Stock clearance is an activity by a company where ownership of products and materials move on to another legal entity. These products and materials in stock clearance will not form the basis of a company's key activities. As such they are often end of line stock, surplus stock, returned stock or bankrupt stock.
A company will often pursue a non-profit making agenda when clearing stock, seeking a wider strategic advantage. This can be in the form of releasing storage space, releasing supervision of materials and equipment, ending technical support for a product. Many companies avoid channel conflict by selling anonymously through specialized stock clearance companies. In doing so they seek preservation of the existing corporate image.
Most companies from time to time end up with surplus goods, liquidated goods and bankrupt stock. This can be a costly problem. Stock Clearance is a process by which companies free up valuable money and space. Reasons Leading to Stock Clearance Cancelled orders or late deliveries Closing Down of business Overproduction Returns Frustrated Stock (When importer or exporter decides to abandon the stock and leave it with the shipping company)
When customers are told that the reason for a price reduction is a stock clearance, they find this less attractive than other explanations such as a volume discount. This is because they suspect that the stock clearance indiactes that the products are of poor quality.
There are a number of companies that specialize in stock clearance. Clients can dispose of their surplus stock discreetly through companies such as stock buyers who will then re sell this stock to exporters, wholesalers, and smaller retailers. There are many benefits of using a stock clearance company to dispose of stock in this way. They generally have the cash available and the warehousing in place to offer a quick and efficient solution to stock disposal problems.
- Bill Merrilees ;Kim Shyan Fam (January 1999), "Effective methods of managing retail 'sales'", The International Review of Retail Distribution and Consumer Research, 9 (1): 81–92, doi:10.1080/095939699342697