Dormant and unsold stocks have always been a real headache for most brands and retailers. The causes of these stocks, which struggle to sell out, are diverse, but generally result from orders and production that are not in line with the needs of the markets concerned. There are a number of ways to get rid of them, with major retailers using common solutions such as the services of large destockers and private sales sites. SMEs and VSEs, on the other hand, are faced with a lack of solutions for disposing of their end-of-series and unwanted products at reasonable prices, and these products very often become synonymous with financial losses, but not only...
We're going to try and list the main consequences for companies of having this type of stock in their stores, shelves and warehouses.
Reduced storage capacity
Stocking products requires storage space. In fact, for every piece that sleeps, a space is used to the detriment of another, more "efficient" piece. So it's logical to want to save space so as to be able to store other items optimally.
Companies are always on the lookout for ways to optimize their storage areas, given the price per m2 of their premises and warehouses.
Unsold goods therefore take up space and increase your storage costs.
Financial losses
The build-up of dormant stock has a negative impact on your cash flow, as it increases both fixed costs (premises, machinery, storage) and variable costs, notably personnel costs, which are not allocated to products that can be properly amortized.
Purchased or manufactured products have a cost price, so the fact that they don't sell and no revenue comes in has a direct impact on your operating income, resulting in a net loss.
What's more, the efforts and investments you make to sell your unsold stock, such as merchandising, have a direct impact on your margins.
Complicated renewal of collections and ranges
To remain competitive in your market, it is essential to renew your collections and stocks frequently.
Costs tied up in dormant stocks can be very high, preventing certain brands from renewing their product ranges.
The stock rotation of each of your references is an indicator to be monitored in order to detect dormant or dead stock.
Lower product prices
In most cases, the best way to get rid of unsold products is through promotional actions or sales, which lower the selling price of your products.
Going through a destocker or "soldeur" will also significantly reduce your selling prices. On average, a private sales-type destocker will buy back your stock at between 5% and 15% of its selling price. A retailer, on the other hand, will buy back your parts at between 25% and 50% of their cost price.
Waste of time
The procedures and actions to be deployed in order to get rid of dormant stocks require a considerable investment of time. For example, we can list the tasks to be carried out:
- Merchandising
- Promotional events or sales
- Research and negotiation with stockists or discounters
- Search for associations for donation and administrative validation
- Management and monitoring of relevant stock
Please do not hesitate to contact the Dropery team if you would like more information about our solution for selling unsold stock, or if you would like advice on how to get rid of dormant stock.
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