One company's disaster can be another's windfall. At least that is the thinking at Manhattan-based Tradewell Industries Inc., which is about to introduce a new concept called "marketing insurance."
Tradewell has already spent the past eight years remarketing other companies' failed products, including more than four million pounds of Crown Zellerbach Corp.'s cat litter that it resold as sawdust substitute for racetracks, and $250,000 worth of ham-flavored turkey roasts that it resold to institutional kitchens after a cold reception at the supermarket. Now, with its so-called marketing insurance, Tradewell will offer the same service before a company has even begun a rollout.
Under the terms of the new "insurance contract," Tradewell agrees to buy from the client remainders of a product at a wholesale price that doesn't exceed $10 million; in exchange, the client promises to turn over the remaining run of the failed product. The client is free, but not bound, to trigger the transaction at any time in the first 18 months of the new product's life.
Tradewell benefits by getting first access to leftover inventory. Company president William S. Steinberg says that Tradewell doesn't have a bias against any industry, with the exception of technology products that require highly specialized knowledge to sell, but it does prefer working with multiproduct companies that can offer the possibility of a long-term relationship. He says that Tradewell's strength has traditionally been in remarketing consumer items. "We're open-minded on [what] we will contract to buy," says Steinberg, "as long as we perceive there is a potential market for it."