Dead stock is stock you have already paid for that has stopped selling. The money left your account when you paid your supplier. It is now sitting on a shelf, and it will keep sitting there until you do something deliberate about it.
There is no official cut-off, so use a working one:
Dead stock is any item still in your shop that has not sold a single unit in the last 90 days.
Ninety days suits most small retail. Adjust it to what you sell: a provisions shop can use 30 days, while furniture, building materials or specialist parts may need 180. The exact number matters less than having one, because without a cut-off, “it will move eventually” is always available as an answer.
Why dead stock costs more than it looks
The cost of dead stock is not the loss you would take clearing it. It is what that money would have been doing in the meantime. Three things make it easy to miss.
- It looks like an asset. Stock appears in your records as value, not as a problem. A ₦1,500,000 stock figure feels like strength even when ₦400,000 of it has not moved since February.
Work out the real number for yourself. Take your total stock value at cost, then subtract the value of everything that has not sold inside your chosen window. What is left is the part of your working capital that is actually working.
How to find your dead stock in one sitting
You need three things for each item, and none of them require software:
- How many units you have on hand
- What one unit cost you — the cost price, not the selling price
Multiply the first two to get the money tied up in that item. Then sort the list by that figure, largest first.
That last step is the one most people skip, and it is the one that matters. The item that has been dead longest is rarely the item holding the most cash.
Here is a provisions shop reviewing its shelves on 31 August, using a 90-day cut-off:
- Hair cream — 40 units at ₦2,500 cost = ₦100,000 tied up. Last sold 5 March (179 days ago).
The notebooks are fine; they sold four days ago. The other three fail the 90-day test, and they are holding ₦226,000 between them.
The wall clock has been dead longest at 225 days, so it feels like the obvious problem. But the hair cream is holding ₦100,000 — nearly twice as much money. If you only have the energy to deal with one line this month, deal with the hair cream.
Two numbers for when the last-sold date is not enough
A last-sold date tells you whether something is moving at all. These two tell you how well it is moving, which is what you need before you decide to reorder.
Sell-through rate
This is the share of what you had available that actually sold.
Sell-through rate = units sold ÷ units available × 100
Units available means what you started the period with, plus whatever you received during it. If you began the month with 30 units, took delivery of 20 more, and sold 12:
12 ÷ 50 × 100 = 24%
Just under a quarter of that line sold in a month. Whether 24% is good depends on your trade, but tracked across three months on the same item it shows you the direction, and direction is what tells you whether to reorder.
Inventory turnover
This is how many times you sell and replace your entire stock in a year.
Inventory turnover = cost of goods sold ÷ average inventory
Average inventory = (opening stock + closing stock) ÷ 2
Both figures are at cost, not at selling price. Take a shop with ₦7,200,000 in cost of goods sold for the year, opening stock of ₦1,000,000 and closing stock of ₦1,400,000:
Average inventory = (₦1,000,000 + ₦1,400,000) ÷ 2 = ₦1,200,000
Turnover = ₦7,200,000 ÷ ₦1,200,000 = 6 times a year
Divide 365 by that and you are holding roughly 61 days of stock. A low turnover points at too much stock, weak sales, or both — usually concentrated in the exact lines your dead-stock list has already named.
What to do with what you found
Work down this list in order and stop at the first option that works.
- Check that it is really dead. Something mis-shelved, stored in the back, or listed under a name nobody searches for is not dead — it is hidden. Fix the visibility first and give it a few weeks.
The discount arithmetic
The hardest part of clearing dead stock is emotional. Cutting the price feels like admitting you wasted money. The arithmetic is more forgiving than the feeling.
The ₦2,500 you paid for each unit of hair cream is gone either way. It is not part of the decision any more. The only real question is which choice puts more money back in your hands, and how soon.
Take those 40 units, ₦100,000 at cost, normally priced at ₦4,000:
- Hold at ₦4,000. It has been selling about one unit a month. That is over three years to clear the shelf, with ₦100,000 tied up for the whole stretch.
Put the last option against the first one honestly. ₦88,000 back in the business now, buying stock that actually turns, is worth more than ₦100,000 released one unit at a time over three years, and it ends the slow cost of giving shelf space and attention to a line that has already failed.
Two rules make discounting safer:
- Set the floor before you start. Write down the lowest price you will accept and stop there. Without a floor, a clearance turns into a slow slide with no bottom. The will tell you what margin any price you are considering actually leaves you.
What creates dead stock in the first place
Nearly all of it traces back to buying decisions made without information, rather than to bad luck.
- Buying deep for a supplier discount on something untested. A better unit price on 100 units of something that turns out not to sell is not a saving.
Making the check routine
Finding ₦226,000 of dead stock once is useful. Not accumulating it again is worth more.
- Put the review in the calendar. Once a quarter, on a date, the way you would treat any other obligation.
The short version
Dead stock is not a sign that you are bad at buying. Every business that carries stock ends up with some. The difference is whether you find it after 90 days or after three years.
The check itself is simple: what do I have, what did it cost me, and when did it last sell. Keep those three things in one place and the list writes itself.
That is the part WadMaster's inventory tools handle for you. Stock levels, cost prices and profit per product stay connected to the invoices you already send, so the items that have stopped moving surface on their own instead of waiting for you to notice them.
