Overstock inventory refers to a business that has “extra” or “too much” inventory on hand. A company can have overstock inventory for many different reasons. If a customer cancels a large order this can result in the supplier having too much product. If a company accidentally orders too much inventory, this may lead to an overstock situation. Package changes also often result in overstock because the old product is no longer being sold once the new packaging is available.
There are other similar terms that mean the same thing as overstock inventory, and these words are often interchangeable. Excess inventory, surplus inventory, closeouts and obsolete inventory are just more ways of saying the same thing. The Merriam Webster dictionary defines the word “overstock” as a surplus of stock or an excessively large inventory of goods. The Merriam Webster thesaurus includes these words to further help explain what overstock means: oversupply, surplus, overage, excess.
According to a recent article written on godaddy.com the costs of carrying excess inventory can be huge, potentially costing businesses millions each year. It says properly managing inventory is one key to small business success, evidenced by the fact that companies with low inventory and high turnover outperform those with high inventory and low turnover.
There are many different ways business owners can try to reduce or eliminate their overstock inventory. Much of this inventory can be sold off to large retail chains specializing in selling overstock merchandise at deeply discounted prices. Dollar Tree, Marshall’s, Ross, and Big Lots are some of the largest discount store chains in the U.S. In 2021, Dollar Tree’s annual sales were $33 billion. Dollar Tree is a Fortune 500 company operating more than 15,000 stores throughout the United States and Canada.
Online closeout websites and wholesale overstock buyers can work work with companies to help them sell excess merchandise they no longer need. Overstock can be discounted and then sold to distributors and retail stores specializing in selling off-price merchandise. It can also be sold out of the country so it will not interfere with a company’s everyday distribution channels or affect regular customers.
Sometimes if a company has too much overstock inventory on it’s books, it affects sales to the point where the company has to go out of business. This is rare, however, when overstock inventory is not monitored properly and becomes too large of a percentage of total inventory, it can result in bankruptcy. You can learn more about bankruptcy, inventory management and closeouts on the Wikipedia website where there are more dedicated pages to these subjects.