What is the term ‘Channel Stuffing’ in Business?

  • This refers to a business practice wherein a company produces and delivers more goods to retailers than what could be sold successfully to end consumers.
  • Companies generally resort to channel stuffing to temporarily boost sales and profits, thus presenting a rosy picture to investors, although they have not yet received payment in cash.
  • The sale of goods is recorded under accounts receivable, and it is likely to be reversed when the retailer returns the unsold goods back to the company, thus eventually causing sales and profits to drop.
  • Channel stuffing may fail to boost stock prices if investors begin to doubt the quality of a company’s sales.


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