The Times of India, Chandigarh - 14 March 2002
Kind for kind, this barter is kind for wallets
Barter days are back again. And Believe it
or not, it’s kind for kind in the fast paced corporate
world.
Eliminating the need for cash and riding hard on international
trend winds, net4barter, a part of the UK-based ISP
net4india, has pioneered the concept of corporate barter
in the country.
“The concept is catching on internationally and
is worth $1 trillion. In India alone, the market potential
is around Rs. 100 Crore…, and growing,”
says Akhilesh Sharma, Head, Business operations, North
India.
Elaborating, Sharma said, “It acts as a financial
solution and a marketing tool to the companies. They
can do away with some of their dead inventory in exchange
for some goods or services. The best part of the deal
is that it does not involve any cash, which helps reduce
the company’s negative cash flow.”
“As soon as a client registers with us, we flash
the profile and services and goods it offers on our
national network. A team of professionals keeps coming
up with innovative ways of exchange offers,” said
Sharma. “If the client sells through our network
he does not pay, but if he buys we get a cut of 10 percent
of the value of the deal. We also sell their dead stocks
at MRP, buying them cheaper. Since we help them liquidate
their dead stocks only up to five per cent, we aren’t
a threat,” he added.
Corporate Barter helps companies in many other ways,
reducing storage costs of inventory, entering new markets,
generating incremental sales, utilizing excess production
capacities, reducing corporate purchase costs, obtaining
equipment and capital assets and increasing exports,
said company officials.
The concept originated in 1950s when during recession
in the US many major companies found themselves with
excess inventories and manufacturing capacity, and limited
cash resources. A lot of perishable products like ad
space, hotel occupancy, cruise ship berths, airline
seats brought huge losses to the companies. Many early
entrepreneurs then made good of the Barter system, selling
their goods and services.
One of the most famous corporate barter transactions
was the PepsiCo’s marketing Pepsi Cola in the
erstwhile USSR in exchange of Russian Vodka, which became
one of the best selling brands in the US under the name
of Stolichnaya.
With a client base of over 750 companies and six offices
in the country, net4barter has done business worth Rs.
75 Crore till date, said Sharma.
