I started with a low number of stocks but as I gradually grow the business, my inventory grew and my dead stocks also accumulated a lot. Prior to the pandemic, I did have some customers who bought in bulk and they usually buy the dead stocks because they usually get a higher discount for those items. However, when the pandemic hit, I find my dead stocks growing tremendously as sales slow down due to the work from home station and now I’m thinking, what should I do with my dead stocks?
If you’re new to Thrifty Hustler, I share my online selling journey on my blog because selling second-hand clothes, bags, shoes, etc is my main hustle. If you’re also an online seller and if you’re wondering what you can do with your dead stocks, then read on.
What is a Dead Stock?
A dead stock is basically your merchandise that is left unsold. It may also be deemed unsellable due to a number of reasons. It may also be damaged items in your inventory.
What Causes a Dead Stock?
I’m not familiar with other industries, and I will only be sharing my point of view in selling second-hand goods online. There are so many reasons why an inventory is left unsold and, in my case, some of them include:
My sales turnover has become so sooo slow due to the pandemic and it’s one of the reasons why my dead stocks grew tremendously. Most people who work in offices (which is my target customer base) are now working at home and I don’t know yet when they will start to report back to their respective offices. Probably it’ll take a year or two (hopefully) before everything goes back to (new) normal (?).
A lot of people are also hesitant to buy clothes nowadays compared to the pre-pandemic years due to financial reasons. Employment and economic uncertainties are in the air and almost everyone I personally know is struggling financially and would rather save money or just spend money on essentials.
The competition also ballooned in a short period of time. This is because a lot of people who lost their jobs are now selling also online.
Changing Market Demands
Since I am selling second-hand clothes, a lot of my dead stocks is mainly due to the current economic condition. But the second reason that I can see is that the market demand has changed. To be honest, this should be an expected reality in any business. Markets do change every now and then. In clothing, due to the current situation, clothes suited for home use are more in demand.
Most of my merchandise is geared towards office workers and the style, type of fabric, etc is not in demand due to the current work-at-home setup.
Another reason for the (unwanted) growth of my dead stocks is that my response to the situation is also quite slow. I’m caught off-guard by the situation and was not able to react right away.
The pandemic did not just cause financial stresses to myself and my family but as well as emotional stresses.
Looking back, I know that there are still a lot of things that I could have done to minimize my dead stocks and to increase my sales.
Impact of Dead Stocks on My Business
Having a large dead stock impacted my business negatively and the most significant effects are:
I Ran Out of Space
Luckily, I was able to move to a bigger apartment before the pandemic hit. However, the growth of my dead stocks continuously ate up my available storage space.
And this is not good especially for sensitive items such as leather bags. As they need ample space in order to prevent getting damaged in the storage area.
Space also costs a lot of money especially if you’re living in the city.
Capital Money Got Stuck
The money that I spent in buying my inventory which eventually became a dead stock is technically stuck in my storage room.
Luckily, I’m in the business of low-capital products but nevertheless, I could have used that money for something else.
Increased Cost of Maintenance
Because my inventory grew huge, there are more items now in my storage space. The first few items that got affected so much by the congestion are my leather merchandise.
So, to minimize and to avoid getting damaged, I frequently clean them which ate up money and time. I also bought some dehumidifiers to ensure that the storage area is cool to prevent leather items from molding.
I still continuously buy new inventories so I can have something new to post on my online selling accounts. This is to ensure that my pages get refreshed every now and then and also to attract new customers.
Because my storage room has already reached its limits, a lot of my new merchandise ‘overflowed’ to my bedroom and some are in the living room.
What to Do with Dead Stocks?
To be honest, I didn’t have a clear plan when I first realized that I have a growing number of dead stocks. In my mind, I’d just like to accumulate and accumulate new stuff so I can have a big inventory.
Initially, I thought that having a huge inventory should be part of my goal. But now, I realized that it’s not sustainable for the business model that I am aiming for.
And also, another reason why I didn’t react right away to the growing dead stocks, is that I still had space during that time to accommodate everything that I have.
But now that I have completely run out of space, I am slowly dealing with my dead stocks and I’d like to share with you how I’m addressing this concern.
Sell for a Lower Price
If you want to recoup your investment, then you have to sell your dead stocks for a lower price. You can slash the selling price for as much as you think you can accommodate. This will not only reduce the number of dead stocks that you have, but it will also attract a lot of new customers to your online shop.
Aside from lowering the selling price, you can also sell bundles. You can group some items together and sell them for a very affordable price.
Give Them Away as Freebies
What I’m planning to do now is to take all the lightweight garments from my dead stocks and give them away as freebies to paying customers. The reason why I’ve thought of this is that in terms of shipping, weight costs money.
In the past, I just have included random freebies in shipping pouches and it did costs me additional money (shipping fee) which in turn, minimized my profit.
For the mid-heavy garments, I would probably give them away to buyers who will opt for same-day delivery services like Grab or Lalamove since it will not have any effect on the shipping costs.
Give Them Away to Friends and Family
I just sent five eco-bags full of clothes and bags to my family this morning and I’m glad that they liked the items that they have received from me.
This is also one way of helping your friends and family financially because they wouldn’t need to spend their budget on clothing anymore if they’re going to receive clothes regularly from their online selling friends.
I’m also planning to donate some of the items that I have, especially those items that are not on trend anymore or those that are too avant-garde for most people.
If you’re an online seller from a high-cost country or if you’re an online seller who has bought your inventory for a high price, you may also consider recycling or repurposing your garments to give them a new look and then and sell them again.
Personally, I use some of my dead stocks as bag stuffing to help prevent deformity of the bags in my storage rooms.
Exceptions to My Dead Stock Concern
There are two kinds of items that I don’t mind keeping though. And also, I don’t consider these items as dead stocks even if they’ve been with me for a long time and these are:
Authentic Vintage Designer Garments and Accessories
I have a few vintage designer garments and accessories and I don’t mind keeping them. As I mentioned earlier, I don’t consider them as dead stocks. It’s so difficult to find authentic vintage designer garments and accessories at thrift stores and even online.
And also, I was lucky that I have paid for these items for a very cheap price and I’m not bothered with the money that will be stuck by keeping these items.
Authentic Vintage and Antique Porcelains and Art Pieces
Aside from clothes and accessories, I also have a few vintage and antique Japanese porcelains. Japanese Thrift Stores are abundant in the Philippines and I was able to collect a handful of real antiques in the years that I have been visiting these stores.
Moving Forward – Better Inventory Management
Inventory Management is actually one of the main causes of dead stocks for most businesses. I didn’t mention this above though because I wanted to give more emphasis to this before I end this article.
Personally, I didn’t pay much attention to Inventory Management for my business prior to the pandemic because my main issue during that time is not dead stocks but actually, the opposite – lack of inventory.
Prior to the pandemic, competition in online selling was very low and I always get to sell the majority of the items.
Buying quality stocks was also difficult unlike nowadays thus having too much inventory was never an issue. But having experienced both times (pre and during the pandemic), I realized that I should make Inventory Management my priority moving forward, even if I’m just running a small online shop.
If you’re planning to start an online selling store, you should also consider thinking about this as it can help you protect your capital, minimize losses and increase profitability.
I’ll probably write about this in a separate article since this is a broad topic to talk about.
Drafting my Inventory Management Plan for 2021 onwards is my main priority but in the meantime, I’m sifting through my current stocks that I’m intending to give away and donate.
I will update this article with the link to my Inventory Management plan once it becomes available.
How about you? Are you also an online seller? How do you deal with your dead stocks?