Real Estate Industry has been struggling for some time now starting from Demonetization in 2016.
RERA, GST, NCLT, and other compliances have been brought in because of the large-scale defaults which have historically haunted the common man. It also proves a point that until there is a stick nobody wants to follow the right practice. Unfortunately, all the time the consumer the common man is on the receiving side.
While the industry was reeling under various crises like a liquidity crisis, low demand, and lack of trust, etc the current COVID pandemic has hurt the struggling industry badly.
The demand has practically vanished.
To mitigate the current situation the Developers are using inventory as a cash tool. A HUGE DISASTER IN MAKING.
BARTER SYSTEM – The current tool the developers are using to pay off creditors.
1. Barter with CONTRACTOR & VENDOR: The developer is doing barter with the vendor to get material or service – UPVC, Sanitary Ware, Steel from a local vendor and even with construction contractors undertaking civil work, plumbing, firefighting all are being given inventory instead of cash
2. Barter with MEDIA: for publishing an advt in a newspaper to digital hosting on websites to hoardings on the roadside all are being given inventory instead of cash
3. Barter with BROKER: (The sales facilitation agency, the broker – channel partner) the developer is allotting inventory to brokers for the payment due in their name. To get money the broker must in the first place sell for the developer, then raise an invoice and pay GST from his pocket and finally to get paid to agree to take inventory which is on the discretion of the developer (product and price)
I will not be surprised if the developer starts to barter service of their consultants Legal-Tax-Finance etc with inventory or for that matter the high paid salaried employee is allotted a unit for a tenure of his service
Dear Developer: YOU ARE YOUR OWN ENEMY: You are creating a competitor for your product your inventory in the market. All those with whom you do barter for product or service and allot them inventory will stand as tall competitors and will be in the market to sell your product at a price lower than what you quote. They need cash to pay for raw material, labor, salaries, establishment expenses, and others. They are happy to take a little hit within their margins and sell your inventory at a lower price than you to generate cash
As a result, you will see your sales fall further and your revenue dip below a level where it starts hurting you and your business
IS THERE A WAY OUT …???
YES, OF COURSE
Instead of doing a BARTER consider lowering the price to the extent of extra you have to pay for a product or service that you are using while doing barter and generate extra sales volume so that you can increase your revenue and pay in cash for the product or service that you use.
YOUR PROBLEM IS SALE
YOUR SOLUTION IS ALSO SALE
Schemes offering free woodwork, accessories, stamp duty are discount on your price list
Why not straight away give a discount and make it more affordable for the customer to buy
BARTER is the last thing a developer should consider for using a service or exchanging it for a product
DO NOT CREATE YOUR OWN COMPETITOR – A COMPETITOR WHO CAN TURN OUT TO BE A THREAT TO EXISTENCE OF YOUR BUSINESS
SAY “NO TO BARTER“