Barter an old idea that's new again
Published on Tue, Mar 24, 2009 by Carmell EmoryRead More Business
When you think about barter, do you envision trading chickens for a goat?
"That's the basic idea behind barter, of course, but with modern technology and knowledgeable business management, the concept is a smart tool for today's businesses," said local trader Werner "Randy" Randall.
Modern barter exchanges are membership-based networks of professionals, service providers and retail merchants who sell their goods and services to one another using trade "credits." The credits, which are tracked electronically, maintain a stable value within the system and ensure an equitable exchange.
By using a standard system of credit, members are free to buy and sell throughout the system without having to rely on one-to-one trades. The transactions are processed online at the trade exchange's Web site, which also allows members to have instant access to their trading statements and an up-to-date directory of participating businesses.
According to International Reciprocal Trade Association (IRTA), barter can help businesses realize lost revenues and make additional profits by making use of excess business capacity and underperforming assets. The national non-profit organization works to promote awareness of "alternative capital systems," including modern barter exchanges, and to ensure ethical practices in the field.
"If you're a restaurant owner with empty tables, you're suffering from excess capacity," Randall explained. "You still have staff costs, operational and administrative expenses even if no one walks through the door."
Filling those empty tables with customers who pay with trade credits instead of cash can be a practical solution, Randall said. The actual cost of the food served is the only incremental cost to the restaurant business, which means the $40 in trade credits earned might have a "hard" cost of just a few dollars.
The same principle applies to the orthodontist with unbooked appointment times, the mechanic with an open bay or a hotel with empty rooms.
Retail merchants can also benefit from participation in a modern barter exchange. Inventory that's not moving from store shelves can be sold on trade, then the credits used to pay for services that might have previously been purchased with cash.
"The trick is to convert some of your company's cash expenses to trade," said Randall, "while attracting new customers who might not have purchased from you otherwise."
A veteran of the barter industry, Randall owned and operated Mountain Barter in the 1980s and '90s. The exchange boasted more than 350 members in King and Snohomish counties, and highlights of membership included quarterly live auctions with all items up for bid using trade credits.
"The current economy offers an opportunity for businesses to think creatively, and barter can be a great survival tool," Randall explained. To help facilitate fair local trades while giving members access to global trade opportunities, the Marysville businessman has established Community BarterNet through the Virtual Barter network.
Other trade exchanges also operate in the Puget Sound area, including national giant ITEX and BizXchange of Seattle. The popular free online classifieds Web site, Craigslist.org, also features a section for barter transactions.
ITEX of Seattle has a membership roster of roughly 500 businesses and handles over $8 million in barter transactions each year.
"It really makes sense to convert excess capacity to trade credits," Randall said. "In this economy, businesses can't afford to overlook any potential resource."
To find out more about Community BarterNet, phone (360) 652-1869 or e-mail barternet@msn.com.
"That's the basic idea behind barter, of course, but with modern technology and knowledgeable business management, the concept is a smart tool for today's businesses," said local trader Werner "Randy" Randall.
Modern barter exchanges are membership-based networks of professionals, service providers and retail merchants who sell their goods and services to one another using trade "credits." The credits, which are tracked electronically, maintain a stable value within the system and ensure an equitable exchange.
By using a standard system of credit, members are free to buy and sell throughout the system without having to rely on one-to-one trades. The transactions are processed online at the trade exchange's Web site, which also allows members to have instant access to their trading statements and an up-to-date directory of participating businesses.
According to International Reciprocal Trade Association (IRTA), barter can help businesses realize lost revenues and make additional profits by making use of excess business capacity and underperforming assets. The national non-profit organization works to promote awareness of "alternative capital systems," including modern barter exchanges, and to ensure ethical practices in the field.
"If you're a restaurant owner with empty tables, you're suffering from excess capacity," Randall explained. "You still have staff costs, operational and administrative expenses even if no one walks through the door."
Filling those empty tables with customers who pay with trade credits instead of cash can be a practical solution, Randall said. The actual cost of the food served is the only incremental cost to the restaurant business, which means the $40 in trade credits earned might have a "hard" cost of just a few dollars.
The same principle applies to the orthodontist with unbooked appointment times, the mechanic with an open bay or a hotel with empty rooms.
Retail merchants can also benefit from participation in a modern barter exchange. Inventory that's not moving from store shelves can be sold on trade, then the credits used to pay for services that might have previously been purchased with cash.
"The trick is to convert some of your company's cash expenses to trade," said Randall, "while attracting new customers who might not have purchased from you otherwise."
A veteran of the barter industry, Randall owned and operated Mountain Barter in the 1980s and '90s. The exchange boasted more than 350 members in King and Snohomish counties, and highlights of membership included quarterly live auctions with all items up for bid using trade credits.
"The current economy offers an opportunity for businesses to think creatively, and barter can be a great survival tool," Randall explained. To help facilitate fair local trades while giving members access to global trade opportunities, the Marysville businessman has established Community BarterNet through the Virtual Barter network.
Other trade exchanges also operate in the Puget Sound area, including national giant ITEX and BizXchange of Seattle. The popular free online classifieds Web site, Craigslist.org, also features a section for barter transactions.
ITEX of Seattle has a membership roster of roughly 500 businesses and handles over $8 million in barter transactions each year.
"It really makes sense to convert excess capacity to trade credits," Randall said. "In this economy, businesses can't afford to overlook any potential resource."
To find out more about Community BarterNet, phone (360) 652-1869 or e-mail barternet@msn.com.
