What is Overstock?

Overstock locks up cash in products that are not selling fast enough. That cash could go toward new products, marketing, or covering rent, but instead it sits on a shelf. For a small store the carrying cost adds up fast, even if nothing is officially lost yet.

Watch sell-through rate and weeks of supply by variant so you catch overstock early. If a product has far more weeks of supply than its lead time requires, stop reordering it and consider a discount or bundle to move it before it turns into dead stock.

Example

A candle store normally sells 20 units of a scent per week. The owner orders 400 units thinking it will sell out before the holidays. Three months later 250 units remain and demand has dropped to 10 units per week, meaning 25 weeks of stock on hand. That is overstock.

Common mistakes

• Ordering large quantities to hit supplier minimums or case pack discounts without checking real sell-through.
• Ignoring sales trends and reordering based on what sold well last year.
• Treating overstock and dead stock as the same thing, when overstock can still sell, just too slowly.

Overstock and SteadyShelf

SteadyShelf forecasts demand per variant so order quantities are sized to expected sales instead of guesswork, which helps avoid ordering into overstock.

Work it out for your own products with our free tool: Cash tied up in inventory.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Excess inventory · Dead stock · Carrying cost · Sell-through rate · Demand forecasting

Full inventory glossary

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