Overstocks: what overstock inventory is and how to clear it

When you trade in physical products, overstocks are inevitable. You order for the season you expect, then the season you get is different. Overstocked items eat into the margin you planned and can undo the good sales you've already made. The good news is that overstock is usually new, saleable product, so it has a market. The trick is finding it quickly and without undercutting your own customers.

What is overstock inventory?

Overstock is inventory a business holds beyond what it can sell at full price, through its normal channels, in a reasonable time. It's usually new, saleable product of a specific line, left over because more was ordered or made than customers bought. Overstocked inventory still has a market, just not at full price.

It's closely related to excess inventory and surplus stock. The difference is mostly emphasis. "Overstock" usually points to a specific line you have too much of, often because more was ordered or made than the market wanted.

Why do businesses end up overstocked?

Businesses get overstocked when supply runs ahead of demand, and that often happens for reasons outside their control.

• Over-optimistic forecasts. A line was expected to sell well and didn't.
• Cancelled or reduced orders. A customer cuts an order after it's been made or shipped.
• Factory minimum order quantities. You needed 2,000 units; the factory makes 5,000.
• Changing trends. Fashion, colours and technology move faster than reorder cycles.
• Fewer customers through the door, so the same stock takes much longer to sell.
• Packaging or label changes that strand old stock.
• Range reviews, where a retailer drops the line.

Which products get overstocked most?

Any product can be overstocked, but some categories are much more prone to it.

A note on food overstocks

Food passing its best-before date isn't the same as food passing its use-by date. Under the Food Standards Code, food can legally be sold after its best-before date provided it is fit for human consumption, but not after its use-by date. Food Standards Australia New Zealand explains the difference. Our guide on what the date label really means goes further, and we regularly buy short-dated stock.

How do you know you're overstocked?

You're overstocked when a line holds far more months of cover than it should, or hasn't sold in weeks. Check these regularly:

1. Months of cover. Stock on hand divided by average monthly sales. Compare it with your normal reorder cycle.
2. Sell-through against plan. If a line is well behind what you forecast when you ordered it, act now, not at the end of the season.
3. Date profile. For food, drink and personal care, list best-before dates against the minimum life your customers accept.
4. Inbound stock. Check what's already on order or on the water for lines that are slowing.
5. Customer signals. Slower reorders, range reviews and requests for markdown support usually come before cancellations.

The earlier you spot overstock, the more options you have. A line with six months of life left can go almost anywhere. A line with six weeks left has far fewer buyers.

What does overstock really cost?

More than the shelf price suggests. Overstock ties up cash you could spend on lines that sell. It takes pallet space, handling time and insurance. It loses value as fashion moves, models are replaced and dates get shorter. And it distracts your team, who spend their time chasing old stock instead of selling new ranges. Waiting for a better price rarely pays, because those costs keep running while you wait.

What are the best overstock solutions?

The best overstock solutions are promotions for lines that still sell, wholesale and discount channels for part of the stock, and a single parcel sale to an overstock buyer for the rest. Most businesses use a mix, starting with their own channels.

Run a promotion

• Multi-buy deals such as 2 for 1.
• Limited-time discounts, so customers buy now rather than think about it.
• "Limited stock left" messages, which work on the same principle.
• Gift with purchase, using overstock as the free gift to lift sales of your new range.

Promote it online

Run the offer on your website and social channels. Deal-sharing pages and groups are often happy to pass on a good offer, and visitors who come for the deal may browse your full-price range.

Sell to wholesale and discount channels

Discount retailers, wholesalers and deals websites all take overstock. They buy on their own timing, though, and only what fits their range.

Watch the downside

Promotions and public marketplaces can train customers to wait for discounts and can put your products on display at low prices. Even a good promotion usually leaves something behind. That remainder is where a buyer helps.

How do you sell overstock?

The quickest way to sell overstock is to send a stock list to a buyer who will purchase the whole parcel outright, then resell it away from your channels. You get cash and clear space in one transaction.

That's what we do. We've been buying and selling overstocks for over 30 years from our Sydney office, and buy from anywhere in Australia, from New Zealand and internationally. We buy the parcel ourselves and don't charge sellers fees. You'll hear back from John the same business day.

Send a stock list spreadsheet (SKU, description, quantity, cost or RRP if you're happy to share, best-before dates), photos and where the stock is. John discreetly checks the market and, in most cases, offers to buy all of it. If that isn't possible, he gives you his best advice on how to sell it. The full process, what to send and a worked example are on our overstock buyers page.

Where does the overstock go?

We resell to major retailers, discount chains, overseas buyers, charities, wholesalers and distributors, and keep the stock out of the channels you want to protect. We strictly follow your guidelines on pricing and distribution locations. Our guide on protecting your brand when clearing stock explains how.

What if the overstock has a problem?

Sometimes overstock has a labelling issue, damaged packaging, a short date or a minor fault. Tell us. We're transparent about it with our buyers and can often still find one.

How do you stop getting overstocked?

You can't prevent it entirely, but you can make it rarer.

• Order from real sales data, including seasonality and planned promotions.
• Negotiate smaller minimum order quantities or staged deliveries with factories.
• Ask suppliers about returns or exchanges before you order, not after.
• Plan an exit for seasonal and promotional lines at the time you buy them.
• Review your range regularly and cut tail lines before they become problems.

Even well-run businesses still get caught by cancelled orders and market shifts. That's normal. What matters is acting quickly when it happens.

Should you take an overstock offer or wait?

Take a fair offer. Overstock almost never becomes more valuable with time. Our guide on why you should take an overstocks offer explains why waiting usually costs more than it saves.

Overstock parcels we've handled

We've sold 27 semi-trailers of a discontinued paint product and bought 19 containers of washing powder in New Zealand that we sold on to Singapore. Smaller overstock examples on this site include:

• 43,000 packets of branded gum
• Food packaging, 792 cartons

Are you looking to buy overstocks wholesale?

We're not a retail overstock store, and we don't sell to the public. We buy from businesses and resell parcels to trade buyers in our network. If you're a retailer, wholesaler, distributor or exporter who buys clearance parcels, get in touch and tell us what you're after.

If you're overstocked, sell your overstock to us or send us your stock list and we'll tell you what the market will pay.