The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
December 14, 1999
In this week's report. . .
Billions In Bartered Products Used To "Buy" Valuable Shelf Space
The old axiom "share of shelf space should reflect share of market" is more critical than ever with merchandisers today. Why? Because a typical supermarket, for example, currently stocks over 40,000 items, and new products continue to be introduced at ever increasing rates.
Today over 1,000 new items are introduced per month. This is 10 times the rate that existed in the 1970s. As a result, "deals" (like trading additional product to the store in exchange for guaranteed shelf space) have skyrocketed. While at the same time, increasing portions of promotional budgets are being allocated to stimulate distribution and on-shelf merchandising.
Total expenditures to invigorate on-shelf merchandising in supermarkets have more than tripled in 10 years, to over $100 billion annually.
Retailing Clout Bartered For Equity
An online watch and jewelry retailer, Ashford.com, traded 16.6% of its company stock to Amazon.com. The 7.1 million shares, currently valued at $128 million, were offered so Ashford could be listed on Amazon's web site over the next 13 months.
The barter deal is another example of the growing power of big Internet brands. Amazon has used its retailing clout of 13 million customers, to obtain equity in online marketers anxious to pitch Amazon's customers.
So far this year Amazon has obtained stakes in pet supplies retailer Pets.com, outdoor supplier Gear.com, and foods marketer HomeGrocer.com.
Follow-up On Last Week's Question:
Would American Express' entry into the commercial barter business be beneficial to the industry?
Susan Groenwald, Vice President of Retail Barter at BarterTrust.com (formerly BarterCorp): "American Express' interest in the barter industry is very exciting. It reflects the financial community's growing interest in barter, brought about by the explosion of the Internet and e-commerce.
"With the frenzied pace of investment into Internet businesses, it's no wonder that companies with large groups of business customers such as American Express are interested in parlaying their cardholders into an Internet barter system in which the private barter currency will provide a competitive advantage.
"The interest in our industry by companies such as AMEX will change the image and substance of the barter industry within the next year. This change is good, and something we've worked very hard to accomplish for many years. We are on the threshold of a new age of barter.
"With change, however, comes pain and fear. People who are close-minded, or resistant to the coming changes, risk being left behind to compete against 'the big guys' that are being attracted to our industry.
"It's more a factor of agility than it is size. As with any industry in our fast-paced world, companies that embrace change and prepare for it have a better chance of survival; those that don't may perish.
"As an industry, we should embrace and work with companies such as American Express, using their reputation to help us raise the stature of the whole industry. Spending time trying to keep them out of the industry is wasting time."
(What's your opinion? Send along to: email@example.com)
TCV Invests In ICON Holding Corp.
Technology Crossover Ventures, www.tcv.com, invested $111.8 million in 12 leading Internet enterprises during October and November. Two of those companies are involved in various tangents of the barter industry.
ICON Holding Corp. is the parent of ICON International, a corporate barter company headed by Lance Lundberg (cover story of BarterNews issue #46), and ZoneTrader.com, a business-to-business auction site for refurbished and surplus business equipment.
Made A Poor Business Decision?
Bernard Marcus and Arthur Blank have transformed a few ragtag stores in Atlanta into the nationwide profit-making empire known as Home Depot. In Built From Scratch, published by Random House, they tell how Ross Perot blew a chance to invest $2 million in 1978 for a 70% interest in the company, which would be valued at more than $60 billion today!!
According to the story, Perot was unwilling to allow Home Depot to assume the lease payment on Marcus' four-year-old Cadillac. Marcus walked when Perot balked, exclaiming, "If this guy is going to be bothered by what I'm driving, how much aggravation are we going to get when we have to make really big decisions?"
Here And There...
Coming soon. . .
We welcome your comments, questions, and observations.
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