Factory oversupply is a category of closeout merchandise that is created due to the nature of the relationship between factories and their trading accounts. Oversupply occurs when a factory is producing merchandise for an upcoming season and wants to ensure that it will have enough stock to meet the demand of distributors, importers, and wholesalers. For example, if the end of the school year is fast approaching and the factory is producing party dresses, you’ll want to run your machines at full steam to make sure you have enough supply for the dress wholesalers buying to resell to dress stores. . Although the factory runs the risk of overproducing merchandise, it would rather have a small loss on excess inventory than lose wholesale customers who will switch their purchases to another manufacturer.
If a large department store runs out of enough products to sell, it won’t risk next season and give its orders to the factory’s competitor. While many producers research market demand so they can make the correct quantities, it makes more business sense for them to produce additional products to meet any unexpected demand. Also, if the factory has additional wholesale dresses available, you can sell your excess products to new retail accounts.
Not all overproduction can be bought from factories. If Jones New York places an order for women’s suits to be made, it doesn’t want suits to be overproduced. If there are additional suits made by the factory, they are expected to be destroyed. As the licensee, Jones New York would be the only entity that would have the right to sell those items. To purchase branded inventory from a lumber mill, you will need written permission from the owner of the brand. A safer route would be to buy generic and unbranded merchandise, since you would not be required to seek a release document for liquidated merchandise.
