Is corporate barter a good solution to the problem of surplus stock?
Excess inventory is an issue for a wide range of retailers because it means capital is tied up in unsold goods or services. At the same time media owners need to buy a wide range of goods and services.
Corporate barter works by connecting the two. It allows retailers to use their surplus stock to part pay for their media. The role of barter specialists is to broker the deal between retailer and media owner and to manage the process. But corporate barter can deliver value beyond solving the problem of excess stock.
Corporate barter allows retailers to pay for media more cost-effectively by enabling them to transfer the margins on their goods and services to the media they are buying. This means it costs retailers less to buy media than if they were paying for it in cash. Barter can also create opportunities for retailers to trial new media channels that can enhance existing media plans.
Barter companies can open new sales channels that augment a retailer’s distribution strategies, while allowing the brand full control of how excess stock is redistributed, according to Paul Mann, managing director of Miroma, which counts House of Fraser among its clients.
Mann says the key question for retailers considering using corporate barter is simply: “Do you have capital tied up in unsold goods and services that could be used to part pay for your media?”