Posted by TeamBartsParts on 16th Jun 2022
Dead stock: the facts
Entrepreneurs or dealers in the sectors of agriculture, green care and material handling machinery often have enormous stocks of slow-moving, obsolete spare parts. This is usually caused by a number of reasons and costs a lot of money. Luckily, BartsParts can turn your stock into cash in a matter of time!
Causes of dead stock
The term 'dead stock' refers to stock that is catching dust on your shelves, mostly parts that haven't sold by the time tey reach the end of their lifecycle. This can include damaged items, incorrect deliveries or returns, leftover seasonal products, or expired raw materials. Multiple factors contribute to unsold inventory.
Any business can find itself with spare parts that are unmarketable, for whatever reason. This is caused by various internal and external factors, such as poor sales, inaccurate forecasting, and a drop in demand.
The most common cause of dead stock is over-ordering. It is important to have a clear picture of how much of your inventory you'll sell in a given period of time and how much stock you need to fulfill future orders. It is beneficial to have an inventory control system and be aware of your inventory turnover ratio.
A product may not sell for several reasons. For example, a dealer has a certain part in stock for a few customers with a specific machine, but the last customer no longer needs those parts. Or maybe a business' marketing strategy is not optimal due to bad product messaging, poor web experience, or low customer awareness.
Several factors can lead to inaccurate forecasting. For example, when you base your inventory on flawed data or unrealistic expectations, you can't make informed decisions on how much inventory you'll need to fulfill customer demand. In some cases, these factors are beyond the company's control. Even if your business has solid forecasting abilities, changes in the market can lead to sudden and unpredictable drops in demand.
Dead stock costs money. The most obvious cost of dead stock is lost revenue. For example, if a dealer can't sell 150 units of a product with a retail price of €50, this will theoretically lead to a loss of €7.500 in anticipated revenue.
But there are more costs, even though these may be less obvious. For example, dead stock leads to increased holding costs including storage space, labor and insurance. Moreover, more stock requires more managing effort and thus increased employee wages. Lastly, it decreases the opportunity to generate profit as the space it takes up could otherwise be used for faster-selling products.
It is not always possible to avoid dead stock. Some factors are simply uncontrollable. In that case, you might want to sell your obsolete spare parts. However, this requires a lot of work: determining your inventory and prices, finding buyers, packaging, delivering... this costs a lot of time. BartsParts can help during this process. Simply sign up as a seller, upload a list of the spare parts you want to sell, and let BartsParts take care of the rest!