verb | stock clear·ance | ˈstäk ˈklir-ən(t)s
Stock clearance is when goods are sold to with an intent to "clear" or get rid of them rather than to earn a profit. The items could be overstock, end of line leftovers, surplus inventory, obsolete items, overproduction, canceled orders, stock abandoned with the shipping company, bankruptcy liquidation or returned merchandise. Through the process of stock clearance, companies reclaim space in their warehouses or retail outlets while trying to recover some of the intrinsic value of the goods.
Stock clearance is when goods are sold to with an intent to "clear" or get rid of them rather than to earn a profit. The items could be overstock, end of line leftovers, surplus inventory, obsolete items, overproduction, canceled orders, stock abandoned with the shipping company, bankruptcy liquidation or returned merchandise. Through the process of stock clearance, companies reclaim space in their warehouses or retail outlets while trying to recover some of the intrinsic value of the goods.
Stock Clearance Best Practices
This in-depth article explains what it takes to clear excess stock using a wide variety of methods and channels, including a global directory of companies specializing in stock removal. Click below to go straight to the section you are most interested in:
→ Stock Clearance Definition
→ Why Excess Stock is a Problem
→ What Causes Dead Stock?
→ The REAL Reason Why We Hang on to Obsolete Stock
→ A Process for How to Clear Dead Stock
→ Ways to Dispose of Excess Stock
→ Global Directory of Companies Specializing in Stock Removal
→ Ways to Prevent Dead Stock
→ Stock Clearance Definition
→ Why Excess Stock is a Problem
→ What Causes Dead Stock?
→ The REAL Reason Why We Hang on to Obsolete Stock
→ A Process for How to Clear Dead Stock
→ Ways to Dispose of Excess Stock
→ Global Directory of Companies Specializing in Stock Removal
→ Ways to Prevent Dead Stock
Why Excess Stock is a Problem
Most companies suffer from excess stock from time to time. It can be a costly problem due to the space occupied, capital tied up and oversight/upkeep required. Other times, companies are motivated by the need to make way for newer models or to end technical support of old legacy products.
Excess or obsolete stock can cause a wide variety of issues such as:
At the same time, companies need to minimize cannibalization of their flagship products. For example, if a big brand offers last year's model of shoe at a heavily discounted price right next to this year's model, it could harm sales of the current model. Companies avoid such channel conflicts by removing branding, selling anonymously through stock clearance companies and/or selling in other countries outside of their target markets.
Such stock clearance companies dispose of surplus stock discreetly through a network of exporters, wholesalers, flea market sellers and small retailers. There can many benefits of using a stock clearance company to dispose of stock in this way. For example, they generally have ready cash and warehousing space available to offer a quick and efficient turn-around. This can save months and even years of time that it might take to clear such items yourself. Although the pricing offered by such companies might be lower, the time and energy saved is often well worth it. A country-wise list of stock clearance companies has been documented further down in this article.
Excess or obsolete stock can cause a wide variety of issues such as:
- Financial losses if sold below cost
- Reduced sales due to blocked retail shelf space
- Blocked cash flow in your company
- Reduced sales due to blocked cash flow of your customer
- Congested warehousing storage space
- High tax payments due to inability to book losses on depreciated assets
- Depressing feeling every time you visit the warehouse or check the balance sheet
- Sending the wrong signals to your team (it is OK to be sloppy and inefficient)
- Shrinkage (theft/disappearance)
- Obsolescence/spoilage
- Bloated working capital and high interest cost
At the same time, companies need to minimize cannibalization of their flagship products. For example, if a big brand offers last year's model of shoe at a heavily discounted price right next to this year's model, it could harm sales of the current model. Companies avoid such channel conflicts by removing branding, selling anonymously through stock clearance companies and/or selling in other countries outside of their target markets.
Such stock clearance companies dispose of surplus stock discreetly through a network of exporters, wholesalers, flea market sellers and small retailers. There can many benefits of using a stock clearance company to dispose of stock in this way. For example, they generally have ready cash and warehousing space available to offer a quick and efficient turn-around. This can save months and even years of time that it might take to clear such items yourself. Although the pricing offered by such companies might be lower, the time and energy saved is often well worth it. A country-wise list of stock clearance companies has been documented further down in this article.
What Causes Dead Stock?
External factors such as slowing customer demand, new developments in technology, shifts in fashion, slowdowns in the economy, pandemic lockdowns, heavy discounting by competitors, etc. often contribute to forming excess stock. But the root cause is usually weak internal systems and processes.
For example, changes in fashion might result in large quantities of unsold garments in the retail outlet, some of which get returned to the distributor or manufacturer. Nevertheless, the practice of “pushing” large quantities of each SKU to the retailer could be the difference between a minor adjustment and a major catastrophe.
In other words, large quantities of dead stock are a surefire sign of opportunity to improve internal systems and processes. Fill up the form at the bottom of this article to receive a free comprehensive PDF guide detailing the typical root causes and their solutions for how to prevent dead and obsolete stock.
For example, changes in fashion might result in large quantities of unsold garments in the retail outlet, some of which get returned to the distributor or manufacturer. Nevertheless, the practice of “pushing” large quantities of each SKU to the retailer could be the difference between a minor adjustment and a major catastrophe.
In other words, large quantities of dead stock are a surefire sign of opportunity to improve internal systems and processes. Fill up the form at the bottom of this article to receive a free comprehensive PDF guide detailing the typical root causes and their solutions for how to prevent dead and obsolete stock.
The Real Reason Why We Hang on to Obsolete Stock
Business managers often attribute more value to dead stock than it is worth in the market. Hence, they try to hold out for a better deal – one which rarely ever materializes!
Our natural attempt to recover it's “true value” is due to the psychological principle of loss aversion. This cognitive bias causes humans to feel twice as much psychological pain from losing something than it is actually worth to us.
Our natural attempt to recover it's “true value” is due to the psychological principle of loss aversion. This cognitive bias causes humans to feel twice as much psychological pain from losing something than it is actually worth to us.
The first step to clearing excess stock is to realize that you will probably need to discount it a lot more than you ever imagined. Until all of the key decision makers come to terms with this fact, any attempt to dispose of stock is destined to end in frustration.
The *Other* Reason Why Businesses Never Get Around to Clearing Excess Stock
Disposing of excess stock is a lot of work. It requires many coordinated tasks for which no one is currently responsible, plenty of blame to go around and a low probability of initial success.
To succeed, you need strong determination, cross-functional participation, persistence and active sponsorship from high up levels in the organization.
A Process For How to Clear Dead Stock
We recommend the following process to clear out stock effectively:
Step 1: Download a complete list of all stock items from your ERP or inventory records in Excel format. Include unique item code/SKU no., description, quantity and price. If available, also include warehouse code, stock location, dimensions, cost (if available) or weight (if it helps you estimate cost) and date of stocking.
Step 2: Remove all running items from the list so that only excess, dead or obsolete items remain.
Step 2: Remove all running items from the list so that only excess, dead or obsolete items remain.
Step 3: In Excel, create a column for TOTAL VALUE and multiply the quantity into list price or cost. Copy this formula all the way down for all items.
Step 4: Sort this TOTAL VALUE column Z→A (from largest to smallest).
Step 5: Select a manageable list of high value excess stock items to focus on, perhaps the top 20 or so initially.
Step 6: Visit the warehouse to check on the condition of the goods and validate the quantities.
Step 7: Identify any changes required e.g. refurbishments, new packaging, cleaning, etc.
Step 8: Mark off a section of the warehouse and place the identified items separately.
Step 9: Identify possible channels for clearing the short list (refer to the section below for ideas)
Step 10: Assign roles and responsibilities for preparing and clearing the stock.
Step 11: Follow up with weekly meetings to measure the progress and plan next steps. Be sure to include key stakeholders such as the business owner, sales/marketing team, warehouse manager, CFO, Sr. Management, etc.
Step 12: As items begin to clear, add more items from lower down in the list. When willing customers are found, attempt to cross-sell them other items on the list as well.
Step 5: Select a manageable list of high value excess stock items to focus on, perhaps the top 20 or so initially.
Step 6: Visit the warehouse to check on the condition of the goods and validate the quantities.
Step 7: Identify any changes required e.g. refurbishments, new packaging, cleaning, etc.
Step 8: Mark off a section of the warehouse and place the identified items separately.
Step 9: Identify possible channels for clearing the short list (refer to the section below for ideas)
Step 10: Assign roles and responsibilities for preparing and clearing the stock.
Step 11: Follow up with weekly meetings to measure the progress and plan next steps. Be sure to include key stakeholders such as the business owner, sales/marketing team, warehouse manager, CFO, Sr. Management, etc.
Step 12: As items begin to clear, add more items from lower down in the list. When willing customers are found, attempt to cross-sell them other items on the list as well.
Ways to Dispose of Excess Stock
Many possible channels exist to clear stock. The list below presents them in order from those that might realize higher pricing, down to those that might realize next to nothing:
- In case of a bungled launch/marketing, try improving the packaging, redo the marketing and relaunch the product
- Reuse major components (e.g. change the power adapter and packaging/language to sell in other countries)
- Discount and sell:
- Direct to consumers through e-commerce portals, eBay, etc.
- To your largest distributors (if it doesn’t cannibalize running products)
- For example, offer monthly "specials" which are only for existing stock on a first-come, first-serve basis
- To distributors in other countries / markets
- On online marketplaces (https://www.sellingexcessinventory.com/sell-amazon-fba)
- In specialized stock clearance companies (see a complete listing in the section below)
- In alternate markets like flea markets and bazaars
- Melt/chip/reuse the raw materials
- Sell it for scrap
- Pawn it
- Offer as freebie bundled with other products
- Offer as an employee reward to boost morale
- Create social media contests and give away the dead stock to earn free publicity
- Donate it to charity and gain tax deductions or corporate social responsibility (CSR) expense credits
Global Directory of Companies Specializing in Stock Removal
This listing of stock clearance wholesalers is organized by country, with notes about which categories they specialize in. Consider reaching out to companies OUTSIDE of your core markets to avoid cannibalizing sales of your other products.
Australia - Stock Clearance Companies
Belgium - Stock Clearance Companies
Canada - Stock Clearance Companies
Germany - Stock Clearance Companies
India - Stock Clearance Companies
Italy - Stock Clearance Companies
Japan - Stock Clearance Companies
Netherlands - Stock Clearance Companies
United Arab Emirates - Stock Clearance Companies
United Kingdom - Stock Clearance Companies
United States of America - Stock Clearance Companies
Saudi Arabia - Stock Clearance Companies
Singapore - Stock Clearance Companies
Thailand - Stock Clearance Companies
Australia - Stock Clearance Companies
- https://www.dimmeys.com.au/excess-stock-buyers-australia/ - Apparel, home furnishing
- https://www.coorey.com/excess-stock/ - General merchandise, all categories of consumer goods
- https://a1stockbuyers.com.au/ - Consumer goods, apparels, hardware, pharmaceuticals
- https://shop.jtcimportexport.com.au/ - Apparel, home furnishing, general houseware, hardware
Belgium - Stock Clearance Companies
- http://suprimax.be/ - Textiles, clothing and shoes
Canada - Stock Clearance Companies
- http://tradezones.ca/services - Apparel
- https://www.closeoutking.ca/aboutus.asp - Designer fragrances, jewelry, sunglasses, books, electronics, houseware, electronic toys
Germany - Stock Clearance Companies
- https://stock-solution.de/en/for-sellers/ - Clothing & fashion
India - Stock Clearance Companies
- https://surplusindia.in/index.php - Apparel
- https://www.rack37.com/ - Garments, consumer electronics, footwear, health, furniture, home appliance
- https://www.deadstockcompany.co.in - Apparel, footwear, consumer electronics, gifts, furniture, electronic goods
- https://www.valueshoppe.co.in - All categories
Italy - Stock Clearance Companies
- https://www.stockinitaly.com/ - Clothing, shoes, bags, accessories, textiles / yarns, kitchens, bedrooms, living rooms, sofas, office furniture, desks, wall units, chairs, electric equipment, lighting / LED, bathroom accessories and taps, household, pots, pans, plates, cutlery, WC, sinks, bidet, shower trays, cabinets, ceramic, porcelain and gres tiles, fridges, dish/washing machines, freezers, ovens, small appliances, mixers, kettles, toasters, DIY tools, equipment, generators, garden furniture, electronic equipment, foods, soft drinks, wines and spirits
- https://www.winterludegroup.it/en/index.html - Apparel & accessories
- https://www.2000network.com/en/ - Footwear, mens/womens/children's clothing, bags, backpacks, linens and household items, small appliances, collectable items including scale models, toys, gifts
Japan - Stock Clearance Companies
- https://www.revalue.jp/english/ - Computers, consumer electronics, major appliances, furniture, toys, apparel, consumer goods, components / parts, raw materials, machinery and equipment, ther miscellaneous items
Netherlands - Stock Clearance Companies
- https://zerostock.nl/en/ - Machiney, IT equipment, office furniture
United Arab Emirates - Stock Clearance Companies
- http://www.weselldeadlots.com/ - Electrical, electronics, tools, building material, garment, home appliances, IT
United Kingdom - Stock Clearance Companies
- https://sgtrading.co.uk/ - All categories
- https://anystockbuyer.com/contact-us.php - All kind of stock
- http://sit-international.co.uk/ - All kind of fashion and techology stocks
- https://ukstocksupplies.com/we-buy-unwanted-stock/ - Footwear, health & beauty, home items, phones & accessories
- http://www.wameurope.com/ - Consumer tech products
- https://elsatex.com/clearance-textiles/ - Textile items
- https://www.surplusstockworldwide.com/About-Us/Contact-Us - Electrical, electronic, plant machinery, car & van parts
United States of America - Stock Clearance Companies
- https://www.bullpenfood.com/ - Food & grocery liquidators
- http://excessinventorybuyer.com/ - Closeout buyers of discontinued or distressed goods
- https://merchandiseusa.com/index.php - Wholesale pet products, discount housewares, wholesale sporting goods, wholesale pallets, wholesale Christmas décor, and anything else you may have for a discount warehouse
- https://www.dfliq.net/sell-to-us/ - Electrical inventory
- http://www.stock-point.com/index.php - Electronic components
- https://www.sirplus.com/ - All categories
- https://www.amlinc.com/ - Tools & equipment, general merchandise, home furnishing, clothing, footwear, electronics, jewellery, grocery
- https://boxfox.co/ - Retail
- https://bulkinventorybuyers.com/ - Consumer products
- https://webuyexcess.com/ - All categories
Saudi Arabia - Stock Clearance Companies
- https://www.win.com.sa/home/about - Electrical, safety, construction equipment, mechanical
Singapore - Stock Clearance Companies
- https://www.bentecc.com/components - Electronic components
- https://www.maxicom.sg/buyexcessinventory - IT hardware
Thailand - Stock Clearance Companies
- https://www.stockbuz.com/ - Apparel
Ways to Prevent Dead Stock
Are you struggling with excess stocks and would like to learn how to prevent them from forming in the first place?
We have compiled a comprehensive collection of root causes for excess stock, along with their corresponding solutions which you can use to find the right approach for improving your business.
Fill up the form below to receive your free copy of the PDF report documenting different ways to prevent dead and obsolete inventory.
We have compiled a comprehensive collection of root causes for excess stock, along with their corresponding solutions which you can use to find the right approach for improving your business.
Fill up the form below to receive your free copy of the PDF report documenting different ways to prevent dead and obsolete inventory.
About the Authors: the above article is a written by Ashish Agarwal, Director of SHK Brands Pvt. Ltd. and edited by Joseph A. Hopper, Principal - South Asia at the Theory of Constraints Institute