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What is excess inventory?

Feb 23rd 2015 at 10:34 PM

What is excess inventory? What are the benefits of having excess inventory? Who are ones who benefit from excess inventory? – These are a few questions that are always in the mind of people investing into an inventory business, irrespective of the industry.

However, if we look at excess inventory and look at industries and then look at the revenue and profit generated, the textile industry will be the most lucrative in that segment. This is mostly because, textiles essentially is for general consumption, especially Apparels, Home Textiles and Made-ups. Yarns, fibers, fabrics don’t effect general consumption directly, but has an indirect hand in it. So how does the market work?

Let’s look at one of the biggest markets for textiles, India. We can argue that China is bigger, but India has better statistics to show as the textile industry has a legacy here. India’s output is about $300 Billion annually, out of which 5% belongs to the stocklot market. If we do the math, that’s $15 Billion annually. That’s how big the stocklot market is in India, and it is poised to get bigger.

Now, how does the stocklot market work? Essentially, suppliers have a set of buyers to whom they sell their inventory and a price is agreed upon beforehand. It goes the same way for the buyers as well.

However, the problem is that these suppliers and buyers are not well connected, which leads to a closed circuit of suppliers of buyers, the prices are not regulated and changes based on the whims and fancies of the supplier or buyer. As there is no uniform platform where the suppliers and buyers can come and look at what is available, the supply-demand chain becomes very limited.

But these problems are being worked upon – a platform is coming up which will make the stocklot segment more transparent, allow a better pricing for products and enlarge the pool of suppliers and buyers. In case, Textiles has you interested or you just want to look at what this platform, do look up XSTOK – you won’t be disappointed.

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