Overstocked businesses are commonly caused by seasonal products, perishable products or a change in demand for those products. And can causes a loss of revenue/cash flow. So these companies try to sell their products in after season sales at a drastic discount. And in most case, they don’t sell the bulk of their inventory. And are left with the storage overheads or loss of revenue to dispose of the product.
With perishable products, there is a vital importance to move the stock well before the best by date or the stock legally has to be disposed of at a loss.
Changes in demand for products and services can be due to financially changes in currency, government and economic conditions that affect the way consumers buy or do not by.