This is why it is better to do a study and detect the products that are likely to end up in the excess stock. Common Reasons for Overstock Here are the most common reasons why retailers fall into the overstock problem 1. Avoid outofstock items If an item is out of stock retailers are jeopardizing their reputation and may lose a sale to a competitor. Excess stock on popular items gives them a sense of security. 2. The remaining sizes Fashion industry sellers send packages in evenly distributed sizes. Even when the supplier allows some wiggle room it is extremely difficult to determine the correct size distribution at the time of ordering resulting in excess stock on unpopular sizes.
Every product in every store and even every jewelry retouch service style will have a different size demand. 3. Difficulties related to logistics and order fulfillment Having the right product in your store at the right time is essential but if you have logistics problems or if supplier delivery times are not met the order may be cancelled. When a customer cant get what they want when they want it theyre more likely to shop online or elsewhere. Finally youre stuck with excess stock that youve bought but cant sell. stock a buffer beyond what they need to avoid stockouts.
Due to the many factors that can influence demand over time it is difficult to make accurate forecasts. The ideal amount of stock to avoid running out excess stock carrying costs and potential markdowns are the consequences of overbuying. 5. Retail promotions that didnt work You must have noticed that each year retailers have promotions at different times of the year. The problem is that they are usually launched without any advanced analytics that ties them to inventory levels in stores such as expected demand how the promotion is selling other products and other critical issues.
