Whether you are running a small or big eCommerce operation, you are going to deal with a lot of product stock. So much so, that you may end up dealing with deadstock, obsolescence and spoilage quite a few times in a typical year.
However, with the right inventory control and management practices and strategies, you’ll be able to deal with these kinds of situations in your online store quite easily. Products that remain on the shelves for too long occupy precious space and eat away at your revenue and profit margins.
To prevent and deal with these kinds of solutions, eCommerce stores often implement stock rotation to have better visibility and control of their inventory. That said, let us first understand the definition of stock rotation, its types, its importance and the best practices
What is Stock Rotation?
Stock rotation is a systematic approach to organising warehouses and inventory so that older and slow-selling items are prioritised over new and fresh items. However, eCommerce companies implement stock rotation in different ways. The aforementioned logic applies pre-dominantly to non-perishable goods.
Broadly speaking, stock rotation ensures that stocks of certain products are sold before others. For instance, if a retailer deals with a large volume of perishable goods, they should prioritise selling products with earlier expiry dates.
Online stores can take multiple approaches to stock rotation, based on their needs and the nature of products.
Here are the 3 types of stock rotation systems that you should know about:
1. First-In-First-Out (FIFO)
In the FIFO method of stock rotation, the oldest stock is prioritised in stock rotation and removed first. If your product catalogue consists of perishable goods or items whose value might fall over time, you are likely to pick this method of stock rotation.
2. Last-In-First-Out (LIFO)
The LIFO method involves removing or selling the most recent and newest items first. If you primarily deal with non-perishable items for which newer stock is always requested (appliances, gadgets and apparel), you might want to adopt this method of stock rotation.
3. First-Expired, First Out (FEFO)
FEFO is a precision-based approach primarily focused on the shelf life of products and will be applicable to your products only if they are likely to expire and cause safety or quality issues.
If you sell skincare or makeup products that may cause safety issues after they expire, you will follow an FEFO method for stock rotation, organising items according to their expiry date and pushing them out for sale accordingly.
Why is Stock Rotation Important?: 5 Key Benefits
Now that you know what is stock rotation, and the different methods you can use based on the nature of the products and goods you sell, let us look at why this process is so important. Here are the reasons that make it so crucial for online stores:
1. Ensure Product Quality and Safety
One of the key reasons you must look into implementing a stock rotation strategy is that it will help you moderate the quality and safety of your products. Stock rotation can help you get rid of goods that are about to expire or go obsolete, helping you effectively reduce dead stock in your inventory.
As a result, you’ll prevent accidental sales of such products and ensure that the products you sell always meet the quality and safety benchmarks.
2. Make Room for New Products
By implementing stock rotation, you can not only have a more efficient inventory turnover but also make room for new products without compromising on the old ones. This benefit is commonly leveraged by electronics manufacturer, who sell their old models and products at discounted prices to make room for new product launches.
3. Maintain Seasonal Relevance
When you are dealing with a lot of seasonal products, stock rotation becomes a lot more about keeping your products relevant than just about your inventory efficiency. Imagine being a brand specialising in winter wear and jackets, only to have a huge deadstock volume to deal with in summer.
With the right stock rotation approach, you can effectively keep the movement of your old stock going, while ensuring that you don’t end up with too much dead or obsolete stock after the seasonal demand ends.
4. Manage Inventory Levels
When you implement stock rotation, you have no choice but to take a deeper look at your inventory movement and take steps to maintain optimal stock levels. This enhanced visibility into your inventory performance can help you identify potential issues like overstocking a specific SKU or its slow-moving stock.
You can also get insights into the stocks that are performing well and should be stocked more.
5. Enhancing Customer Satisfaction
The more control you have over your products and inventory, the better your chances of delivering on your customers’ expectations. At the very least, your customers expect quick deliveries and the products they ordered to be of expected quality.
Since stock rotation will help you ensure better performance in both these areas, your customer satisfaction levels will get that extra boost.
5 Challenges in Stock Rotation and How to Solve Them
We have now discussed stock rotation definition and its importance in your online store, and how it can help you improve the performance of your online store. However, there are also a few challenges that you should be aware of if you are considering this approach.
Here’s a detailed explanation of the primary ones you should know about and their respective solutions:
1. Inaccurate Tracking of Inventory
For your method of stock rotation to be truly successful, you need to ensure that you implement inventory control and management accurately. However, using outdated versions of inventory management software and tools can often cause errors and discrepancies in your inventory data.
These kinds of inaccuracies in your inventory data can lead to incorrect or improper stock rotation decisions and implementation, which can then lead to financial losses and a lot of product wastage.
Solution: So many online stores today invest in advanced inventory management systems that can help you track and monitor your inventory accurately. These tools can also automate most stock rotation processes and help you gain real-time visibility into your inventory movement.
2. Seasonal Demand Variation
Depending on the nature of your products, you may experience seasonal demand fluctuations. Fluctuations in demand require online stores to come up with an effective plan to ensure that products with shorter shelf lives are sold or removed before their demand goes down. Without a proper strategy or plan in place, your entire stock rotation process could get derailed.
Solution: You must consider implementing demand forecasting techniques and conducting sales data analysis that can help you predict product demand more accurately, and adjust your stock rotation strategies accordingly.
3. Limited Storage Space
When you are dealing with limited storage space in your warehouses, you can quickly end up facing a lot of challenges in implementing a proper stock rotation strategy. Additionally, when you have to manage perishable items and accommodate a wide range of products maintaining an optimal inventory level can get tricky. On the flip side, if you end up understocking products, you could end up with lost sales opportunities.
Solution: If your online store deals with perishable products, you must consider implementing a first-in-first-out (FIFO) stock rotation procedure. This can ensure that you prioritise pushing out the older items with expiration dates by keeping them at the front, while newer items are at the back.
4. Complicated Supply Chain
If your online store caters to a wider audience and deals with international shipping operations, you are most likely dealing with multiple suppliers, retailers and distributors. When there are so many stakeholders in a process, managing stock rotation across the board can quickly get complicated.
Solution: To overcome this challenge, online stores must strive to enable better communication and collaboration among all the parties involved. You should also consider setting down clear guidelines and information exchange so that stock rotation happens seamlessly.
5. Communication Gaps and Issues
One of the biggest challenges to stock rotation is the lack of visibility that often plagues the supply chain operations of online stores. Without real-time visibility, the data upon which your stock rotation strategies are based could contain several inaccuracies and errors.
Inaccuracies can also cause communication gaps and issues between departments and employees, causing your entire stock rotation process to break down.
Solution: Establish robust communication strategies and plans that can help you strengthen interdepartmental communication and ensure that you document every unilateral or bilateral communication taking place in your organisation.
Stock Rotation: 10 Best Practices You Should Know About in 2025
By now, you must have a clear idea of what a stock rotation cycle entails, the benefits and challenges associated with it, and the steps you can take to overcome those challenges. However, if you are looking to implement stock rotation for your online store, we recommend learning about the following best practices that you should follow:
1. Leverage Technology to Track Your Stock
Technological integration is inevitable in modern-day businesses. However, in the context of inventory and stock management, technology can play a pivotal role in several ways. With the right technological tools, you can track and monitor the stock movement in your inventory in real time.
Keeping an eye on your stock levels will help you have more control over your inventory and manage your stock rotation chart more effectively. Having the right technology stack will help you streamline your stock rotation strategy and automate most parts of it while improving accuracy in operations and order management.
That said, some of the common types of technology-driven tools that are used for managing stock rotation are:
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Barcode scanning: Barcodes involve assigning a unique code to each SKU and can help you identify and track all your products at different stages of the supply chain.
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Inventory management software: These are software solutions that facilitate insights into inventory turnover, and SKU level visibility. It also helps you keep a real-time count of your inventory.
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Lot numbers: These are numbers assigned to locations in your warehouse that help you organise your products based on production or expiration date.
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Warehouse Management System: Another tool that helps you streamline the typical warehouse processes and operations such as picking, packing and shipping is a Warehouse Management System.
2. Train the Warehouse Staff
Facilitating the necessary training for your staff is perhaps the biggest advantage you can give yourself when you are trying to implement a stock rotation strategy. Training your warehouse staff effectively will ensure that you don’t have to deal with any major mistakes or errors in your inventory reporting or related processes.
What’s more, this staff training should be consistent and continuous. You must focus on training them regularly so that they are abreast of the trends and can ensure that your stock rotation strategy is successful. Your warehouse staff will be dealing with your inventory regularly, so they should know how to manage it so that it aligns with your business objectives and strategies.
3. Measure the Efficacy of Your Stock Rotation Strategy
There are different kinds of approaches an online store can take when implementing stock rotation. However, once you implement it, it is even more important to consistently monitor it and measure the stock rotation regularly so you can ensure that your approach is working.
By analysing the results, you can figure out whether you need to make adjustments to your approach and make necessary improvements whenever necessary. One of the best ways to manage and measure the performance of your stock rotation strategy is to track your cost savings.
You can also use the results and insights from the analysis to reduce spoilage and inventory obsolescence, thus minimising your wastage and maximising your ROI.
You can also track other inventory KPIs that can measure the performance of your stock rotation such as:
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Stockouts
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Inventory Turnover Ratio
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Holding Costs
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Stock to Sales Ratio
Your stock rotation strategy is only as good as the results it can generate. You will see a drop in your deadstock over time and in your holding costs. Ensure consistent measurement of your stock levels and related data so that you can come up with the right approach.
4. Choose the Right Stock Rotation Method
Stock rotation can be a great strategy for your online store, but it is not a one-size-fits-all solution. There are different stock rotation approaches you can consider for circulating and managing your stock more effectively.
The different stock rotation methods are based on the products, and sizes offered by your brand and figuring out the right approach can make all the difference between the success and failure of your stock rotation strategy.
You can consider the pros and cons of the aforementioned three stock rotation approaches and pick one that works best for your online store:
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First-In-First-Out Stock Rotation
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Last-In-First-Out (LIFO)
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First-Expired-First-Out (FEFO)
FIFO and FEFO are approaches that work best for online stores that sell perishable products and have to be sold before their expiration date. On the other hand, LIFO can help you when the relevance and currency of your products are crucial when they are being sold.
5. Utilise Stock Tracking Tools
When you carry out a complex and multi-layered process such as inventory control or stock management manually, it is prone to errors or mistakes. While manual intervention would still be required considering the skills required for the process, most of the sub-processes within it can be automated.
With automation in stock tracking, you can get real-time insights into your existing stock and aim for higher productivity. You can use tools like NetSuite, InFlow, and Sortly to ensure that your stock is tracked accurately and consistently.
6. Organise and Optimise Warehouse Space
Warehouse organisation is one of the most underrated ways to ensure that your stock rotation strategy is efficient and meets the desired goals. One of the biggest factors correlating your warehouse layout and stock control is accessibility. You must stock older products up front and make them more accessible to pickers and other staff.
Other than this, you can define zones depending on the kind of stock rotation strategy you want to implement. For instance, you can divide them into older and newer stock. Or you can categorise and store them based on their expiration date.
A well-defined and optimised warehouse layout also helps you boost the accuracy of your picking process, and even optimise your order fulfilment process so that your products are out of the door in the shortest time possible.
Additionally, to solidify your stock rotation strategy and ensure that your warehouse layout is conducive to it, consider implementing robust storage solutions, and clear labeling and signage.
7. Adjust Strategies Based on Sales Data
Tracking your sales and analysing the data resulting from it will tell you a lot about the effectiveness of your stock rotation strategy. Your sales data can tell you whether the products you want to sell first, are actually selling out first. If they are, you know that the stock rotation approach you have implemented is indeed working.
You can also pair your sales data with your demand forecasting strategies to get a better idea of the optimal size of your purchase orders and inventory management. Equipped with these insights, you can adjust how your products are placed, promoted or sold for best performance.
8. Introduce Discounts on Slow-Moving Stock
Getting rid of old or slow-moving stock can get quite difficult and definitely is not as easy as it sounds. Even with a great stock rotation strategy in place, you may end up being unable to get rid of your stock faster. To get around this challenge, many online stores prefer to use discounts, especially on slow-moving stock.
You can also use discounts or special offers to remove all the leftover stock after a particular season or sales cycle. This will ensure that you can clear out products that are old or close to expiry, and sell them faster.
9. Pay Attention to Labelling and Bin Location
Labelling your products properly can save you a lot of trouble down the line when you are shipping them, however, it can also help you in tracking your inventory. Labelling and bin locations can help you identify and track your products more effectively, by assigning specific locations to store products.
When getting rid of your stock, it is always a good idea to prioritise the older stock based on the FIFO approach, unless you want to apply other conditions for your stock rotation strategy. This approach can help you get rid of excess stock and reduce wastage while maintaining product quality.
Implementing a bin system can also help you eliminate manual stocktake, while you are checking and analysing your inventory levels.
10. Conduct Regular Inventory Audits
Inventory audits are mandatory for companies that store large volumes of products. After all, they give you deeper insights into your stock movements and performance. As an online store, you must conduct routine inventory audits to track the movement of your inventory and identify items that need to be removed or sold immediately.
With the data that you can get out of your inventory audits, you can take timely actions and decisions that will help you prioritise the sale or use of specific products.
Concluding Remarks
Stock rotation is an important part of ensuring that you are always on top of your inventory performance. You not only need to manage your inventory levels but also ensure that your products are always moving. Slow-moving stock or deadstock can easily lead to a loss of revenue, which can then derail the overall performance of your online store.
For other kinds of assistance in streamlining your order fulfilment process, get a quote from PACK & SEND and get started.
Frequently Asked Questions (FAQs)
What is Stock Rotation?
Stock rotation is the process of organising your inventory so that you can prioritise the sale of certain products over others, especially if you are dealing with perishable goods such as food, pharmaceuticals, and products with shorter shelf lives.
What is the Best System for Stock Rotation?
There is no single ideal system or approach when implementing stock rotation. The best stock rotation system for you is one that will help you get rid of unwanted or targeted stock easily without negatively impacting other processes.
How is Stock Rotation Calculated?
Your stock rotation can be calculated through the objective measure of the stock turnover ratio. The formula for stock rotation calculation is as follows:
Stock Turnover Ratio = Cost of Goods Sold (COGS)/Average Inventory