapidly from month to month.
What are the causes of dead stocks?
So now you know what dead stock is, but what causes it and why might your ecommerce business be especially vulnerable?
A particularly common reason is that you are selling seasonal items and when that season ends you have some unsold items. No one wants a pumpkin in the middle of spring, and if you sell seasonal items of any kind, you might find them hot one day and freezing cold the next.
This dilemma is particularly applicable to clothing retailers. Selling clothes online can be a lucrative ecommerce business, but only if you stock up on the latest trending items. Old-fashioned clothing can quickly turn into dead, unloved, and unsold inventory, as can items of unpopular sizes, styles and colors.
Take a look at this again, it’s an important point whether you’re selling fashion, tech, or anything in between: if you don’t understand what your consumer wants, you’re in the fast lane. to a dead stock. This is just one of the reasons smart market research will always pay off.
This should be in the first chapter of your sales book; facing and overcoming dead stocks can lead to rapid growth and better margins.
Why Dead Stock is Bad for Your Business
Dead inventory is common to all ecommerce businesses, but turning a blind eye to the growth of dead inventory is bad news for your business. Here are some of the ways dead inventory can cost you time and money.
Waste of storage
To be successful as an ecommerce retailer, you will need a warehousing solution. However, your space is likely to be limited, so beware of dead stocks that eat away at this precious ability.
Animal corpses sit on your shelves and don’t move. This means that if you don’t take proactive steps, you might as well write off that storage space for good. Remember that statistic from earlier? Can you afford to have nearly a third of your warehouse dedicated to items that collect dust and never sell?
If you sell primarily through Amazon, your inventory may be stored in a Fulfilled By Amazon fulfillment center. Fulfillment by Amazon can bring many benefits to an ecommerce retailer, but if your dead inventory is in their fulfillment center, you could face a large bill.
The more you use your storage facilities, the more overhead you have. One of the biggest costs any retailer faces is their utility bill. Warehouses need light and heat, and it doesn’t come cheap.
Every smart business owner, whether they own a physical store or an e-commerce operation, monitors utility bills and switches providers when a cheaper offer appears. Equally important is controlling the wasted energy in your warehouse, and dead inventory needs more energy. More energy means more money for your bottom line.
Warehouses and storage facilities need people to run them, and the more inventory you have, the more people you will need. By reducing dead inventory, you can reduce your storage facility and reduce the number of staff hours required to keep it running smoothly.
Long delivery times
Long delays and slow deliveries are one of the main issues facing e-commerce customers. If your items take too long to arrive, customers can cancel their order or leave a bad review, and you can say goodbye to repeat the custom.
A 2021 study of American consumers showed that 19% of buyers would abandon their online purchase if the delays were too long. Dead inventory extends lead times because it is more difficult to find live inventory resulting in lost sales and lost customers.
Take control of your dead stock
We’ve looked at what dead stock is and how it can eat away at your profit margins, so it’s time to see what you can do with it to minimize your losses.
The first step is to admit that you have dead inventory; if a particular item hasn’t moved in the past six months, it’s not lucky to move in the next six – without your help.
That’s right, dead stock doesn’t have to sit on your books and shelves forever, you can bring it to life using e-commerce CPR:
Partnership with charities
The first option is to simply donate your dead items to charity. It could be a lucrative option, while also ensuring that your unpurchased items are put to good use.
Consumers love businesses that show their humanitarian side, whether it’s embracing green initiatives, showing real inclusion, or helping great causes. In fact, like Forbes revealed, 81% of millennials said they prefer to shop at companies that support charitable causes.
Many charities would love your unsold inventory, from multinational legends like Oxfam to your local charity store. Once you’ve found a suitable charity, don’t forget to publicize your actions on your website and social media accounts. In doing so, you free up your storage space and create good news for your e-commerce brand that consumers will love.
Promotions and gifts
It’s important to realize that while dead inventory will never sell in its current form, it can still end up in the hands of consumers. How do you do that? Smart promotions.
Regardless of their demographics, one thing unites all consumers: they love to receive something for free. Most importantly, they love companies that give them something for free.
Revolutionary psychologist Dr. Robert Cialdini has shown that humans are hardwired to render favors, so when we receive free gifts we want to buy from the people who provided them. That way your dead stock could increase future sales of your other products.
Repackaging and bulk offers
Major retailers have long known about the power to repackage and offer items in bulk, and it can work for your ecommerce business as well. Have a powerful remarketing strategy can increase your income while freeing up storage space.
Remarketing is all about targeting customers you’ve previously advertised to, but it can also involve products you’ve advertised before. Your inventory items did not sell when isolated, but if they are introduced with other items, they can encourage consumers to check out rather than abandon their cart.
It is a question of perceived value; if consumers feel they are getting better value by buying three products rather than just one, or even getting one of the products for free, they will feel much better about their commitment to buy.
Prevent dead animals
We looked at the CPR strategy for dealing with dead inventory, but how do you reduce dead inventory levels in your business? Better safe than sorry, so listen to your customer and track your inventory.
All e-commerce businesses need to know what their target consumers want and listen to what they are saying. Reduce hassle by providing great customer service and easy transactions, and make sure everything online chatbots reflect your brand and improve the overall customer experience.
Understanding your consumers can also help reduce dead inventory, as you will have accurate information on what they want to buy and how much they will pay for it.
Surveys are a great way to stay in touch with customers. This means that they give you a better understanding of it and allow you to tailor your offers so that they have a buyer’s journey, which translates into greater customer and sales satisfaction.
Another great way to reduce dead inventory levels is to have a better understanding of your current inventory. Manual recording of inventory levels is a quick route to overstocking and under-recording. There is only one way: dead stocks.
Fortunately, there are some great automated inventory solutions that let you know exactly how much you have of any item at all times.
Using best Amazon inventory software may be the best move you have ever made. When you reduce excess inventory, you reduce the risk of having dead inventory and seasonal items that are no longer in fashion.
Your definitive dead stock solution
Developing a three-step strategy can give you control over e-commerce dead stocks:
- Understand what consumers need and when they need it.
- Use inventory software to keep control of inventory levels.
- Eliminate dead stocks using our CPR (Charity, Promotion, Re-packaging) method.
All ecommerce businesses will have dead inventory, but reducing your dead inventory level can free up space, save money, and allow your business to grow.