Scan-Based Trading (“SBT”), the model in which suppliers maintain ownership of the product until it is sold or scanned at the retailer, is gaining widespread traction as a counter-strategy for both suppliers and retailers to compete more effectively with ecommerce. Once isolated to just a few product types, Scan-Based Trading has become increasingly prevalent in mainstream categories. Forward thinking suppliers are embracing the model and using it as a competitive advantage to partner more closely with retailers. With efficient technology now available, suppliers can track inventory closely and benefit from increased margins and higher sales.
Many suppliers that embrace Scan-Based Trading and understand its advantages run into the problem of how to finance working capital for these programs. Banks and non-bank institutions alike will not lend against inventory that resides on a retailer’s shelf. For manufacturers that need this capital to manage cash in growth or seasonal scenarios, it becomes very difficult to take advantage of Scan-Based Trading. Adding to the capital need is the request by many retailers that suppliers buy any existing inventory on the shelf when transitioning to an SBT relationship. For these reasons, many suppliers simply can’t afford to move forward.
Ralston Creek Capital (“RCC”) fills this financing void by lending against consigned inventory at the retailer. As former suppliers to many of the top national retailers, the RCC team understands Scan-Based Trading and believes in its benefits. Additionally, there is an understanding that assets at a retail store have real value and thus a financing market should exist. Ralston Creek Capital will also finance a buy-back of the inventory of a legacy supplier to allow for a smooth transition to an SBT program.
Scan Based Trading represents the way of the future for many retailers and suppliers as the overall market has changed significantly in just a short time. Suppliers that are early adopters can take market share, increase their margins, and increase cash flow. Ralston Creek Capital can be a part of this program by providing much needed working capital for suppliers embracing the changing retail landscape.
Topics: Scan-Based Trading Payments