Exchange offers buying leverage

Exchange offers buying leverage

Deal making to buy and sell licensing rights for entertainment, sports teams, events, and brand names has gone virtual with a company dubbed Whats (WHN) launching an exchange for intellectual property rights at the Licensing International 2000 Show in New York.

By pooling the purchasing power of small-to-midsize retailers, the exchange, at, levels the playing field against the purchasing powerhouses of retailing giants.

In addition to aggregating demand to meet threshold prices set by the manufacturer, by the end of the month the WHN marketplace will do credit checks for the manufacturer before the order is placed, purchase the merchandise for the retailer, and handle all logistics including shipping, according to its chairman and CEO Robert Fried.

Major retailers account for about 90 per cent of the allocation of licensed merchandise, Fried said. WHN will allow smaller retailers to get their share of the merchandise that is hot for only a short time, such as Mission Impossible 2 T-shirts.

"Even if small retailers are able to get that merchandise, they pay 25 per cent more because of the smaller volume. That's where the real economics lie," said Fried, who agrees with industry analysts and corporate licensing executives in downplaying the importance of the actual bidding on licensing rights.

"We would never want to see our licence become bidded out. We need to do due diligence," said Andrew Lelchuk, business development and e-commerce manager at Coca-Cola.

But in the rapidly changing world of licensed merchandise, rapid and pervasive notification of a licensing opportunity is a major benefit to licensees, manufacturers and retailers with the business benefits extending back to the licensor, according to Lelchuk.

"There are thousands of mom-and-pop and specialty stores and our licensees and manufacturers can't get to call on these guys. [A licensing exchange] gives us an extension to our business development activities and to reach more retailers," Lelchuk said, who added that it also gives Coca-Cola the ability to inform licensees and retailers of marketing activities.

As the Internet continues to change the business landscape, the WHN exchange may put a crimp in the clout currently wielded by the massive buying power of only five US retailers: Wal-Mart, Kmart, Target, KB Toys, and Toys R Us.

"WHN challenges some of the primary licensees for goods, and they may be upset if they do not get preferred treatment," noted Gene Alvarez, program director at analyst Meta Group, adding that, "If I am Wal-Mart or Kmart, I may be upset if smaller retailers are competing with me."To add to these retailers' woes, whatever level of customer loyalty some brick-and-mortar giant retailers enjoy vanishes when buying licensed, faddish merchandise, he said.

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