I have been involved with barter in one way or another for over 35 years… I initially started trading my company’s products for local cable and TV advertising in New York City. Bartering our excess inventory for advertising enabled me to grow our small family business at one location to three stores with ten employees in less than five years.
Several years later, we joined a local barter exchange and expanded our trade horizons even more. We started importing and manufacturing to supply our stores and then other stores with fine designer jewlery, becoming a sizable enterprise with many employees, designers, an inside and outside sales force and our very own factory. We were able to use barter to reduce cash requirements for travel, hotel accommodations, printing, construction services, and other business expenses.
Many years later after leaving the family business, I started my own barter exchange in New York City. Within seven years, our exchange had over 700 business members trading over $16 million a year in products and services. I could venture to say that we were the most successful retail barter exchange in New York City in the history of barter.
From there it was a natural to venture into corporate barter, becoming the principal in a transaction rather than a broker facilitating trades between members of an exchange. This led to facilitating many multi-million dollar transactions for larger companies, which greatly helped the companies that did them.
My love for computers and technology, enforced by the fact that trading needed to be facilitated online in order for barter to become mainstream, led me in 1999 to design and develop TradeBanc, an online marketplace that at the time, broke down the barriers to trade. TradeBanc was the first online global trade marketplace. It actually empowered barter exchanges to enable their members to learn about trade opportunities and then facilitate online barter transactions seamlessly even between different members of different exchanges throughout the world.
I then designed and developed VirtualBarter, a branded world class global online Internet trade exchange management system and e-commerce enabled trade marketplace. It was designed to enable anyone to start their own barter exchange without the typical large upfront cost, to automate administrative tasks so that one or two people can run and manage a 300+ member exchange, and to eliminate the need to affiliate with a large national exchange network that takes 20-50% of your earnings just for providing accounting and collection services that you can certainly do yourself if you had the right software. Today, version 3.0 of the VirtualBarter software enables anyone to start a new online exchange overnight for as little as $65/month.
For years, people have emailed or called me and posed many questions about starting up a barter exchange, wanting to know what are the best practices, how do you get the first few members, what type of members should they target, and most important, how do you start making money. I have answered these and other questions over and over again; just to contribute to the cause… getting barter to be accepted worldwide as if it were no different than giving a merchant your credit card. So today, I decided to start this blog, give back, and reveal the basic secrets of successful barter.
BK
BarterPro
Dear BK,
I happened to visit your website whilst searching for barter trading software information. I would like to know if your software also does auto-trade matching.
I am interested in running a mini barter exchange where I live (Malaysia). Do you sell this software?
Kindly advise.
Best regards,
Andrew
Although the vBarter software does not offer automatic matching, that barter business model has proven to be unsuccessful time and time again over the past 8 years, as numerous companies that launched an online matching service, went out of business.
The issue with matching software to automatically facilitate trades is that Person A wants what Person B has, but Person B typically doesn’t want what Person A has, and for multi-party matches to actually occur often, you need thousands of participants each listing multiple trade offers (haves) and items they would be interested in receiving (wants).
The best proven successful model for business to business barter is an online marketplace and member directory, which the vBarter software does provide in addition to a host of other automated features that enables one to two people to run a 500+ member exchange.
The virtualBarter software is exceptional for members of a barter community and for the brokers and administrators that manage the community or exchange. There are both small and large exchanges using the vBarter software, some of which have thousands of members.
The software features the ability for members to join online, list trade offers in a marketplace, view trade offers and purchase them in an e-commerce enabled shopping cart, and to manage their accounts. There is complete real-time transaction history and reporting for members much like online banking.
The software also automates administrative tasks, such as online directories, month end processing, commission reports, sending out statements by email fax or postal mail, daily emails with new trade opportunities, etc. Each of these functions only takes a few clicks and less than 5 minutes to accomplish, unlike other barter software that could take hours to perform the same tasks.
As for the exchange and brokers, you can assign members to brokers, assign permissions to brokers and run commission reports for the brokers. You can have up to 3 brokers and 1 salesperson assigned to each member with different commission structures for each.
You can also customize the text and images on the site using the content manager and the software has a full featured contact management system. The system also provides an automated call list each day for each broker so that you empower proactive trading that generates higher trade velocity and revenue.
You can take a look at http://www.virtualbarter.net for complete details and subscription pricing. As the software is available on a hosted ASP model starting at $65 per month, it probably would not make sense for you to buy the software, as a country license starts at $150,000.
Dear BK,
I am blown away. What you have done and are doing is amazing. A colleague just turned me onto your site this morning; I’m speechless — a rarity for me.
You’re doing one of the most important things that must be done to save the world: advancing the development of the cashless economy that can sustain people through the hard times ahead as fiat currencies collapse. And doing it in a way that knocks down barriers to ordinary people creating their own local plugged-in trade exchange.
I’m definitely going to be a customer and probably more. My wife and I are starting a trade exchange that I propose to make the dominant barter force in and around the nation’s capital. I don’t yet have figured out if this will be a project of OurFinest.Org, a 501 (c) 3 for wounded warriors that I head. Or if we need to organize as a for profit in order to get some SBA funding.
My vision is to do in education what you are doing in commerce, basically upend it and make a top quality education available at a cost the poorest man on earth can afford. I envision a network of community centers, a combination of an upscale thriftshop that has died and gone to heaven, a place where you can turn your trash into treasure through trade, an Internet cafe, a satellite campus where you can take a hybrid course for certification or college credit, and a community center where disadvantaged people and middle class consumers can find what they need and want and make their lives better by helping one another help others. I also want to use this to provide jobs and job training and to generate revenue to help wounded warriors.
I’ve only recently encountered the work of Bernard Lieataer, Ellen Brown, Silvio Gesell, and other open money advocates. I’ve finally learned something about the mystery of money and see ebarter as a major force to empower people and build sustainable communities.
What you are doing is wonderful, and I’m looking forward to contributing however I can. One thing I notice is that you’re apparently early on in the PR thing — no news releases on the site — and this is something I have many years’ experience in. Google “new rules of PR” to download an excellent free ebook on using news releases for SEO.
All the best to you.
Mark Draper, Ph.D.
OurFinest.Org
Thank you for your comments! It is obvious that you too get it…
Barter can be as far reaching as we want it to be. It can bring clean drinking water to children that don’t have any. It can bring dresses to little girls in an orphanage that are wearing rags. It can monetize communities throughout the world, create community currencies backed by products and services, empower the unemployed to work, and even bring a little cheer to the elderly, lonely or destitute.
In commerce, barter can close the gap between a selling price and the amount a buyer is willing to pay, it can offset losses and eliminate write-downs. Barter helps businesses get full value for perishable unsold inventories, such as empty airline seats, unsold room nights in a hotel or B&B, and empty seats in a restaurant. They can’t sell tonight’s vacant room or empty seat tomorrow, so aren’t they better off accepting barter dollars at full value than loosing the entire value of that unsold room night or seat in their plane or restaurant forever?
In real estate, people who must sell their home to reduce their expenses could accept barter dollars for equity and then use the barter dollars to buy furnishings for their new home, or to pay for lawn maintenance and repairs. Banks should accept barter dollars towards the pay-off of overpriced mortgages. These properties are being sold on a short sale, whereby the bank is taking a hit, which of course effects the entire economy. Instead the bank could get full value, eliminate the loss or write-down and then utilize the barter dollars to renovate bank branches, pay for signage when a bank is rebranded, pay for printing of all of their collateral materials, or to advertise on radio and local TV, which also has unsold excess perishable inventory.
I have been involved in various aspects of barter for over 35 years and most recently, I am seeing a new trend… taking barter back to basics and using it to empower people, help the less fortunate, and revive communities through barter enabled social networks…
I am working with a stellar company in the merchant services and processing industry that wants to give back and help the world through charitable giving. Knowing that donations to charities have become difficult in this economic times, they are giving back 100% of the profit they earn from a merchant’s credit card processing to the merchant’s charity of choice (for the first year, and 25% thereafter). Details about this wonderful initiative can be viewed at http://www.thehopeprocess.com. We hope to soon explore adding a barter marketplace to their offering, so that participating merchants can also donate to charities by offering their excess products, services and capacity in an online barter marketplace for barter dollars that they can then donate to their favorite charity.
We are also building a custom social network enabled barter exchange that will empower communities and people to trade for the products and services they need. I would venture to guess that they will have 100,000 members by the end of next year, which is more than 200 times the size of your average barter exchange.
And we are making all of these ubiquitous exchanges as easy as using a credit card. Except instead of a credit card where you have to pay your monthly bill in cash, members use their Trade Card, Community Card or Reward / Gift Card, to pay for the products and services they want or need with their own product or service instead of cash. And, the vBarter enabled Trade Card could be used locally, across the country or throughout the world.
The possibilities are endless… All we need is a paradigm shift in thinking and a few hundred thousand raving fans to make the shift to a cashless economy a reality. What will you do to foster the dream?
I am interested in trading with a college in exchange for tuition. Can you tell me how to go about this? Thanks. Cindy
Colleges and universities are hit just as hard as other businesses during an economic recession and could truly benefit from participating in a barter exchange, or from just accepting barter dollars for tuition from an individual that is already a member of a barter exchange, which the university can then use to reduce cash expenses.
During these difficult economic times, colleges and universities need to market and advertise to get more students. They may also need local services such as grounds maintenance, lawn care, parking lot repaving, etc. Or they may need signage or renovations.
The challenge is to get to the right person who is a decision maker and simply propose to them that they accept payment in trade for tuition. They may even be interested in a larger scale transaction whereby you could pay 3 or 4 year’s tuition in advance. You benefit by paying trade instead of cash. The university benefits as they are guaranteed a paying student for 3-4 years and they get years of tuition fees in advance to use immediately to reduce cash expenses.
Bruce,
Thought I’d share that our book was covered in the USA Weekend! http://www.usaweekend.com/article/20100806/MONEY/8080301/-1/health/Bartering-can-help-you-save-big-bucks
I hope all is well in your world!
Guess I should add the name of the book for other readers… “The Art of Barter-How to Trade for Almost Anything” by Shera Dalin & Karen Hoffman published Spring 2010