Forward buying - Meaning & Definition

Published in Operations and Supply Chain Terms by MBA Skool Team, Last Updated: November 15, 2019

What is Forward buying?

Forward buying is a process related to retail inventories, financial instruments, assets etc. wherein they are purchased in quantity excess to demand to counter future price rise. This is practised by retailer when they find manufacturers selling the product at a discounted price and purchase the items bulk. Now when the price of the product is set to original price by the manufacturer, retailer can make profit by selling the item purchased at low price earlier.

This is used when manufactures are overstocked and they want to clear the inventory. They give the discounts to the retailer and retailer also get benefited by getting better profit margins.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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