Dead stock (also called obsolete inventory or slow-moving stock) refers to products that have not sold within a reasonable period and are unlikely to sell at their original price without significant intervention. In e-commerce, dead stock is a direct drain on working capital and storage costs - the money tied up in unsold inventory is money that cannot be reinvested in marketing, new product development, or operational improvements.
Dead stock typically accumulates from three sources. Demand forecasting errors - purchasing more units than the market demands, often from over-optimistic sales projections or inadequate historical data. Product-market fit failures - a new SKU that simply does not resonate with customers regardless of pricing or positioning. Trend expiry - seasonal, fashion, or trend-driven products that were popular when ordered but have since been displaced by newer alternatives by the time they arrive.
The standard inventory metric for identifying dead stock is sell-through rate - the percentage of a SKU's received quantity that has sold within a defined period, typically 90 days. A sell-through rate below 20% at 90 days is a strong signal that a SKU needs intervention. Shopify's native inventory reports and dedicated tools like Inventory Planner surface low-sell-through SKUs automatically.
Recovery options range from promotional discounting (bundle the slow mover with a fast mover, offer time-limited discount), liquidation (selling at cost or below to recover capital), and donation (some jurisdictions allow charitable inventory write-offs). The correct strategy depends on the product's margin structure, storage cost, and whether it can be salvaged with marketing effort or has fundamentally no demand. The relationship between dead stock and gross margin is direct: write-downs of dead stock reduce reported gross margin, making careful inventory management a profitability lever, not just an operational one.
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