Reasons for the appearance of illiquid goods in an online store
Last Updated on 28 August 2025
The presence of illiquid goods in the warehouse of an online store is a serious threat to its development and financial stability. Warehouses filled with unclaimed items slow down business growth and lead to significant losses. Shopify Plus developers tell us what illiquid goods are, why they appear and what danger they pose to a business owner.
What is “stock balance” and when does it become illiquid
Stock balance is the goods that are currently in the warehouse and ready for sale, but have not yet been released to the buyer. This list includes:
- ready-to-sell products;
- reserved but unpaid goods;
- paid but not shipped goods to the buyer.
Information about the availability of stock balances helps to plan the release of new products, make purchases, plan activities to minimize warehouse and general costs of the enterprise.
When a product becomes illiquid
A product becomes illiquid when it loses the ability to be sold quickly and profitably. A characteristic feature is the cost of storing it and trying to sell it above its selling price (the cost of finished goods).
Other criteria of “illiquidity”:
- long-term storage without sales – the goods “hang” in the warehouse longer than the usual turnover cycle. But the final diagnosis is made after 2-3 such cycles.
- lack of demand from customers.
- a new version of the product has already been released, a new technology was used.
- seasonality – the season is over, and the goods are no longer needed by customers.
- physical deterioration in quality.
The sooner the owner of the online store recognizes the signs of illiquidity, the higher the probability of minimizing losses. Therefore, the analysis of inventory balances should be carried out regularly.
Why illiquid goods are harmful to business
Having illiquid goods in a warehouse is not just frozen money, but a factor that directly affects the efficiency of an online store.
Damage from illiquid assets:
- Occupied space in the warehouse.
Warehouse space is a valuable resource. When it is filled with slow-moving goods, the ability to place new, in-demand items is blocked.
- Increased rental costs.
- Decreased business flexibility.
Lack of space in the warehouse and dependence on slow-moving items prevent a quick response to changes in demand.
- Excessive burden on personnel.
- Risk of product spoilage.
Products with a limited shelf life (food, household chemicals, building materials) become obsolete and spoil. We get a double loss: the cost of purchasing goods and organizing their sale and additionally for the disposal of unclaimed items.
- Accounting errors, the appearance of mis-sorting and problems during inventory.
- Frozen capital.
- Influence on the image and customer satisfaction.
Competition is the engine of trade. If you do not have an up-to-date range of goods, then the buyer will choose another supplier. Just a few refusals and the online store’s reputation will deteriorate. And it is very difficult to restore it.
Regular checking of the assortment allows the company to promptly identify unsellable items and take measures for their quick sale. A thoughtful approach to the selection of goods helps to minimize the occurrence of illiquid assets in the future.