Finance

The term closeout products refers to a companys merchandise that is regarded as excess inventory from an earlier fiscal quarter. Closeout products usually become that way as a result of changes in color or design or fabric or missed deliveries but other factors may sometimes be involved. In the end, many large companies are commonly stuck with billions of dollars in closeout products every year and have to sell it all off at a whopping discount.

Obviously, closeout products remain a regular source of tension for most companies. Products need to be removed from shelves to make way for the influx of newer models. Sometimes a shift in financial circumstances or strategy results in canceled orders or manufacturers need to downsize or move their facilities due to economic pressures. Whatever their origin, closeout products need to be unloaded quickly, regardless of cost.

What Happens to Closeout Products?
More often than not, companies simply get rid of their closeout products by auctioning or selling them off to wholesalers and other constituents of the off price industry. Discount retailers, flea market swappers, auctioneers, exporters, and myriad other companies prosper exclusively by reselling these items, especially since theyre getting quality merchandise at such a steal (sometimes as much as 80 percent off the first quality retail rate). These groups presumably pass along such savings to consumers, which in a fairly loose sense may be considered an act of charity.

Donating closeout items directly to licensed charity organizations is of course another possible use of such items, although sadly it is the road less traveled. Doing so is often less hassle and inconvenience to the company, which would then go on to enjoy the public relations benefits that come with such transactions. Yet it goes against the grain of many businessmen to think in such terms, and corporations tend to be resistant to change, even when a more refined methodology would make immeasurably more sense from a business perspective alone.