The Reseller's Math: How to Calculate Real ROI and Stop Hoarding Dead Stock

Reading Time: 5 minutes | Category: Business Guides | Level: Beginner to Intermediate

Quick Takeaways

• Your inventory isn't an asset until it sells — cash sitting on a shelf is cash you can't reinvest
• Real ROI includes opportunity cost — that $500 in slow-moving stock could have turned 3x in fast movers
• The 90-day rule — if it hasn't sold in 90 days at your location, it's dead stock (regardless of what "should" sell)
• Inventory velocity beats margin every time — $20 profit on a bottle that sells weekly = $1,040/year. $120 profit on a bottle that sells twice a year = $240/year.

Not since ancient Sumeria—when a single amphora of frankincense could buy you a house and myrrh was literally worth more than gold—have fragrance resellers generated as much profit as they're making today. Still, many are leaving easy money on the table.

I've seen it hundreds of times: A reseller shows me their inventory, proudly pointing to 150 different fragrances. "I've got everything," they tell me. "Whatever a customer wants, I have it."

Then I ask: "Which 20 bottles make you the most money?"

Silence.

"How long has that Bond No. 9 been sitting there?"

"Uh… maybe six months?"

"Omg, you're not running a business. You're running a museum."

That bottle of Bond No. 9 sitting for six months? It just cost you three turns of Versace Eros that could have generated triple the profit of 1 niche bottle.

Let's fix that.

The Real Cost of "Having Everything"

Scenario A: The Hoarder (Most Resellers)

• Inventory: 150 different fragrances
• Total Investment: $10,000
• Average Turn Rate: 2x per year
• Gross Revenue: $20,000
• Gross Profit (50% margin): $10,000/year

Sounds decent, right?

Scenario B: The Velocity Player (Smart Resellers)

• Inventory: 30 carefully chosen fragrances
• Total Investment: $3,000
• Average Turn Rate: 8x per year
• Gross Revenue: $24,000
• Gross Profit (50% margin): $12,000/year

Same margin. Higher profit. Less cash tied up.

The Velocity Player:

• Made $2,000 MORE in profit
• Freed up $7,000 in cash for other opportunities
• Spent less time managing inventory
• Had fewer expired/damaged bottles
• Could respond faster to trends

This is the reseller's math.

How to Calculate Your TRUE ROI (It's Not the Number You're Telling Yourself)

Step 1: Calculate Inventory Velocity

Velocity = How many times you sell and replace a product per year

Formula:

Example:

• You sell 48 bottles of Versace Eros per year
• You keep 6 bottles in stock on average
• Velocity = 48 ÷ 6 = 8 turns per year

Good Velocity Benchmarks:

• 10+ turns/year: Elite (restock weekly)
• 6-8 turns/year: Strong (restock monthly)
• 3-4 turns/year: Acceptable (restock quarterly)
• 1-2 turns/year: Weak (you're hoarding)
• <1 turn/year: Dead stock (cut immediately)

Step 2: Calculate Return on Inventory Investment (ROII)

This is your real ROI.

Formula:

Example:

Product A: Versace Eros

• Wholesale cost: $50
• Sell price: $90
• Gross profit per unit: $40
• Keep 6 in stock (capital tied up): $300 invested
• Sell 48 per year: $1,920 annual profit
• ROII: ($1,920 ÷ $300) × 100 = 640%

Product B: Bond No. 9 Tribeca

• Wholesale cost: $220
• Sell price: $350
• Gross profit per unit: $130
• Keep 2 in stock (capital tied up): $440 invested
• Sell 3 per year: $390 annual profit
• ROII: ($390 ÷ $440) × 100 = 89%

Same shelf space. One product generates 640% return. The other generates 89%.

Which deserves more of your capital?

The 90-Day Dead Stock Rule

Here's a rule that will transform your business:

If a product hasn't sold in 90 days at YOUR sales channel, with YOUR customers, it's dead stock — regardless of what influencers say "should" sell.

Doesn't matter what fragrance is trending on TikTok! If YOUR customers at YOUR flea market booth or YOUR online store aren't buying it, it's dead to you.

What to do with dead stock:

Step 1: Clearance (Immediate)

• Mark it down 30-40%
• Bundle it with a fast mover
• Liquidate within 2 weeks
• Get your cash back into circulation

Step 2: Trade or Return (If Possible)

• Some suppliers (like PLA) work with resellers on slow movers
• Trade for proven sellers
• Take a small loss to free up capital

Step 3: Learn and Never Restock

• Track what didn't sell
• Understand WHY (wrong customer, wrong season, wrong price point)
• Never make the same mistake twice

Real Example: Rosa's Transformation

Rosa ran a booth at a swap meet in San Fernando Valley. She came to re-up on her inventory recently and sounded frustrated:

"I'm working so hard but barely making $2,000 a month."

Her inventory: 180 fragrances, $12,000 invested
Her turn rate: 2.1x per year
Her annual profit: $24,000

I had her run the numbers on her top 20 products.

Those 20 products:

• Represented only $2,800 in inventory (23% of her capital)
• Generated $18,500 in annual profit (77% of her total profit)
• Turned an average of 9.2x per year

Here's what she did:

1. Clearanced 130 slow-moving fragrances (kept only top 50 SKUs)
2. Recovered $6,500 in cash
3. Reinvested that cash into her top 20 products (deeper inventory)

Results after 6 months:

• Total inventory value: $5,000 (down from $12,000)
• Turn rate: 7.8x per year (up from 2.1x)
• Annual profit: $38,000 (up from $24,000)

She freed up $7,000 AND increased profit by $14,000.

Same booth. Same customers. Better math.

Your Action Plan (This Week)

Monday: Data Collection

• Pull sales data for last 90 days
• Identify every product that sold <2 units in 90 days
• Calculate current inventory value

Tuesday: Analysis

• Calculate velocity for your top 20 products
• Calculate ROII for your top 20 products
• Identify your dead stock (0-1 sales in 90 days)

Wednesday: Decision Day

• Mark dead stock for clearance
• Create your "Cut List" (bottom 30% by ROII)
• Create your "Double Down List" (top 20% by ROII)

Thursday: Clearance Launch

• Price dead stock to move (30-40% off)
• Bundle slow movers with fast movers
• Post clearance on social media

Friday: Reorder

• Reinvest cleared cash into top performers
• Go deeper on winners (increase stock levels)
• Set reorder triggers to prevent stockouts

The Formulas You Need (Save These)

Inventory Velocity:

Return on Inventory Investment (ROII):

Days to Sell (Inventory Age):

The Perfumes LA Wholesale Advantage

1. No Minimum Orders

• Test products without committing to cases
• Build your inventory strategically
• Scale only what sells

2. Tiered Pricing That Rewards Velocity

• The more you buy (of winners), the better your cost
• Bronze → Silver → Gold → Diamond
• Your ROII improves as you scale winners

3. Stock Depth on Fast Movers

• We stock what actually moves in the LA market
• Our inventory turns inform your buying decisions
• If we're restocking it weekly, you should be too

4. 25 Years of Multi-Channel Selling Expertise

• We know what moves in LA County markets
• Fully bilingual team (English/Spanish)
• TikTok Live, FB Live, online marketplaces, and swap meets

5. Authentic Product Guarantee

• Your reputation depends on authenticity
• We stake our 25-year reputation on every order
• Absolutely no gray market, no knockoffs!

Ready to Transform Your Numbers?

[Create Your Wholesale Account] — Get access to pricing that actually lets you hit these numbers

[Talk to Our Team] — We'll help you analyze your current inventory and identify opportunities

What's Next?

Related Articles:

• Perfume Selling Myths Busted: What Retailers Should Stop Believing
• 7 Essential Fragrances Every Seller Should Stock
• 5 Deadly Inventory Mistakes That Kill Fragrance Resellers (Coming soon)
• Advanced Portfolio Strategy: The 3-Tier Velocity System (Coming soon)

Related Products:

• View Our Best Sellers → (These are the products hitting 10+ turns/year for our resellers)
• New Arrivals → (Test new products strategically)
• Gift Sets → (Higher margins, faster velocity during holidays)

One Last Thing

The resellers who win aren't the ones with the most inventory.

They're the ones with the best math.

Stop collecting fragrances. Start building a machine.

Your capital is your most limited resource. Every dollar sitting in a slow-moving bottle is a dollar that could be compounding in a fast mover.

Run the numbers. Cut the dead weight. Double down on winners.

That's the reseller's math.

Questions? Drop a comment below or contact our wholesale team — we love talking inventory strategy.

Written by the PLA Wholesale Team
25 years helping LA resellers build profitable fragrance businesses