Fair Trade

Barter Smarter

These days, experts say entrepreneurs interested in bartering are gravitating toward online barter companies instead of traditional brick-and-mortar ones. The reasons are obvious: Online barter companies offer a wider universe of possible partners, faster matches between those partners and lower service fees. In fact, most online barter companies collect commission fees of just 3 to 10 percent on transactions. In contrast, offline exchanges usually charge 10 to 15 percent. Plus, almost all offline exchanges require pricey membership sign-up fees that run anywhere from $45 to $395. Additional monthly dues cost about $30.

Online bartering services also allow busy entrepreneurs to participate in exchanges and trades at any time of day or night. Offline exchanges, on the other hand, are only open during business hours, and they usually require that business owners deal with brokers.

There are a variety of online barter companies to choose from. Some popular options worth looking into include Bigvine.com, iSolve.com, Tradaq and Ubarter.com.

Perhaps the most popular online barter company is currently San Francisco-based Bigvine, whose parent company is Allbusiness.com. Bigvine collects a 4 percent commission from both buyers and sellers on transactions of less than 5,000 trade dollars, and a 3 percent commission on transactions of 5,000 trade dollars or more.

Moin Ghatala, 50, founder of A & M Computers Inc., a San Francisco, California-based six-person company that sells computers and software, began using BigVine's barter site last year and now swears by it. Ghatala says he uses the service regularly to trade his excess inventory for things such as restaurant meals he gives to his best customers.

"In the computer world, the moment a new model hits the market, the old model becomes obsolete," says Ghatala. "Oftentimes, we're left with excess inventory because of this. However, instead of sitting on the inventory in a warehouse, I can place them on BigVine, and there are still people out there looking for those items."

Before signing on with any bartering company, it's a good idea to do a little research. The IRTA suggests you ask for a referral list of clients, check their barter prices to see whether products and services are priced fairly and competitively, and check the geographic coverage of the exchange's customer base.

But whatever exchange you choose, don't forget that barter sales count as taxable income. In the United States, barter exchanges annually report the barter income of each client to the tax authorities. It's in your best interest not to do business with anyone who sells barter as a tax dodge.

Melissa Campanelli is a marketing and technology writer in Brooklyn, New York. E-mail her at mcampanelli@earthlink.net.

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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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