Overstock referrers to merchandise in the form of consumer goods like furniture, cookware, barware, pet accessories, TVs, DVD players, lighting or clothes that have never been purchased by a customer and are currently stored on shelves or in some kind of warehouse.
Overstock items typically have the following characteristics: they are typically 100% retail-ready (with instruction manuals) and in new condition. No additional retail/discount or warehouse labels/tags on the items. Items are typically in their original factory case but occasionally can also be loose-packed.
A major disadvantage to holding too much inventory the negative cost implications like negatively affecting the cash flow of the business, especially when the inventory is sitting in storage and is not being sold for profit. Often extra storage must be purchased at high cost.
At the other end of the spectrum is Just In Time (JIT) inventory systems which is a strategy to increase efficiency and decrease waste by receiving goods only as they are needed for the production process, which reduces inventory costs. This method requires producers to forecast demand accurately but can lead to severe disruption if there are any delays - which could also hurt profits.