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Volo Know Your Data Series – Dead Stock
In our monthly series Know your data series, penned by Scott Bagnall, Head of Product at Volo we are looking at how you can use data to grow your business. Detailed in a webinar earlier this year, if you’re a Volo customer then the reports are all available to you in the Vision reporting and analytics module, but for non-Volo users you should still be considering the same factors in order to scale and grow your business. We are collating all of the articles here so if you missed one you can find them all in one place.
Dead Stock Report
In our first two articles in this series, we covered the good stuff that everyone likes to stay close to: your best sellers and the sales velocity of your products. Growing your business is also about fixing the things going less well, so for this month we’re going to take a look at the less good stuff, your dead stock reporting and analysis.
Looking at which of your items haven’t sold is pretty uninspiring – and let’s face it, we all like to focus on the good news – but it’s pretty important. After all, if you’re holding the stock in your warehouse, then there’s a number of things happening to your finances. Firstly, you’ve most likely spent money getting inventory in, and that money is tied up and stagnating on your warehouse floor. You can’t get at this money until you shift the stock.
Secondly, the dead stock is taking up space that you could be filling with stock that’s moving, which is frustrating. Thirdly, you might also be paying for listing the items, which is layering on extra cost. Fourthly, your stock might not be in your warehouse; it might be in someone else’s warehouse, such as Amazon FBA or a third party logistics (3PL) company. And, guess what, that’s costing you too.
If some of your dead stock items are not immediately visible to you, therefore, it’s worth regularly analysing your list of what’s not selling at all. Choose a reasonable time period and look at all the SKUs for which you have a stock level of 1 or more that have not sold at all during that period. What does that tell you about some of your decisions? Did you take a punt on something that didn’t pay off? Are some variations not worth investing in again?
Take a deeper look at these dead SKUs and drill into each of them to see the sales pattern for prior periods when they were selling. Some of the dead items may have sold in the past. Some of them may have never sold. What conclusions can you draw? What can you do to get them moving again? Improve the listing information, drop the price, bundle them in with other products that are moving?
It pays to be cuter than that, however, when analysing your dead stock. It’s also worth looking at your ‘dead listings’ too. Some of your stock might have not have been listed yet, but knowing the items that you have taken the time to list that haven’t sold is especially important. Separate the two to get more of the story behind their inactivity.
Furthermore, you might want to exclude in your analysis those items that you’ve only recently created or listed, since they’ve not yet had much of a chance to perform for you. That way you can focus your attention on the ‘problem children’ that haven’t moved for quite a while.
Of course, if you’re only analysing items that haven’t sold at all, you’re not getting the full picture of the poor sales performance in your business. What about the items that have only sold one, two or a few units? They’re not going to show up if you run a report on dead stock.
That’s why we recommend you also look at your slow-moving stock as well. Slow sellers are almost as commanding of your attention as no sellers. If your analytics software allows it, take a product group and look at items that have sold less than 10 units over a certain period, and for which you’re holding stock of at least 20 or 30 items, for example. This can give you valuable intel for getting the sales moving again, as well as for future order quantities that better match the speed with which they move out of your warehouse.
For both dead stock and slow-moving stock, don’t forget that you also slice your data across different filters to get a better understanding of where to focus your efforts. Have a look at poor stock performance across suppliers, for example, to see if that gives you leverage in supply chain discussions. Stock may not be selling or have slowed down on one of more channels or marketplaces, or in a specific region or regions, rather than across the board. The more detailed the picture you can draw, the better able you are to respond.
Take Some Action
A key metric for your business success is how quickly you can turn your investment in product into a return from your buyers, and slow or dead stock can seriously retard your momentum. One you’ve identified where the problems are it’s important you do something swift and positive to free up the space and free up the capital to grow.
Here are a couple of examples. Firstly, on the competitive front, be sure to check the marketplace for the SKUs in question. It may be a case that your competitors are out pricing you and you have to think about dropping the price to get the stock moving. Make sure you keep your eye on that though, because once your competitors sell out and if you still have stock, you’ll be able to raise the price again.
Secondly, on kits or bundles: if you can’t seem to shift stock no matter what, try bundling up the none-mover with a big seller. This will not only allow you to shift stock that is stagnant but will also boost your top selling item in the process.
Lastly, what you decide to do will often depend on the time of the year and the type of problem products you have. Seasonality can be a factor. If you’ve passed the ‘hot’ season and it’s going to be months before it comes again, it could be time to unload the stock sooner rather than later. If your slow or dead stock is still in season, then you have the relative luxury of a little more time to get it moving and get a better price for it.
Look out for our next monthly article when we get into the nitty gritty of margin analysis.