Inventory 13 min read Intermediate

Find and Liquidate Dead Stock: Complete Playbook with Excel Calculator

Dead inventory ties up cash, fills warehouse space, and kills profitability. Learn how to identify slow-movers, calculate true carrying costs, and execute a profitable liquidation strategy.

Platforms: Shopify WooCommerce
Find and Liquidate Dead Stock: Complete Playbook with Excel Calculator

The Hidden Cost of "We'll Sell It Eventually"

You have 500 units of a product that hasn't sold in 6 months. COGS was $25/unit. That's $12,500 tied up. But the real cost is higher:
  • Warehouse space: $0.50/unit/month × 6 months = $1,500
  • Opportunity cost: $12,500 invested at 10% annual return = $625 lost
  • Risk of obsolescence: Fashion/tech loses 20% value every quarter = $2,500 potential loss
  • Total hidden cost: $4,625 (37% of COGS)
After 12 months, you'll spend more on carrying costs than you spent on the product. Dead stock isn't just unsold inventory. It's cash bleeding out slowly. Let's stop the bleeding.

What Qualifies as Dead Stock?

Not all slow-movers are dead. There's a spectrum:

The Dead Stock Hierarchy

1. Clinically Dead (Liquidate Immediately)
  • Zero sales in 180+ days
  • Inventory turnover < 0.5x per year
  • Seasonal product past its season
  • Discontinued, damaged, or expired
2. Critical Condition (Liquidate Within 30 Days)
  • <5 sales in 180 days
  • Inventory turnover < 1x per year
  • Sitting for 12+ months
  • Next season's version arriving soon
3. Slow but Salvageable (Monitor / Light Discounting)
  • Inventory turnover 1-2x per year
  • Steady trickle of sales
  • Not time-sensitive
  • May improve with marketing
4. Healthy Stock (Keep)
  • Inventory turnover 4-8x per year
  • Consistent sales velocity
  • Reordering regularly

The Inventory Turnover Formula

Inventory Turnover = Cost of Goods Sold / Average Inventory Value Or simplified per SKU: Inventory Turnover = Units Sold (12 mo) / Average Units in Stock Example:
  • Units Sold Last Year: 120
  • Average Inventory: 100 units
  • Turnover: 120 / 100 = 1.2x per year
Anything under 2x is a problem. Under 1x is dead.

Finding and Analyzing Dead Stock in Excel

1

Export Your Full Inventory List

From Shopify: Products > Export. Get SKU, Product Name, Current Stock, Cost per Item, Date Added. This is your starting point.

Export Your Full Inventory List
2

Pull 12-Month Sales Data

Export orders from last 365 days. Use pivot table to sum Units Sold by SKU. Formula: =SUMIF(orders[SKU], this_sku, orders[Quantity]). This shows actual sales velocity.

Pull 12-Month Sales Data
3

Calculate Inventory Turnover Ratio

In your inventory sheet, add column: =UnitsSoldLastYear / AverageInventory. Sort descending. Products at the bottom (<2.0) are your problem children.

Calculate Inventory Turnover Ratio
4

Calculate Days of Supply

Days of Supply = (Current Stock / Daily Sales Rate). Formula: =CurrentStock / (UnitsSold365 / 365). Over 180 days = dead stock. Over 365 days = ancient history.

Calculate Days of Supply
5

Calculate True Carrying Cost

Carrying Cost per Unit per Month = (Storage Rate × Volume) + (COGS × Monthly Interest Rate) + Obsolescence Risk. Typical total: 2-3% of COGS per month.

Calculate True Carrying Cost
6

Calculate Break-Even Liquidation Price

Break-Even = COGS + (Accumulated Carrying Costs). Any sale above this recovers your money. Formula: =COGS + (MonthsInStock × MonthlyCost). Anything less is a loss but stops further bleeding.

Calculate Break-Even Liquidation Price
7

Build Your Liquidation Priority Matrix

Create score: (Units in Stock × COGS × Months Sitting). Sort descending. Highest scores are bleeding the most cash. These get liquidated first.

Build Your Liquidation Priority Matrix

The Liquidation Strategy Decision Tree

Not all dead stock should be liquidated the same way. Choose based on value and velocity:

Strategy 1: Deep Discount (50-70% Off)

When to use: High volume, low COGS, need it gone NOW
  • Example: 1,000 units of $5 keychains
  • Liquidation price: $2-3
  • Goal: Clear space, recover something
  • Channel: Your own site with banner ads

Strategy 2: Bundling

When to use: Dead stock + bestseller = perceived value
  • Example: Slow-selling phone case + popular charging cable
  • Bundle price: $29 (separate: $40)
  • Goal: Move dead stock while maintaining margin on bestseller
  • Channel: Homepage bundle offer

Strategy 3: Liquidation Partners

When to use: Premium brand can't be discounted heavily on your site
  • Example: Designer apparel ($150 COGS)
  • Liquidation price: $80-100
  • Goal: Preserve brand, quick cash
  • Channels: TJ Maxx, Gilt, Rue La La

Strategy 4: Donation Write-Off

When to use: Can't sell above break-even, need tax deduction
  • Must be legitimate charity (not "mystery box" resellers)
  • Get written receipt for tax filing
  • Deduct Fair Market Value or COGS (IRS rules vary)

Strategy 5: Return to Supplier (if possible)

When to use: You have return agreements, product is sellable
  • Expect 25-50% restocking fee
  • Still better than $0
  • Negotiate terms before placing large future orders
Markdown Level Expected Sales Velocity Typical Margin Use Case
10-20% off 1.5-2x normal Still profitable Slow movers, test discount
30-40% off 3-5x normal Break-even to small profit Clearance, fast clear
50-70% off 8-12x normal Loss on item, gain on space Dead stock, liquidation
75%+ off Very high velocity Significant loss Disposal alternative, last resort

The Markdown Cadence Strategy

Don't go straight to 70% off. Start at 30% off for 2 weeks. Bump to 50% for 2 weeks. Final liquidation at 70%. This maximizes recovery - the shoppers who'd pay 50% don't need to see it at 70%.

The Excel Dead Stock Calculator

Build a simple tracker to prevent future dead stock:

Column Structure:

1. SKU 2. Product Name 3. Date First Stocked 4. Current Units 5. COGS per Unit 6. Total Value (Units × COGS) 7. Units Sold L90D (last 90 days) 8. Daily Sales Rate (=Col7/90) 9. Days of Supply (=Col4/Col8) 10. Inventory Turnover 11. Status (formula-driven) 12. Action Required

Auto-Status Formula:

=IF(J2<0.5,"Dead-Liquidate Now",
  IF(J2<1,"Critical-Liquidate 30D",
    IF(J2<2,"Slow-Monitor",
      "Healthy")))

Conditional Formatting:

  • Red: Dead (turnover <0.5)
  • Orange: Critical (0.5-1.0)
  • Yellow: Slow (1.0-2.0)
  • Green: Healthy (>2.0)
Update this monthly. Watch for products slipping from green to yellow.

Common Mistakes to Avoid

Mistake: Waiting until inventory is truly dead (0 sales in 12 months) to take action
Solution: Act when turnover drops below 2x. Early 30% discount is better than desperate 70% discount later.
Mistake: Not tracking accumulated carrying costs in liquidation decisions
Solution: A $50 COGS product that's sat 12 months has cost you $60-65 total. Liquidate at $40 to stop the bleeding.
Mistake: Buying more inventory before clearing dead stock
Solution: Institute a rule: no new POs until dead stock is under 10% of total inventory value.
Mistake: Liquidating everything at once and training customers to wait for sales
Solution: Rotate liquidations by category. Don't make your entire catalog 50% off simultaneously.

Verification Checklist

  • You have a list of all SKUs with &lt;2x annual inventory turnover
  • You know the total dollar value tied up in dead stock
  • You've calculated break-even liquidation price for each dead SKU
  • You have a liquidation plan with specific dates and discount levels

Frequently Asked Questions

4-6x per year is good. 8-12x is excellent. Under 2x is concerning. But it varies by industry - fashion needs 6-8x, furniture might be fine at 3-4x.
Not necessarily. If it's profitable and customers want it, keep it. Focus liquidation on unprofitable or no-longer-selling items.
Aim for &lt;5% of inventory value in dead stock (&lt;1x turnover). 5-10% needs attention. Over 10% is a serious problem affecting cash flow and profitability.
No, but you can minimize it. Better demand forecasting, smaller initial orders, faster liquidation cycles. Even great retailers have 3-5% dead stock.
Depends on brand. Budget/value brands can advertise clearance heavily. Premium brands should use subtle 'Final Sale' sections or liquidation partners to protect brand perception.