FIFO stands for first-in, first-out. Just like FEFO, FIFO is a stock rotation method used by retailers. It is used to determine which products are placed in the back of the shelves and which items are sold first.
Like the name gives it away, the first products that come are sold first. The newer the products, the deeper into the shelf it is placed. Let’s take an example: two shipments of potato chips arrive at the store. They are placed on the shelf. When a third shipment arrives, instead of putting it in front of the previously-received packages, retailers place the items in the back of the shelf.
By selling the products that first arrived with priority, retailers ensure that the quality of the products is up to standards. Although it doesn’t take into account the expiration date, the FIFO method works with a similar tactic.
The benefits of using the FIFO method
FIFO is a great method, especially for stores that sell products that are not perishable. However, it could also work for some perishable products, depending on the type of store and products. One of the biggest advantages of using FIFO for your products is that it helps you prevent deadstock.
Since older products are sold first, you will always know when you run out and can order more products. If products are arranged and sold without taking any method into consideration, you might have expired products and really new products on the shelf at the same time while also placing an order for more products.