How to buy surplus stock

Written by elizabeth falwell
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How to buy surplus stock
Surplus stock often sits idly in a warehouse, awaiting distribution. (Matt Cardy/Getty Images News/Getty Images)

When a company manufacturers or orders too much of any given item -- or can't sell the items -- the leftover products are referred to as "surplus stock." There can be many reasons for this surplus -- changing market conditions, a drop in demand or the unpopularity of an item. A company cannot profit by allowing this surplus stock to sit idly in its warehouse, so it will typically look for a way to sell it, either to another company for distribution or directly to the consumer.

Skill level:

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    Buy as a company representative

  1. 1

    Decide which items you would like to buy. While anything can be overproduced, items that go in and out of fashion -- like clothing, accessories and furniture -- are some of the most common items that end up with a surplus.

  2. 2

    Contact manufacturers directly. If you are working with a company that is already established, your business should have contacts in the field. If you are working to set up a new company to distribute surplus goods, consult trade websites and publications for contact information for manufacturers.

  3. 3

    Negotiate with the manufacturer to decide on the style and number of items you'd like to buy. Manufacturers tend to sell in bulk, so buying a large amount is a better strategy than buying just a handful of items.

  4. 4

    Decide on a price. The manufacturer will likely play a role in this process, as companies have rules regarding how much their products can be sold for by an outside distributor. This amount is typically less than retail value, although the exact percentage of the retail price varies depending on the specific manufacturer, distributor or industry.

  5. 5

    Pay the manufacturer for the goods you've ordered. With surplus stock, manufacturers require distributors to pay for the products up front.

    Buy as a consumer

  1. 1

    Select the type of product you're looking to buy.

  2. 2

    Search the web using product-specific terms for the desired items.

  3. 3

    Visit established retailers that sell surplus stock, such as factory shops or discount designer brand retailers.

  4. 4

    Contact the manufacturer directly if you're looking for a better deal. Retailers will typically not negotiate with a shopper on the price of an item, but in some cases, a manufacturer will. This will depend on the manufacturer with which you're dealing, the item you want to buy and the popularity of that item.

Tips and warnings

  • As a consumer, buying surplus stock from a retailer is often your better option. Manufacturers rarely work directly with consumers. Retailers buy in bigger quantities, meaning they have more negotiating power to get you the best deal.
  • Be aware of the record of the company with which you are doing business. If the company does not deliver on the terms of your agreement, contact your local trading standards department.

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