we call it channel stuffing, but it really isn't.
Chuz...
The game is simple but tough to spot. Works like this... when you need sales, you cajole your channel to take product. You do this through a number of techniques... bigger discounts, closeouts, even threats. The dishonest even know that it can be covered through the returns process (like a shell game). The point is, once shipped, it is current revenue. The good company then works like hell to help the channel get it out their door. If it doesn't move, the channel gets full. The following period, offering bigger price breaks let you convince the channel to take even more.... but now margins begin to suffer. Finally the channel is full, the product gets obsolete, inventory drops in value and the whole thing crumbles. This process has been around for quite a while and is quite easy to hide from the outside. Takes in-depth analysis of ships into vs. ships out of the channel to uncover the practice.... unless of course you abuse it to prop up current sales and then it crumbles.... then it's too late and it becomes known as channel stuffing.
Tom |
