Corporate BarterAn ocean of possibilities

Introduction – Introduction – Challenges to modern businessChallenges to modern business

• Initial market entry costs before selling first unit of Initial market entry costs before selling first unit of productproduct

• Many sellers for same productMany sellers for same product• Little or limited product differentiationLittle or limited product differentiation• Cut-throat pricing by competitorsCut-throat pricing by competitors• Inventory overflow due to excess capacities in industriesInventory overflow due to excess capacities in industries• Inventory carry over costsInventory carry over costs• Fickle consumer mentalityFickle consumer mentality• Difficult trade terms leading to delays in raising operating Difficult trade terms leading to delays in raising operating

capitalcapital• Low demand during recession leads to more uncertaintyLow demand during recession leads to more uncertainty

History of barter businessHistory of barter business

• Earliest form of businessEarliest form of business• Exchange of goods and servicesExchange of goods and services• No cash transactionsNo cash transactions• Transaction between buyer and seller directlyTransaction between buyer and seller directly• Limited product portfolioLimited product portfolio• Limited transactions (in terms of volume and Limited transactions (in terms of volume and

value) between each buyer and seller.value) between each buyer and seller.

The modern barterThe modern barter business business

• Unlimited transactions between or among Unlimited transactions between or among companiescompanies

• Institutionalised and regulated transactions Institutionalised and regulated transactions aimed aimed at creating value by leveraging on inventory, at creating value by leveraging on inventory, rather than just liquidating stocks.rather than just liquidating stocks.

• SpecialisedSpecialised and professionally run exchanges and professionally run exchanges covering products across industries.covering products across industries.

• Over 2,000 barter companies all over the world,Over 2,000 barter companies all over the world,• Transactions of more than US$40 billion per year. Transactions of more than US$40 billion per year. • In 2004 the barter industry in North America In 2004 the barter industry in North America

transacted more than $1 billion. transacted more than $1 billion. • By the year 2010, the number of companies and By the year 2010, the number of companies and

turnover expected to multiply ten times. turnover expected to multiply ten times.

Traditional model of marketing Traditional model of marketing productsproducts

Challenges :Challenges :

• Expenses mount even before selling first unit of Expenses mount even before selling first unit of productproduct

• Many sellers for same productMany sellers for same product• Little or limited product differentiationLittle or limited product differentiation• Cut-throat pricing by competitorsCut-throat pricing by competitors• Excess capacities in industries leading to inventory Excess capacities in industries leading to inventory

overflowoverflow• Inventory carry over costsInventory carry over costs• Fickle consumer mentalityFickle consumer mentality• Difficult trade terms leading to delays in raising Difficult trade terms leading to delays in raising

operating capitaloperating capital

• Sourcing of required products/service without Sourcing of required products/service without spending cashspending cash

• Ease of finding buyers for own product/serviceEase of finding buyers for own product/service• Spread of product/brand across geographical Spread of product/brand across geographical

boundariesboundaries• Less effort on part of seller to market the productLess effort on part of seller to market the product• Low marketing costs allowing competitive pricingLow marketing costs allowing competitive pricing• Possibility of clearing inventory with low costsPossibility of clearing inventory with low costs• Possibility of expanding production capacityPossibility of expanding production capacity• Receive uncollected debts through factoringReceive uncollected debts through factoring

Why do barter?Why do barter?

Cost benefits of barter over traditional Cost benefits of barter over traditional salessales

TrademarginsTrade

margins

Advtg & Prom.Costs

Advtg & Prom.Costs

Salesforcecosts

Salesforcecosts

Transaction fee

BarterTraditional sales

• Other benefits from Other benefits from barter:barter:

• Zero selling costsZero selling costs• Reduced inventory Reduced inventory

costscosts• No documentation No documentation

costscosts• Savings in purchasesSavings in purchases• No interest costsNo interest costs• Cost optimisationCost optimisation

Popular products/services barteredPopular products/services bartered

• Print media, especially vernacular publications & Print media, especially vernacular publications & outdoor mediaoutdoor media

• Consumer durables & non-durablesConsumer durables & non-durables• Industrial consumable products, like paints, etc.Industrial consumable products, like paints, etc.• Furniture & furnishings, like Venetian blinds, sofas, Furniture & furnishings, like Venetian blinds, sofas,

tables, etc.tables, etc.• Hospitality, including room reservations, banquet & Hospitality, including room reservations, banquet &

conference facilities.conference facilities.• Personal care productsPersonal care products• Apparels, including branded clothing, etc.Apparels, including branded clothing, etc.• Lifestyle products, including perfumes, etc.Lifestyle products, including perfumes, etc.

Barter – how does it work ?Barter – how does it work ?

CROSSTRADE

Rooms &Restaurant passes

Appliances

Appliances

Ad space

Promotionalmaterials

Rooms &Restaurant passes

Promotionalmaterials

Ad space

The above exhibit is for illustration purposes only. Products and services differ based on client requirements.

Publication

Appliancemanufacturer

Hotel

Gift manufacturer

Benefits to partners from CrosstradeBenefits to partners from Crosstrade

• Fair trading practices in an authentic exchange,Fair trading practices in an authentic exchange,• Transparent and organised transactions,Transparent and organised transactions,• Maximising the product/service reach of each Maximising the product/service reach of each

business partner,business partner,• Facilitating the growth of each business partner Facilitating the growth of each business partner

through sales channelisation,through sales channelisation,• Professional account management,Professional account management,• Building up of goodwill amongst the business Building up of goodwill amongst the business

partners,partners,• Commitment to national level partner servicing,Commitment to national level partner servicing,• Large network of partners & product variety.Large network of partners & product variety.

How to start using our services?How to start using our services?

• Sign agreement provided to youSign agreement provided to you• Provide list of products available for barter with Provide list of products available for barter with

rates and quantitiesrates and quantities• Finalise requirements and issue P.O.Finalise requirements and issue P.O.• Start bartering !!! Start bartering !!!