Definition of Channel stuffing:
Channel stuffing refers to the practice of a company shipping more goods to distributors and retailers along the distribution channel than end-users are likely to buy in a reasonable time period. This is usually achieved by offering lucrative incentives, including deep discounts, rebates, and extended payment terms, to persuade distributors and retailers to buy quantities in excess of their current needs.
Channel stuffing is a deceptive business practice used by a company to inflate its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they are able to sell to the public. Channel stuffing typically would take place just before quarter-end or year-end so that management, fearful of bad consequences to their compensation, can "make their numbers.".
A deceptive and illegal retail business practice in which a company sends more inventory than could be sold to stores along its distribution channel. Channel stuffing temporarily boosts the accounts receivable for the distributing company since more product is pushed out than normal, but can also result in more items ultimately being sent back to the distributor. Stores with excess inventory are more likely to send excess inventory back to the distributor instead of sending cash payments, which will ultimately deflate the value of the distributors sales.
How to use Channel stuffing in a sentence?
- By channel stuffing, distributors temporarily increase sales figures and related profit measures for a particular period.
- You should do your best to make sure that you are never doing any channel stuffing that could cause you major problems,.
- I deal with channel stuffing by selling the extra merchandise to other uncertified vendors; then, my numbers are clean and so are my shelves!.
- Channel stuffing refers to the practice of a company shipping more goods to distributors and retailers along the distribution channel than end-users are likely to buy in a reasonable time period.
- Regulators frown on the practice and consider it deceptive. In some cases, legal action can be brought to the offending company.
- They practiced channel stuffing and I thought that was not good because too much inventory might mess things up a bit.
Meaning of Channel stuffing & Channel stuffing Definition