The whole principle of this website and what I do is built around closeouts and excess inventory. But what exactly is a closeout? And what makes closeout merchandise considered a “closeout”? There are many different types of closeouts, and the short answer to the question is that closeout merchandise is deeply discounted merchandise. The merchandise could be being discounted for any number of reasons.
Here are a few of the most common reasons why inventory becomes a closeout:
- Market Demand
Consumer Market Demand often changes due to fluctuations in the economy and the level of competition in the retail marketplace. Often times a manufacturer incorrectly predicts these factors when launching a new product, and is faced with excess inventory as a result of under performing sales.
Pricing becomes a reason for a closeout when the product is originally priced higher than its competition’s goods of similar quality. This is also a factor when the perceived value of the product does not match the pricepoint, based upon consumer demand.
When consumers believe that the product’s quality is below the quality of its similarly priced competitors. This can also be a factor which negatively impacts a consumer’s view of durability and reliability.
- Order Cancellations
Manufacturers often produce large quantities of inventory to fulfill orders for the world’s largest retailers. When a retailer decides to no longer carry a product in its stores, the manufacturer may be in a situation where they own significant quantities of the dropped product. In these instances, the manufacturer may not be able to sell through the inventory through their existing channels in a time period that meets their requirements. Additionally, these situations can cause warehousing issues – as the manufacturer had not planned on warehousing the goods long term.
Slow selling inventory can become a financial risk when its carrying cost becomes excessive. Often times manufacturers need money to bring in new inventory, are paying interest on inventory, or must depreciate the value of the inventory on its balance sheet over time.
Changes in legislation often have impacts on labeling and certifications for retail products. When these events occur, manufacturers have a limited amount of time to sell existing inventory before it must comply with new legal requirements.
It costs money to store inventory in any warehouse. The longer the inventory sits, the higher the warehousing costs become. Additionally, it may not be possible for the manufacturer to bring in new goods if there isn’t sufficient warehouse space available for the incoming inventory.
Even the world’s biggest brands have closeouts & excess inventory – these factors are simply a natural byproduct of manufacturer’s growth and uncontrollable economic conditions. If you’re a manufacturer that has closeouts or excess inventory to sell, MAC Wholesale is here to help – we are interested in making a take-all offer on the goods, for immediate shipment. Please contact me today for a prompt take-all offer on your inventory!