Fair Trade

The digital age brings the good ol' days of bartering to B2B transactions.

Online retailers are turning to an old concept these days to get rid of excess inventory-they're rediscovering the art of bartering.

Although bartering itself isn't new, its popularity is. According to the most recent statistics from the International Reciprocal Trade Association (IRTA), $16 billion worth of products and services were bartered in the United States last year. Experts predict that figure will reach $26 billion this decade.

Some attribute the industry's growth in part to the slowing economy. Now that more people have less disposable income, there's more accumulation of unused inventory that needs to be moved. Plus, large numbers of netpreneurs rely on barter to get rid of excess inventory these days because they haven't yet mastered the subtler side of sales-including how to order goods customers want, calculate proper quantities and bring buyers to their sites. Too often, eager online merchants end up with mountains of unwanted, unsold wares.

leading Web sites field more than half of all Net traffic in the United States: AOL, Microsoft, Napster and Yahoo!.
SOURCE: Jupiter Media Metrix

Proponents insist bartering serves as an attractive solution for business owners because it enables them to get fair market value for excess inventory and underperforming assets. Bartering also offers an alternative to selling inventory at greatly reduced prices to liquidators, holding close-out sales or discounting excess inventory. In fact, on average, bartering companies pay businesses trade credits equal to three times what liquidators would pay for the same so-called distressed inventory.

"When you're liquidating something, you're getting pennies on the dollar," explains Bob Meyer, founder, publisher and editor of Barter News, a Mission Viejo, California, journal for the reciprocal trade industry. "When you're selling through a trade exchange, you get the full wholesale or retail rate. So you get top-dollar-the same [amount] you'd get when selling to your normal clients, only in trade dollars."

The arrangement works well, in part, because most barter companies give entrepreneurs tens of thousands of products and services to choose from-and there's no cash outlay. A sample of offerings might include: advertising time or space from broadcasters and media outlets; business travel deals for hotels, car rentals and airlines; office supplies and products; printing and packaging services; layout and design services; photography; carpeting and roofing services; and even telecommunications services and electricity.

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Melissa Campanelli is a technology writer in Brooklyn, New York, who has covered technology for Mobile Computing & Communications and Sales & Marketing Management magazines. You can reach her at mcampanelli@earthlink.net.

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This article was originally published in the August 2001 print edition of Entrepreneur with the headline: Fair Trade.

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