Inventory App Builder

Dead stock: how to find it, clear it and stop buying it (2026)

How a small shop can spot dead and slow-moving stock with three simple measures, decide between markdown, bundle, liquidation or donation, and change buying so it doesn’t build up again.

Floot ·

Key Takeaways

  • Measure, don’t eyeball. Days since last sale, sell-through rate and weeks of cover, calculated per item, separate the truly dead from the merely slow.
  • Rank by money, not units. Sort suspects by stock value at cost. Twenty dusty vases at $14 matter more than a hundred keyrings at $0.60.
  • What you paid is gone. The cost is sunk. Choose the option that recovers the most cash and space from here, even if that means selling below cost.
  • Act early. A 20% markdown at week 8 usually beats a 60% markdown at week 30. Check sell-through regularly so you catch slow items while they still have value.
  • Fix the buying, not just the shelf. Smaller first orders, reorder points that respond to falling sales, and a monthly aging review stop the pile from coming back.

Quick-Start Prioritization Framework

SituationBest first moveWhy
Slow but still selling, in seasonMove it, then a modest markdownPlacement often fixes slow sellers before price does
Seasonal item, season overClearance now or store for next year if it won’t dateHolding costs space for 9 to 11 months
No sales in 90+ days, still in good conditionBundle or gift-with-purchase, then deeper markdownRecovers some value without training customers to wait for sales
Many units, needs gone fastLiquidator or marketplace lotCash and space quickly, at a low price
Usable but unsellable to your customersDonate (ask your tax adviser first)Clears space; possible deduction
Damaged, expired or unsafeWrite off and disposeLast resort; record it so the books are right

Dead stock is inventory that has stopped selling and is unlikely to sell at full price again. Every shop has some. The damage is quiet: cash tied up in boxes, shelf space that could hold best-sellers, and a stock value on your books that overstates what the business owns. This guide shows how to find it with three numbers you can calculate from any sales report, how to choose the right way to clear each item, what the accounting side looks like, and how to change your buying so less of it appears next year.

What counts as dead stock

Shopify’s 2026 guide defines dead stock as inventory that has not sold within an expected period and is unlikely to sell at full price. It separates it from obsolete inventory, which can no longer be sold or used as intended: dead stock may still sell at a discount, obsolete stock usually can’t.

There is no universal cut-off. A florist’s dead stock is three days old; a hardware shop’s might be a year. You need a definition that fits your own pace.

A working definition for a typical small shop

For regular, non-seasonal lines, a reasonable starting rule is: no sale in 90 days, or more than 26 weeks of cover at the current sales rate. Seasonal lines are judged at the end of their season instead. Adjust the thresholds once you see what the rule flags.

Where it comes from

Shopify lists the usual causes: overbuying, weak tracking of lead times and reorder points, trends and seasonal shifts, quality problems and poor demand forecasting. In small shops, the most common single cause is a large first order of an untested product, often to reach a supplier’s minimum or a price break.

Three numbers that find it

Export the last 90 days of sales by item and your current stock on hand with unit cost. With those two files you can calculate everything below in a spreadsheet.

Days since last sale

The simplest flag. Anything with stock on hand and no sale in your threshold window goes on the review list.

Sell-through rate

Shopify’s guide defines sell-through as units sold divided by units sold plus units still on hand, and suggests checking it weekly. If you received 100 units and sold 30 so far, sell-through is 30%. Compare it with where you expected to be at this point.

Weeks of cover

Weeks of cover = units on hand ÷ average weekly sales. It answers: at today’s pace, how long until this runs out? Ninety days is about 12.9 weeks, so weekly sales from a 90-day report = units sold ÷ 12.9.

Worked example: a dead stock review

Here is a 90-day review for five items in a gift shop. Stock value is units on hand × unit cost.

ItemOn handUnit costStock valueSold in 90 daysDays since last saleSell-throughWeeks of cover
Lavender candle 8 oz70$4.50$315540089%1.7
Linen tea towel40$5.00$20026339%19.8
Holiday ornament set85$6.00$51094110%121
Blue ceramic vase24$14.00$33602100%No sales
Phone case, discontinued model30$7.00$21001500%No sales

Reading the table

The candle is healthy. The tea towel is slow but alive at about 20 weeks of cover; better placement or a smaller next order should fix it.

The ornament set sold 9 in 90 days, so at about 0.7 a week its 85 units would take over two years. The season is close, so it gets one push now and a clearance plan for January.

The vase and the phone case are dead by any definition: no sales in 210 and 150 days. Together they hold $546 at cost. The phone case is close to obsolete, because the phone model it fits is no longer sold.

Rank by value

Sorted by stock value, the order of attention is: ornaments ($510), vase ($336), phone cases ($210). That is where cash is stuck, so that is where you start.

How to clear it: choosing the right exit

Shopify’s guide lists the standard options: markdowns and clearance sales, bundling with popular products, free gifts with purchase, closeout channels and liquidators, marketplaces, consignment for apparel, donation, and recycling or disposal as a last resort. The skill is matching each item to the right one.

Move it before you mark it down

An item at knee height in a back corner may simply not be seen. Give a slow line two weeks in a better spot, near the till or with a related best-seller, before cutting the price.

Bundles and gifts with purchase

Pair the vase with a bunch of dried flowers or a candle as a gift set at a price that still clears. Or give a phone case free with any purchase over a set amount. These move units without putting a big “70% off” sign in the window.

Markdowns in steps

Start at 20 to 30% off, review after two weeks, then go deeper. Put cleared stock on one clearly marked table so full-price displays don’t look like a sale rack.

Liquidation, marketplaces and donation

For quantities you can’t clear in the shop, sell a lot on a marketplace or to a liquidator for cash and space. For usable goods your customers won’t buy, donation can make sense; Shopify notes that tax treatment varies and recommends checking with a tax professional before claiming a deduction.

The money: why selling below cost can be right

Owners often hold dead stock because selling below cost feels like taking a loss. The loss already happened when the stock stopped selling. The decision now is about what you can recover.

Worked comparison: the ornament sets

85 sets cost $6 each, $510 in total, and normally sell at $15. Three options for January:

  • Mark down to $9 (40% off). If 60 sell, that recovers $540, and 25 remain to liquidate.
  • Sell all 85 to a liquidator at $2. That recovers $170 immediately, with no further effort.
  • Box them up for next year. Recovers nothing now, ties up $510 and storage space for 11 months, and they may not sell next year either.

Count the cost of waiting

Shopify’s guide works a similar example: a boutique buys 200 coats at $100, sells 100, then pays $200 a month to store the remaining 100 for eight months, adding $1,600 in storage before selling them at $75 for $7,500. Every month of holding has a cost, even if it is only the best-seller you couldn’t fit on the shelf.

The accounting side

Clearing dead stock changes what your inventory is worth on paper. This is general information; your accountant should handle the entries.

Write-downs

IRS Publication 538 lets businesses value goods that can’t be sold at normal prices because of damage, imperfections, shop wear, changes of style or similar causes at a bona fide selling price minus the direct cost of disposing of them. Under IFRS, IAS 2 measures inventory at the lower of cost and net realisable value. Either way, dead stock should not sit on the books at full cost.

Keep the paper trail

Record every markdown, write-off, donation and disposal as a stock movement with a reason, the quantity and the date. It supports any write-down you claim and shows you, a year later, which buying decisions turned into dead stock.

Stopping it coming back

Clearing dead stock once is easy. Not rebuilding it is the real work, and most of it happens at the buying stage.

Test small

For new products, order enough to fill a display and see a few weeks of sales before committing to a full run, even if the unit price is higher.

Let reorder points fall with sales

Recalculate reorder points monthly from recent sales. An item whose sales halve should see its reorder point halve too, or the system will keep buying for demand that has gone.

Make the aging review a monthly habit

Many tools include a report for this. Square, for example, lists an aging inventory report and a sell-through report on its Plus and Premium plans. In a spreadsheet, the three columns from the worked example are enough. Fifteen minutes a month is plenty for most shops.

If you’d rather not do this yourself

An AI app builder such as Floot can build a small app that calculates days since last sale, sell-through and weeks of cover from your sales and stock, and emails you the items over your thresholds each month. Test it against a month you have already reviewed by hand before trusting it.

Common mistakes

These keep dead stock on shelves longer than it needs to be.

  • Waiting for an item to “come back”, so a 20% markdown becomes a 70% markdown months later.
  • Ranking by units instead of value, so the most expensive problems get looked at last.
  • Marking down before checking the item is actually on the floor and visible.
  • Trusting the system count without checking. Count a suspect item before cutting its price; sometimes the “dead stock” was never there.
  • Clearing dead stock and then reordering the same item at the same quantity.
  • Discounting so widely and often that customers learn to wait for the sale.
  • Leaving written-off or donated stock in the system, so the books still show it.

Frequently Asked Questions

What is dead stock?

Inventory that has not sold within the period you would expect and is unlikely to sell at full price. It differs from obsolete stock, which can no longer be sold or used as intended at all.

How long before inventory is considered dead stock?

There is no fixed rule. For regular lines in a small shop, no sale in 90 days or more than 26 weeks of cover at the current sales rate is a reasonable starting point. Judge seasonal items at the end of their season.

How do I calculate sell-through rate?

Units sold ÷ (units sold + units on hand). If you’ve sold 30 of 100 units received, sell-through is 30%.

Should I sell dead stock below cost?

Often, yes. What you paid is already spent; the question is how much cash and space you can recover now. A sale below cost can beat holding stock that keeps costing space and may never sell.

Can I donate dead stock for a tax deduction?

Possibly, but the rules depend on your business structure and where you are. Shopify’s guide advises checking with a tax professional before claiming a deduction, and that is good advice.

How do I write off dead inventory?

Record the disposal or write-down as a stock movement with a reason and quantity, and have your accountant adjust inventory value. IRS Publication 538 describes valuing goods that can’t be sold at normal prices at their actual selling price minus disposal costs.

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