RKS’s showroom is filled with so many different brands of food and toys but do you ever wonder what happens when their shelves become too full or manufacturers produce more goods than they can sell?
When inventory becomes stagnant from a retailer’s perspective, inventory piles up and limits their ability to sell current goods or allow enough space on the shelf to put new or current goods. When manufacturers have excess inventory it also piles up but causes space issues in the warehouse and doesn’t allow them to bring in newer goods or products. This overstock inventory has to be cleared out.
Retailers usually pull the product from their shelves and create returns consisting of assorted pallets of miscellaneous products. This type of return is considered reverse logistics product. Product returns from retailers are either sent back to manufacturers or directly to salvage customers.
Excess product that is sitting in a manufacturer’s warehouse is considered an overstock or first line overstock inventory. It’s not mixed up shelf pulls but are in original master cases packed like it would go into a distribution center of a retail store or chain. This type of overstock causes issues with space in the warehouse and limits the ability of a manufacturer to focus or sell its current product offering of newer goods.
RKS purchases primarily first line excess inventory or closeouts from manufacturers. The additional work to go through reverse logistics products is not something we’re set up to handle. It requires a team of people to go through all the pallets and sort out the good from the bad.
The pandemic caused all sorts of supply chain issues but that’s a discussion for another blog. We hope this clarifies the difference between retailer and manufacturer overstocks and returns.