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Barter – An emerging
corporate tool
Companies barter to primarily:
- Save & Optimize cash –
since it enables them to purchase essential business
needs by exchanging what they have, thereby not affecting
their cash flows.
- Liquidate excess stocks– barter
enables companies to efficiently liquidate excess stocks
/ capacities, which otherwise is blocked inventory or
unutilized capacity for them. Companies may trade their
stocks to get in return products & services they
would otherwise be spending cash on.
- Open whole new & undiscovered markets–
barter supplements a company’s existing cash business
and opens new market segments, since companies would
rather choose barter suppliers of products / services
they require, than pay in cash. These new customers
eventually also become potential cash clients for these
corporates
Target markets & Need
fulfillment The biggest opportunity
for barter solutions also lies in the fact that they apply
for almost every industry possible! Our client members
are across industries – Media, Hospitality, FMCG,
Consumer Durable, Electronics, Commodities, Services,
Industrial products, Technology & software etc.
Though Net 4 Barter solutions can be offered to any industry
in India, the key focus initially had been on those industries
where in there are problems of excess stocks / capacities,
cash flow issues or perishable product offerings (e.g.
hotels, media).
Companies engage in selling through us, and in return
(for the consideration) buying those products and services,
where they otherwise would have spent cash – these
include:
- Raw materials – productions
related expensed
- Marketing expenses – mainly
media & advertising
- Sales expenses – all types
of sales promotion, dealer/consumer incentive schemes
etc
- Capital spends – office equipment,
machinery etc
- Administration expenses –
hotels, travel, stationary etc
| Industry |
Reasons to Barter |
What to Purchase ? |
What to Sell ? |
| Media (Electronic, Print
& Outdoor) |
Excess capacities, and huge expenses
in terms of promotional offers to woo subscribers,administration
and general expenses |
Promotional products for schemes,
Media for self publicity, administration expenses. |
Media space on barter (generally
with an understanding of selling to only non-cash
or non-regular clients ) |
| Hospitality |
Excess capacities, perishable products
which have to be sold to extract value – either
in cash or barter |
Media, Hotel supplies. |
Rooms and Banquets |
| Consumer Durables/Products |
Save cash in general, get rid of
excess stocks |
Media, promotional products for
consumer and dealer offers / schemes etc |
Products |
How multi party barter
trade works?
Let’s take a simple example of a typical business
situation:
- A media company wants to trade its excess time/space
with hotel rooms for its executives
- Hotel wants to trade its excess rooms with appliances
- An appliances co. wants to trade its excess stocks
with media promotion
With the above one-on-one limitations - what do they
do? To save on cash and yet utilize excess stocks
With a multi party Barter network, all 3 companies can
trade seamlessly and get exactly what they want, overcoming
the one to one limitations.
Through the multi party transaction all 3 companies have
benefited and traded excess capacities and saved cash
as follows:
- The Media company has successfully traded its media
in lieu of hotel rooms
- The Hotel has traded its rooms in lieu of appliances
- The Appliance Company has traded its products in
lieu of media.
The same principle can be extended to trades with more than
3 companies seamlessly trading.
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