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BarterItOnline Larry Chase's Web Digest For Marketers 5/24/00
Barter
News, June 1,
2000
Barter, when folks swap goods and services rather than exchange cash, is bigger — and some say better — than ever. Especially for small businesses strapped for greenbacks and worried about cash flow. By bartering, small businesses get the goods and services they need without tying up one of their most precious resources: cash. For fledgling companies with limited cash flow, bartering can mean the difference between doing business and doing without. It’s one of the reasons why bartering is so big. More than $16 billion worth of goods and services was bartered last year alone, with most of that carried out in small local or regional exchanges and informal networks. Enter the Internet. Scads of Web sites have sprung up to help small businesses barter online. All bartering Web sites, including big names like BarterTrust, BigVine.com, BarterItOnline and UBarter, approach swapping the same way. You list the goods or services you want to trade, but price the stuff at fair-market value, or what you’d charge a cash-paying customer. When someone selects your product or service, you get a dollar-amount credit, which you can then redeem for anything posted on the bartering site. The online exchange makes its money by taking a piece of the action, charging the bartering parties anywhere from 4 percent to 10 percent. The key is to pick a bartering site with lots of listings, since there's no universal barter currency, and any bartering credit you get works only within that site. BarterTrust, for instance, boasts about 10,000 listings at the moment. Bartering sounds like a smart idea to me, especially considering the recent interest-rate hike by the Federal Reserve, which may cool down the hot cash economy. Assuming you have the necessary excess inventory and resources to support new business, bartering is also a great way to create some new customers. In the best of all worlds, of course, you’d convert any new leads you get into paying customers. Even if you don’t want to barter now, keep an online bartering site on your Web browser’s bookmark list. You may need it down the road. We welcome your feedback about AllBusiness Daily. Drop us a line at
daily@allbusiness.com. By
Joel Palmer, Des Moines Register
The age-old art of bartering is making a comeback on the Internet.
Before there was currency there was bartering, considered the
second-oldest form of commerce behind prostitution.
Bartering remains strong even in the final year of the 20th century - and
it's growing. Nearly 300,000 businesses in North America barter an estimated $16
billion worth of goods and services each year. Within a decade, according to the
International Reciprocal Trade Association, 1.2 million businesses will barter.
That growth will be the result of Internet sites like BigVine, Ubarter
and BarterItOnline, which provide small and
medium-sized companies a nationwide network of traders.
"We knew that if we could transform bartering the way eBay
transformed auctions, that this would be a good business opportunity," says
BigVine CEO Bippy Siegal.
On BarterItOnline, members can find $3 million
in investment real estate, $600,000 in office furniture, thousands of dollars of
hotel room nights in Jamaica and cable TV advertising. BigVine has $50
million in inventory divided in 100 categories. Traders can choose among
offerings like 18 acres of land in rural Maine, 50 leather Oakland Raiders caps,
$5 worth of spiritual advice or a 1951 Pobeda - a Russian automobile - valued at
$6,500.
Most of these sites are marketed as a way for smaller companies to
attract new sales and increase cash flow while offsetting overhead. For example,
a Web developer starting out will spend a lot of money buying equipment. What he
can do instead is offer his skills through one of these online barter networks.
Once he's sold his services, his account receives credit that he can then use to
buy, say, a scanner from one of the other members.
That's how online bartering most differs from the traditional form. There
are hardly any direct trades between companies. Media Company A might sell
$1,000 worth of advertising to Law Firm B. The former doesn't receive cash, but
rather e-dollars that go into an account set up by the site, which it can then
use to buy a photocopier from Office Supply Store C.
"By bartering offline, you might have access to 500 members,"
says David Crombie, vice president of marketing for Ubarter. "Our site
currently has 10,000 members, and we're adding about 200 each day."
Most of the sites offer free memberships. Some even provide a line of
credit so companies can buy goods and services before they sell any. The sites
charge anywhere from 5 to 8 percent of the transaction's value from both buyer
and seller.
"This enables businesses and entrepreneurs
to trade products and services through the use of a trade dollar currency,"
explains BarterItOnline CEO Richard Cravatts. "The Internet promises wider
and easier use of barter as a strategic business function."
Derrick Dominique, a research analyst who studies online auction and
bartering sites for the Hurwitz Group, says the appeal for companies is being
able to buy goods without necessarily reporting the transactions on their
financial statements. "It allows you buy things you need and pay for them
with other unsold goods, without the use of cash. Those kinds of transactions
never have to be put on financial documents."
There still is something of a flaw with online bartering, especially for
those trying to trade services. Most people still want to conduct business with
those nearby.
Chad Kovac, who just started his own database company called Tech
Knowledge Inc., joined BigVine about a month ago, offering database development
to its members. So far, nobody's inquired. Kovac reasons it's because few Iowa
companies are involved in the bartering network. "People are looking more
in their own regions for people to work with." Kovac is hoping Iowa companies come aboard. He wants to buy some equipment, but lacks the cash to do so. "I could just use the barter credit to buy the hardware I couldn't afford."
BarterItOnline.com
in Deal With Publisher For First Round eCompany
Now, June 23, 2000
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