Surplus stock: what it means and how to turn it into cash

Almost every business that sells physical products ends up with surplus stock at some point. A customer over-orders, a season ends early, a line is discontinued, or the factory makes more than you asked for. At first it looks like a write-off. It usually isn't. Surplus stock can be turned into cash, as long as you move while it still has value.

What does surplus stock mean?

Surplus stock is inventory beyond what your business needs or can sell at normal prices in a normal timeframe.

You'll also see it called a stock surplus, surplus inventory, excess stock or overstock. It's typically new, saleable product: the issue is quantity and timing, not quality. Common examples include:

• the balance of an order a customer cancelled or cut back
• end-of-season clothing, Christmas or summer lines
• stock in old packaging after a rebrand
• a discontinued line, either yours or a retailer's
• over-production from the factory
• stock released when a business is sold, restructured or closing

For the full picture of causes and costs, see our pillar guide to excess inventory.

Why does surplus stock happen?

It happens when what you ordered and what you sold drift apart, and that's often outside your control.

• The company over-ordered or a forecast was too optimistic.
• Too many units were manufactured, often because of factory minimum order quantities.
• The market changed, so demand dropped.
• Someone overestimated the item's popularity.
• The business was sold, merged or is closing, and the new owners don't want the stock.

What does surplus stock cost you?

It costs cash, storage and time, and its value falls the longer you hold it. Money sits on the shelf instead of in the bank. You pay for pallet space and handling. Dates get shorter, packaging gets tired and fashions move on. Your team spends time trying to clear old lines rather than selling new ones.

How can you sell surplus stock yourself?

There are several ways to sell surplus stock through your own channels, each with trade-offs.

Use it in a promotion

Offer a free gift with purchase above a set spend, a little above your average sale. You lift your takings and clear stock at the same time. Bundles that pair surplus lines with bestsellers work the same way. Don't run them too often, though: you can teach customers to wait for the deal, and devalue the product in their minds.

Swap it with another business

A stock swap with a non-competing business can work. A shoe retailer might swap with a clothing business, then sell the new stock or use it as an added-value gift. It clears stock without discounting your own brand publicly.

Repackage or rebundle it

A fresh pack, a gift set or a kit can make tired stock appealing again. Check labelling requirements first, especially for food and cosmetics.

Run a flash or clearance sale

A short, limited-time sale through your email list and website creates urgency. It suits consumer products and businesses with an engaged customer base.

Sell it online or at auction

Online marketplaces and auction sites will move stock, but they're public-facing. Your regular customers may see your products at very low prices, and you're unlikely to recover your cost. There's more in our guide on why we don't recommend online auction sites for excess stock.

Donate it

Charities such as GIVIT accept slow-moving and obsolete stock from businesses. It's a good outcome for stock with little resale value. Ask your accountant about the tax treatment before you donate.

Which way to sell surplus stock suits you?

How do you prepare surplus stock for sale?

Good preparation gets you a faster, cleaner offer, whoever you sell to.

1. Build a stock list. One spreadsheet with SKU, description, quantity, cost or RRP if you're happy to share, and best-before dates where relevant.
2. Take clear photos. Show the product, the inner and outer packaging, the carton labels and how the stock is stored.
3. Note where it is. The address, how it's packed (pallets or loose cartons) and whether it can be loaded easily.
4. Be upfront about problems. Old packaging, short dates, damaged cartons or a labelling issue. Buyers find out anyway, and honesty keeps a deal together.
5. Set your rules. If the stock mustn't appear in certain stores, regions or online, say so at the start.
6. Keep the parcel together. Selling off the best lines first can leave a remainder that's very hard to place.

Whenever we sell a parcel, we present it so the buyer can understand it at a glance. A tidy stock list does half that work for you.

What is surplus stock worth?

It's worth what the clearance market will pay for it now, which is usually well below what you paid. Brand, category, quantity, dates, packaging condition, location and the channels you'll allow all affect the price. Our guide on how much your stock is worth explains each one. Remember to weigh the price against what holding the stock costs: storage, handling, insurance and your team's time.

Should you take the first offer for surplus stock?

Usually, yes. In our experience, the first serious offer for surplus stock is normally the highest.

It sounds strange, but we've never seen the price of surplus stock go up because it sat in a warehouse longer. Dates get shorter, the season moves on and buyers fill their budgets with other parcels. Retail buyers are flooded with offers: a department-store purchasing manager can receive 200 to 300 emails a day. Opportunities often knock only once.

Before you accept, check the details:

• Who pays freight and handling, and where the stock needs to go.
• Any import or export costs if stock is moving across borders.
• Payment terms, in writing.
• Where the stock can and can't be sold, so it doesn't undercut your customers.

If the offer is fair and the terms fit, take it and get back to running your business. The time spent hunting for a slightly better price rarely pays for itself.

What do surplus stock buyers do?

Surplus stock buyers purchase whole parcels of unwanted stock and resell them through their own networks.

Some act as brokers and charge fees. We don't. We buy the parcel ourselves and resell it to major retailers, discount chains, overseas buyers, charities, wholesalers and distributors. Each of those buyers has different motivations, so we structure the deal to suit them, and keep your stock out of the channels you want to protect. Read more about who buys excess stock in Australia.

How selling surplus stock to us works

1. Send the details. A stock list spreadsheet (SKU, description, quantity, cost or RRP if you're happy to share, best-before dates), photos and the stock's location.
2. We survey the market. John discreetly checks with our buyers to see what the stock is worth.
3. We make an offer. In most cases, it's an offer to buy the whole parcel. If that isn't possible, John gives his best advice on how to sell it.

We've been buying and selling surplus stock for over 30 years, from our Sydney office. We buy from anywhere in Australia, from New Zealand and internationally. Collection is flexible and agreed per parcel. There's no minimum size: small parcels are welcome, and sometimes they lead to bigger ones.

Our four guarantees

1. "We strictly follow your guidelines in relation to pricing and distribution locations."
2. "We send payment promptly, as per our agreed terms."
3. "We place a priority focus on clearing your stock."
4. "We speedily and discreetly convert your stock into cash at the highest possible price, without damaging your market position."

Examples of surplus stock parcels

We've handled parcels from a few cartons up to 37 semi-trailers of short-dated orange juice. Some recent surplus stock examples on this site:

• 24,000 Christmas decorations
• 1,600 paintings
• Leather iPhone covers

If you've got surplus stock sitting in the warehouse, send us the details and we'll tell you what the market says.