Monday, September 17, 2012 12:22:03 PM
The flip side to this could be that a distribution company orders an initially small portion to "Test the waters". If the product does not sell, the distributor would not be out that much in cash. If the product takes off, then the distributor knows that there is high demand for the product. It would be an unwise business decision to purchase a large shipment of products and then not sell any because of low demand. Then, the business is left holding on to products it can't sell, which cuts into its profit potential.
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