For manufacturers, the art of managing inventory in its most recent incarnation includes increasing challenges such as retailer unwillingness to hold inventory, stronger requirements for rapid replenishment and increasing expectations of shelf-ready inventory. These growing demands chip away at profitability and have potential to back up warehouses with problematic inventory.
Incorporate the fact that the National Retail Federation is predicting back-to-school spending to decline by 13% while discretionary income is trending downward — gluts of product may be stacking up faster than anticipated.
To contend with the need to clear warehouse space and recoup proceeds, many manufacturers look to the close-out market to liquidate excess inventories, getting pennies on the dollar for their product. However, some companies have found a smarter answer to inventory issues: corporate barter.
Though not a new solution, corporate barter is more relevant than ever offering both a high purchase price and an immediate sale. “I’ve purchased all sorts of inventory and paid more than any other buyer and we never ‘cherry-pick’ our clients’ inventories. Our business model allows us to make large purchases no matter what the situation,” says Jeffrey Lesser, vice president of remarketing at ICON International, Inc., Omnicom Group’s corporate barter company.
In a corporate barter transaction, a company such as ICON International, Inc. pays a premium (in cash or trade credit) for an underperforming asset. They partner with the client company to remarket the goods immediately, and then the client recoups that value as they place advertising back through the barter company, an expense they would have incurred with or without a barter transaction. The advertising should be the same quality and pricing as the client company would receive otherwise, with no fees involved to keep the agency relationship intact.
Inventory assets ideal for corporate barter transactions are classified as: short-dated product, returns, products lifts, package changes, prior goods, SLOB (slow and obsolete) or simply excess (raw or finished) product.
“With nearly 30 years of experience in barter and reverse logistics, we’ve been able to solve some very unique inventory issues” adds Lesser. “With the offering of a premium cash payment, corporate barter has evolved into a financial tool companies can apply to all sorts of asset situations.”
Read client case studies and more on corporate barter at www.iconinternational.com