What is dead stock? Why it's bad and how you can avoid it

Dead stock includes all the goods that cannot be sold for some reason but are still in the warehouse. We tell you how to recognize it and how to avoid it.

Why is dead stock bad for your business?

From a pure accounting point of view, dead stock is not an asset, but an issue that is generating losses and costs for the company. It is a type of harmful inventory which can cause financial problems for the company, such as:

Loss of profits: dead stock is an obstacle to making profits. The longer a product is stored in the warehouse without being sold, the higher the maintenance costs. But it also limits space and the ability to sell newer products that could generate real profits.
Increases investment needed to grow. An expanding company, such as an eCommerce company, needs space to grow and launch new product lines or equipment. If part of the company's storage is occupied with dead stock it can limit growth, and it may be necessary to expand facilities or look for new locations, which can slow down the process.
Excessive inventory costs, by accumulating products that have no clear purpose. In small quantities, dead stock may not represent an excessive cost, but in the long term, it can drain resources.

Improve your eCommerce cash flow today

Join hundreds of online sellers growing every day with RITMO

Get Started

Last Posts at RITMO's Blog

Online sellers

Mar 2023

How to sell in Mercado Libre: Step by step guide

Communication

by RITMO

How to sell in Mercado Libre: Step by step guide

RITMO News

Mar 2023

SBV and Credit Suisse: Lessons Learned and How To Protect Your Business Against Banks Liquidation

Jorge Juttner, CFA

Head of Partnerships

How To Protect Your business against banks liquidation

Inventory Management

Mar 2023

What COGS is and how to calculate it for your eCommerce?

Communication

by RITMO

What COGS is and how to calculate it for your eCommerce