April 23, 2019

Corporate trade: the model at work

Published by Retail World, April 201, author: Cameron Swan, Group Managing Director 

In an age of constant disruption and pervasive uncertainty, brands are struggling to keep up. As the market becomes more fragmented, competition is tougher than ever, with start-ups and ad technology (ad tech) platforms making waves across the market, causing disruption. 

No matter what sector, brands can no longer operate ‘business as usual’ but should seek to find new avenues to become stronger and commercially agile. In our business of corporate trade, we know that we have the tools and expertise to provide a solution that comes with a safety net and helps improve their balance sheets. Corporate Trade gives clients that competitive advantage retail and FMCG brands especially are looking for.  

Corporate trade is a way to drive extra value for your business by using your stock or assets to offset significant business costs, such as your marketing spend.  

The advantages are huge: with corporate trade, you can help pay for your media spend with your own assets; excess, unwanted or obsolete stock; or even new product lines.   

We have pioneered a bespoke number of customisable business solutions to help businesses extract more value out of their assets.  Tailored to our clients’ unique requirements, solutions such as the Trade Credit Model, the Increased Marketing Budget Model, and the Guaranteed Incremental Sales Model are just three of our extensive offering. What is truly exciting is that the possibilities are endless.  

With Active, you can give your dead stock a new lease on life. We help brands achieve more with what they already have, by delivering on business cost savings, optimising marketing budgets, and creating extra value for them to grow their business.  

In a previous interview with Retail World, I talked about how we refer to commercial agility as being able to anticipate what’s next. We call it the What’s Next Economy: a shape-shifting business environment fuelled by change, technology, and consumer behaviour.  

How would this work for an FMCG brand? 

“In 2018 Active met with a large FMCG client initially to talk about their slow-moving and obsolete stock (SLOB) management process and Active’s ability to restore the depreciated value of this stock," Active International Head of Commercial Selina Martin said. 

"After various discussions, it was clear that there were two main pressure points to the business developed from of their regular SLOB inventory, increasing sales to minimise waste and loss as well as freeing up internal personnel to focus on first line and more profitable sales areas of the business.

Regular SLOB is a common situation for many retailers and with focus on first lines sales, time is not spent on improving existing processes for SLOB, nor should it be. Streamlining processes is integral to achieving improved results and first line sales differ enormously from the clearance market, an area Active are well educated on. 

“We worked with the client to determine what model and level of support would work best for the business and ended up entering into a multi-year deal whereby we exclusively represented their brand and products in their slow-moving and obsolete inventory. The client was able to hand over full responsibility and management of their SLOB, allowing internal resources to focus on ever changing first line sales opportunities.

“Delivering an increased network of clearance channels, Active were able to increase the amount of inventory sold each month as well as improve on the price points that the client had been achieving for their stock by managing the market with a strategic approach. Within 6 months Active had increased the cash return to the client by 70 per cent each month, on track to deliver more than $1 million additional revenue recovered from SLOB” Selina added.

In addition to the organic increases Active were able to achieve from their sales channel network and knowledge of the clearance market, Active’s commission was used to create even more value with the Trade Credit model. This bespoke model enabled the client to receive a large % of cash in from the stock sales to be paid directly to them each month with the additional value of Trade Credit returned annually through their media spend.  

Commercially agile, Active delivered the FMCG brand positive business outcomes by utilising our expertise in the clearance market as well as tap into our Trade Credit Model and transformed their assets into new forms of value. 

To find out more about what Active can do you for your business, reach out and start a conversation.