Books-A-Million: Floored by a Creative Barter Solution
The Challenge
Books-A-Million (BAM) had a multimillion-dollar problem – an inventoryWhile this can refer to a client's physical inventory of merchandise (which, if it represents an undervalued asset, could form the basis of a corporate barter transaction), in the corporate barter world, inventory more commonly refers to a supply of advertising time/space purchased in advance by the barter company, which client companies use as fulfillment to complete their side of a corporate barter agreement. of unsold gift products from a manufacturer that refused to take them back.
The CFO was prepared to accept the loss and liquidate them… until he was approached with a unique solution: Sell all the items at once to one buyer in exchange for trade creditAn alternative currency used in the corporate barter industry; one of ICON's financial options. (Note that this term is properly used only in the singular, i.e., never trade credits.), which could be used toward the purchase of products and services needed to run the business. This was his first exposure to corporate barterThe creation of value by exchanging a client's unwanted or undervalued asset for the promise to purchase over a period of time from the corporate-barter company a defined set of goods and/or services, called fulfillment. (Sometimes mistakenly referred to as Corporate Trade.), and the solution seemed almost too good to be true.
How ICON Uncovered Value
As a mass-market discount retailer, BAM had minimal budget for media spending, so the typical form of trade credit redemption – consumer advertising – would use up only a small portion of the credit bank. But as a large retail chain with more than 200 points and sales approaching a half-billion dollars, it would have other opportunities.
Using trade credit, new purchasing opportunities began to unfold – warehousing supplies… store materials… point-of-purchase displays… and the “big two” – freight and transportation.
To get things rolling, ICON spent time educating suppliers about corporate barter and the competitive advantages of accepting trade credit for its services. One highly successful example of this is flooring. Carpeting is a major image component for the 200-store chain that consistently offers a friendly, clean and modern environment. As an annual expense sent out to bid, flooring is a fantastic opportunity to integrate trade credit as partial payment. Another case in point: garbage. Bookstores go through piles of the packaging, boxes and crates that hold the books and products the stores sell, making waste-management suppliers key partners in their success and efficiency.
Result
Books-A-Million now has a long-term contract with a carpet supplier, a waste-management company and dozens of other suppliers willing and eager to accept combinations of cashU.S. federal banknotes; one of ICON's financial options. and trade credit for services the firm used to purchase!
