Press Coverage

Generating revenue from excess stock

Dean Wilson 28 Jan 2011

Generating revenue from excess stock - STRATEGIC FINANCE. Time to consider corporate trade.

The widespread snow and ice across Britain in the run up to the festive period was not kind to brands and retailers, nor to the nerves of many financial directors, during what for many is their most important period for sales.December saw consumers struggling to make it to the shops and retailers failing to fulfil deliveries to their outlets and direct to customer’s homes.

While conditions eased for the vital post-Christmas sales period, no matter how good your planning is, the risk of unforeseen circumstances affecting your sales is always a real threat. As result, there’s no question that some of you reading this will be left with excess stock at the end of the sales season and scratching your head at the thought of how to generate the best value from it and avoid creating a hole in your balance sheet.

In fact the issue of excess stock caused by the festive trading conditions is likely to be exacerbated by the end of the calendar year and the approach of April, which spells the end of the financial year for many businesses. This is traditionally a period when brands and retailers find themselves with excess stock or assets they need to dispose of.

Therefore, the big question is what’s the way forward to maximise value from this unsold stock or unwanted assets?

A key option is to work with a corporate trade or barter business. They will be able to minimise the loss of margin on those goods that you would otherwise have had to take when liquidating them. And by receiving three times more than the liquidation value in trade credits for the product or asset you are offloading, you will be able to spend these on generating extra value from your media and marketing campaigns – from advertising to print, to conference events and corporate hospitality.

Despite corporate trade being a well established and growing industry, too few financial professionals make the most of the opportunity it presents to generate extra value from their underperforming assets. As a result, businesses are often left having to ‘cut their losses’ with their surplus stock, exposing their organisations to financial loss as well as aving to contend with what to actually do with the goods. Critically, they are also missing out on generating the extra value that corporate trading offers (through trade credits), in terms of boosting media spend and supporting brands during tough trading conditions.

But what should you bear in mind before partnering with corporate trade business?

Big is best

Only deal with established corporate trade operators who have financial stability to ensure they will be around in the long term. For finance professionals, this longevity guarantees that they can work with their marketing team to spend their trade credits as part of a media strategy without the worry that that the corporate trade partner might not exist in the future, along with their opportunity to spend credits.

Worldwide presence

If you are a business that operates worldwide you must partner with a corporate trade company with similar reach. This can help generate extra value for media spend within the countries they operate in and adds an element of flexibility to your media spend.

Big brand names

Ask the corporate trade company you approach who they work with. If their client list does not include some blue-chip brands, consider giving them a miss as they are unlikely to have sufficient experience and reach that will deliver maximum value.

Approved resellers

It’s vital that any business sells stock to approved resellers, or else they risk serious damage to their brand. Ensure your corporate trade partner has the contacts to do this.

Reporting

In this day and age, technology has progressed sufficiently for corporate trade organisations to offer 24/7 reporting on how trade credits are being spent. This knowledge can be used to easily tweak trade credit spend in real time to ensure the brand constantly generates the best results from their campaigns. Always ask what procedures are in place before undertaking any appointment.

Conclusion

When looking to generate the best price and also extra value from excess stock or an unwanted asset, use an established corporate trade business. Because being an industry where experience, size, volume of contacts and the provision of the latest reporting technology is key to delivering value, it’s only these businesses that can offer all this to ensure you generate the greatest return from your unwanted assets.


Dean Wilson

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