Dead Stock
Products that haven't sold and aren't expected to sell — inventory that's stuck. It costs money: storage, insurance, tied-up capital, and often depreciation. One of the biggest causes of cash-flow problems.
In practice
Dead stock is 'money asleep.' Any SKU with no sales for 90+ days while still in stock is a dead-stock candidate. Opportunity cost: that same money invested in a selling SKU would generate revenue. Dead stock = zero revenue + ongoing costs.
Common misconception
'It's better to hold dead stock than to sell at a loss.' No. $14K of inventory sitting idle is $14K earning nothing. Selling at 50% off (a paper loss) brings back $7K in cash that can be reinvested in fast movers. That's a real opportunity cost.
How to fix it
Dead stock? (1) Define a dead-stock threshold: 90+ days with no sales, (2) Run a flash sale on dead stock: 20-50% off, (3) Bundle: pair a dead SKU with a fast mover, (4) B-stock/liquidation: wholesale it near cost, (5) Donation: a tax offset.
Example
Home goods store: $33,000 in dead stock (products unsold for 6+ months). Flash sale at 40% off: $20,000 in revenue. The 'lost' inventory turned into positive cash flow, reinvested in fast movers ← monthly revenue +28%.
Priority
Run a dead-stock audit quarterly: export inventory → add a 'days without a sale' column → products over 90 days go on the action list. Act fast — depreciation accelerates between 90-180 days.
Related terms
Keep learning. Metrics that touch the same area:
- Cash FlowFinanceThe movement of cash in the business. 'Profitable on paper, broke in the bank' — a common problem in growing stores.
- Inventory TurnoverLogisticsHow many times inventory is fully sold and replaced in a year. Turnover = COGS / average inventory value. Benchmark: 4-12x depending on category. Higher = efficient inventory. Lower = tied-up capital.
- Demand ForecastingOperationsUsing historical data to predict sales volume. Enables ordering the right amount of inventory at the right time.
- SKU – Stock Keeping UnitOperationsA unique identifier for each product variation. The basis for precise inventory management.
- Inventory ManagementOperationsTracking, ordering, and maintaining inventory. Too much means cash tied up. Too little means stockouts.
- StockoutOperationsA product unavailable for shipping. Immediate lost sales plus damaged trust.
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