What Is Dead Stock? Definition and Guide

what is dead stock

Inventory that doesn’t turn over—that doesn’t sell—is often referred to as dead stock. For businesses that don’t use inventory management software, dead stock can remain on warehouse shelves forgotten and useless.

Dead stock costs businesses money. They can’t recoup the costs of unsold goods that they either manufactured themselves or purchased from another company. In addition, storing dead stock costs money and takes up valuable warehouse space that could be used to house top-selling products.

How to avoid dead stock

To avoid dead stock and its associated expenses, consider doing the following:

  • Use inventory management software to alert you to issues, so they can be addressed in a timely way.
  • Order smaller quantities when offering new products until you know how they perform, even if the per unit cost is higher.
  • Survey customers to learn what other products they want.
  • Base new product offerings on industry and customer research rather than intuition or personal interests.

What to do with dead stock

While some dead stock will need to leave storage in a garbage truck, there are ways to recoup some of the initial investment. Possibilities include:

  • Selling to close-out and liquidation retailers
  • Donating to charity in exchange for a tax write-off
  • Giving it away as a gift with purchase
  • Bundling it with other products offered collectively for less than the cost of buying them individually
  • For apparel, selling dead stock to consignment stores

An alternative definition of dead stock

In certain circles, dead stock has also come to mean products that are no longer available for sale. When used in that context, the phrase is usually spelled as one word: deadstock.

Sometimes, merchandise that is no longer available is coveted simply because it can’t be found in stores. In those situations, it can sometimes be sold for a premium price.

Sneakers, which are often sold on brand image more than function, are popular “deadstock” items that can be found for sale online and identified in searches as “deadstock.” Vintage apparel is also a popular deadstock category.

In most product situations, however, dead stock refers to inventory that wasn’t sold and needs to be disposed of to make room for money-making counterparts.

Dead Stock FAQ

What is the example of dead stock?

Dead stock is any unsold merchandise or inventory that has not been sold or used in a certain amount of time. Examples include unsold clothing items, excess electronics, or leftover food items.

What happens to dead stock?

Dead stock, also known as excess inventory, is inventory that is no longer wanted or needed by a company. It is typically sold to a liquidator or wholesaler at a discounted price, or donated to a charity. It can also be recycled, resold, returned to the manufacturer, or broken down for parts.

How do you deal with dead stocks?

Dead stocks can be dealt with in a variety of ways. The best approach depends on the type of stock and the individual situation.
Some strategies include:
  • Selling the stock at a discount or through a private transaction.
  • Holding the stock in hopes of a future rebound.
  • Writing off the stock as a tax loss.
  • Transferring the stock to a charitable organization.
  • Donating the stock to a scholarship fund.
  • Trading the stock for more liquid assets.
  • Selling the stock to a venture capital firm.

What is the difference between dead stock and obsolete stock?

Dead stock refers to products that are not selling and are no longer in production, but remain in inventory. Obsolete stock refers to products that are no longer being sold and are discontinued, and often cannot be used or sold anymore.