Overselling vs. Underselling
The Inventory Dichotomy
Selling out should be a badge of success, but in reality, it’s often just bad inventory management in disguise. Overselling means promising stock that doesn’t exist, turning excitement into disappointment. Underselling means leaving money on the table, watching customers walk away while unsold stock lingers in warehouses. Both are symptoms of the same problem—systems and strategies that fail under pressure, whether it’s a flash sale, a peak season rush, or just the unpredictable nature of demand.
Overselling: The Fast Track to Customer Disappointment
Overselling happens when brands promise more than they can deliver. Flash sales, influencer drops, or sudden demand spikes push inventory systems to their limits. The result? Orders brands can’t fulfil, refunds they didn’t plan for, and customers they’ll probably never win back.
Why does it happen?
Stock systems lagging behind reality. Orders are taken faster than stock levels can update.
Peak season chaos. A surge in demand overwhelms even well-prepared brands.
Overconfidence. Brands overestimate what they can fulfill, assuming cancellations and returns will balance things out.
*Example: A brand launches a Black Friday sale. Their site shows stock available, orders fly in, but their warehouse system can’t keep up. By the time stock updates, they’ve oversold by 20%. Cue customer service headaches, angry emails, and a dent in brand reputation. The frustration is only compounded when, a week later, those same products come back in stock due to returns—making customers feel like they were unfairly shut out of the sale. **
The Fallout of Overselling
Being told your order is cancelled after payment is taken is a surefire way to frustrate shoppers. The disappointment of missing out is compounded when, a week later, the same product is suddenly back in stock due to returns. This fuels a sense of unfairness, making customers feel misled. Cancellations and refund requests generate an influx of inquiries, overwhelming customer service teams and creating operational chaos. Reorders, where possible, only add to the workload. Negative reviews, social media backlash, and lost goodwill can linger long after the stock issue is resolved, damaging long-term brand loyalty.
The Underselling Dilemma: Leaving Money on the Table
Underselling is the opposite problem—but just as damaging. To avoid overselling, some brands hold back a percentage of inventory. Sensible in theory, but if demand is miscalculated, it means losing sales unnecessarily.
Why do brands hold stock back?
To prevent overselling. Better to underpromise than overpromise, right?
To cover potential returns. Some brands keep a safety buffer for refund replacements.
To control stock across channels. Retailers might keep e-commerce stock separate from physical store allocations.
Example: A brand withholds 15% of stock during a summer clearance sale, afraid of overselling. The sale ends, and they’re left with stock they now have to discount even further—or worse, carry into the next season.
The Cost of Playing Too Safe
Holding back too much stock can mean losing out on full-price sales, forcing brands to rely on discounts to clear excess inventory. Every unsold item sitting in storage adds to operational expenses—warehousing, insurance, and logistics all take a toll. When shoppers see 'out of stock,' they don’t wait—they buy from a competitor. Worse, if the item magically reappears a week later, frustration builds, and trust in the brand erodes.
The Real Problem? Inventory Systems That Can’t Keep Up
So, what’s the fix? Brands need inventory systems that match the speed of commerce. That means:
Real-time inventory updates. If stock isn’t syncing fast enough, overselling is inevitable.
Smarter forecasting. Historical data, demand trends, and AI-driven insights prevent both over- and underselling.
Agile inventory allocation. Holding back stock makes sense—up to a point. Brands should regularly reassess their buffer stock to avoid unnecessary underselling.
Final Thought: Selling Out Is Fine—Just Not for the Wrong Reasons
A sold-out product should be a signal of demand, not a failure of inventory management. Brands that get this right will maximise sales without compromising customer trust. Those that don’t? Well, they’ll be spending more time issuing refunds than fulfilling orders.
Commerce Thinking works with brands to eliminate the inventory bottlenecks that cause overselling and underselling. Through smarter architecture, real-time stock syncing, and demand forecasting, we help brands prevent stock mishaps before they happen.
If inventory issues are holding your brand back, let’s fix that. Get in touch and take control of your stock management for good.