“overstock” is just a euphemistic term an under capitalized business uses to discribe its poor management decessions.
Example one:
Broadway Limited comes out with their first run of N&W Class A 2-6-6-4 locos at about $400 retail some years ago. After about a year, 20% of the production run is still sitting on the shelf at BLI, but they are cash poor, and China wants the next payment for the next batch of something else.
So they have a sale - they tell all their dealers that N&W Class A’s are now $270, just a few dollars above their normal cost. But the dealers get no relief on the ones thay have stock, rather BLI offers to drop ship the discounted ones for the retailers and sell them at a lower price, but not the same percentage markup they would make selling one for $400.
I buy one from Standard Hobby (now out of business) and it is shipped right from BLI. BLI sells out of N&W Class A’s.
In another year, maybe two, BLI does another run of N&W Class A’s. Many people still want them, some people pay whatever the going rate is (20% off $400), others wait for the sale…
The value of the product is degraded in the market place. BLI and dealers missed the profits on the ones they sold on sale, and so the cycle continues…
Result - some people will not BLI unless they get the “deal” - that would be me, partly because of their marketing, partly because I’m going to rip out the sound decoder.
Example two:
Retailer, big enough to buy direct (or so he thinks), buys a big pile of Walthers passenger cars to get the lowest price. But now decides they are not moving fast enough and too much of his money is tied up. He sells 1/3 of them at his cost to basement Johnny, who can no longer sell Athearn because you have to be a “real business” to get an account with Horizon, he then sells them on Ebay for a 15% to 20% profit because he has no overhead and has a day job.
Again