
What Is Dead Stock? Causes, Impacts, and Solutions
by Jaidyn Farar
Excited about a new trend, an ecommerce brand places a large order for a specific sweatshirt style. While the sweatshirts sell well for a few weeks, the trend quickly fades, with a new style becoming popular.
The brand is left with boxes of excess inventory taking up space on warehouse shelves, and the odds are low that customers will want to buy it anytime soon.
In other words, the sweatshirts have become dead stock.
When does inventory become dead stock? And what can you do to prevent it from happening? Let’s talk about what dead stock is, why businesses should be wary of it, and how you can eliminate this problem through good inventory management.
Understanding dead stock
First, we’ll dive into the basics of dead stock: what it is, how it differs from “deadstock,” and why it’s important to avoid.
What is dead stock?
Dead stock is inventory that hasn’t sold and is unlikely to sell in the future because there’s no demand for it. Essentially, it’s merchandise that sits on store or warehouse shelves, tying up space and capital.
Dead stock might include products that have gone out of style, leftover seasonal items, damaged or expired goods, or overstock from inaccurate demand forecasting. Keep in mind that only unsold items are considered dead stock—customer returns don’t count.
Dead stock vs. deadstock
While dead stock is inventory that remains unsold because it’s obsolete, damaged, or expired, deadstock refers to products that are no longer available for sale through traditional channels but are highly sought after because they’re rare, unique, or nostalgic.
The term deadstock is especially popular in industries like fashion and footwear, where vintage or limited-edition items—think retro sneakers—can become collector’s items.
Why managing dead stock matters
Dead stock can have major consequences for your business. We’ll cover some of the impacts in more depth below, but for now, here are three reasons why managing dead stock matters.
- Profitability. Dead stock ties up capital and takes up valuable storage space, both of which could be used for fast-selling, revenue-generating products. By addressing dead stock, you free up resources to invest in inventory that actually benefits your company.
- Sustainability. Excess inventory often ends up in landfills, contributing to waste and environmental harm. Proactively managing dead helps reduce your carbon footprint and promote sustainable practices.
- Customer satisfaction. Dead stock clutters your operations, making it harder to focus on stocking the items customers actually want. Streamlining inventory lets you offer more relevant, in-demand products.
Causes of dead stock
Why do businesses end up with stock that won’t sell? A few reasons include inaccurate forecasting, ineffective inventory management, and seasonal demand fluctuations.
Inaccurate demand forecasting
When sales projections don’t align with actual customer demand, merchants may overstock products that don’t sell. This often happens when they rely on guesswork or outdated data instead of robust forecasting tools.
Ineffective inventory management
Without a clear system to monitor inventory levels and product performance, it’s easy to lose track of slow-moving items, leaving you stuck with goods that no longer align with customer preferences. Inventory visibility is key for knowing what stock needs to be replenished (and when) and what to hold off on ordering.
Seasonality
Some companies sell products that are closely tied to specific seasons, like holiday decor or beachwear. If you order too many seasonal products, they can quickly become dead stock once their prime selling season is over. Though you might be able to sell them during your next seasonal spike, it’s not a guarantee—and in the meantime, the products will be taking up valuable warehouse space.
Trends
Trends can fade just as quickly as they rise, and products that align with a fleeting trend may become dead stock once customer interest shifts.
Product issues
Demand for a product might be lower than expected because of issues with the product itself. If an item has flaws in design, quality, or even branding, initial buyers are likely to leave negative reviews that discourage others from purchasing. Pricing products too high can also lead to lower-than-expected sales and dead stock.
Impacts of dead stock
Dead stock can have major consequences, including lost revenue, a limited ability to invest in profitable products, high storage costs, and less sustainable operations.
Lost revenue
Unsold inventory means you’ve spent money on production, shipping, and storage without any return, creating a significant gap in your expected profitability.
For example, let’s say you end up with 300 unsold units of a product you expected to sell for $50 each. Those products represent $15,000 in lost revenue! While you could try selling the products at a discount, you might lose money on the sales instead of making a profit.
Tied-up capital
When you have dead stock, the money spent acquiring that inventory is effectively frozen. With limited financial flexibility, it’s more difficult to invest in revenue-generating activities like new product launches, marketing campaigns, or operational improvements. And the longer the inventory sits unsold, the greater the strain on your cash flow.
High holding costs
Holding onto dead stock increases your operating costs because you’re paying for storage, utilities, insurance, and labor to maintain inventory that isn’t contributing to your bottom line.
Less storage space
As you know, storage space isn’t an infinite resource. Whether you’re renting a warehouse or operating your own facilities, it’s important to use storage space to its full advantage—and dead stock makes things tricky. These unsellable products occupy valuable storage space, limiting your capacity to hold and manage products that are actually in demand.
Overcrowded storage areas can also delay order fulfillment and lead to missed sales opportunities, especially during peak seasons when space is at a premium.
Wasted products and materials
While it’s possible to clear out dead stock by offering discounts or donating it to charity, some products—like expired food or damaged items—will eventually need to be discarded. To keep brand-new products out of landfills, you’ll need to think strategically about how and when you order new inventory.
Strategies to prevent dead stock
By proactively avoiding overordering, you’ll reduce dead stock and save your business money. It’s all about using the right technology, forecasting demand accurately, and gradually testing the waters with new products.
Use the right technology
A robust inventory management system is key to preventing dead stock. This technology helps you track inventory levels in real time, monitor product performance, and identify slow-moving items before they become a problem.
To make the most of your inventory management system, set up automated alerts for when stock levels are too high or when products aren’t moving as quickly as expected. You can also set reorder points so the system automatically alerts you when inventory is running low.
Improve demand forecasting
With accurate demand forecasting, you’ll be able to predict the sales of any given product, allowing you to order the exact quantity you need—not too much, not too little.
One of the most valuable forecasting tools is historical sales data, so you’ll need a platform that collects and analyzes this data, identifying patterns and trends. But for a more complete picture of demand, try combining data analysis with qualitative forecasting methods. For example, many businesses research market trends, including broad economic conditions and competitor behavior.
Collecting feedback directly from customers is another great way to gauge whether certain products will be successful; try sending a short survey to learn what customers are interested in purchasing.
Order new products in smaller quantities
Launching a new product? In some cases, it’s helpful to test the waters by ordering a small number of units to see how well the product sells. If the product performs well, you can reorder in larger quantities. If it doesn’t, you’ll have minimized the risk of overstocking.
How to get dead stock off your hands
Even with great inventory management and demand forecasting, unforeseeable factors can cause businesses to end up with dead stock. If you’re in that boat, don’t worry! The following strategies can help you clear up shelf space—and maybe even recoup costs.
Bundle products
Bundling dead stock with popular, high-demand items is a great way to clear out unsold inventory. Simply group related products together, potentially offering a small discount.
For example, if you have too many candles, you might create a “self-care essentials” bundle that contains a candle, fuzzy socks, face masks, and body scrub.
Offer discounts and sales
Discounts and flash sales can be powerful tools for getting dead stock off your shelves quickly. By offering temporary price reductions or running limited-time promotions, you create a sense of urgency that encourages customers to act before the deal expires.
This strategy works well for products that are no longer in high demand but still have potential value at a lower price.
Give gifts with purchases
If bundles or discounts don’t seem like the right move for getting rid of your dead stock, consider giving the excess inventory away as a free gift with customer purchases.
In addition to clearing out slow-moving stock, gifting has another meaningful benefit: it creates goodwill between customers and your brand. When the unboxing experience includes a pleasant surprise—whether it’s skincare, stationary, food, or something else—customers will likely be excited and feel like you’ve gone above and beyond.
Donate or liquidate excess stock
When you’re struggling to move dead stock, donating it to charity or liquidating it through a clearance outlet can be a win-win.
Donations can provide tax benefits and boost your brand’s reputation by showing social responsibility—plus, they keep perfectly good products out of landfills. Liquidating through wholesale or discount retailers allows you to sell products at a lower price, helping you free up storage space and recover some of your investment.
Better order fulfillment with EasyPost
Now that you’re an expert on avoiding and clearing out dead stock, you’re on track to manage inventory and fulfill orders more efficiently than ever. But to get shipments out the door on time, you need a solution that automates every stage of the shipping process. The EasyPost suite of APIs makes it easy for ecommerce merchants to integrate with carriers, shop rates, optimize delivery times, create labels, and more.