1. What is Barter?
2. Why Barter?
1. What is Barter?
Barter is a type of trade in which goods or services are directly exchanged for other goods and/or services, without the use of money. It can be bilateral or multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, when the currency is unstable and devalued by hyperinflation.
In the past, goods were exchanged on a one-to-one basis with the intent that the value of the goods traded was of relatively equal value. Prior to the establishment of currencies, barter was the most accepted form of commerce. The equality of the value in a one-on-one barter is often an issue. (From Wikipedia)
Modern barter is the exchange of goods or service which passes through a commercial organization (barter centre or barter company) that provides a trading platform and bookkeeping system for its members or clients. The member companies buy and sell products and services to each other using an internal currency known as barter or trade dollars or barter points or both together (Cash$ + trade dollars or barter points).
Modern barter becomes an effective method of increasing sales, conserving cash, moving inventory, and making use of excess production capacity for businesses around the world.
Businesses in a barter earn trade credits or barter points (instead of cash) that are deposited into their account. They then have the ability to purchase goods and services from other members utilizing their trade credits – they are not obligated to purchase from who they sold to, and vice versa. The exchange plays an important role because they provide the record-keeping, brokering expertise and monthly statements to each member. Commercial exchanges make money by charging a commission on each transaction either all on the buy side, all on the sell side, or a combination of both. Transaction fees typically run between 4 and 15%.
I am a member of two Barter companies here in
One is Aussie-based local company and the other is local.
The trouble with my country is that the business community here is very slow to accept barter unlike in the West where it is a billion-dollar industry.
2. Why Barter?
Good question
I chose to barter is because I can get better returns for my goods.
A lot of unsold items is either excess stock or outdated items or items with damaged packaging which I would have to throw the selling price to very low rate in order to dispose of them, but in barter it is always based on the selling price (item selling for $5.00 will get me $5.00 worth in barter points i.e. 5 barter points from the barter company). Of course it is always the term - Willing buyer – Willing seller.
Barter companies normally accept and deal in new and used goods.
Normal terms between members and the barter company is that the barter company collects a transaction fee of between 4 – 10% upon the purchase of member, that is no transaction fee collected upon sales.
My local barter co. also accepts spoilt equipment like computer monitors/printers, CPUs, VCRs, radios, cameras, etc.
Apart from collection of the transaction fee, for some items we have to pay a cash component. (e.g. the barter company puts for an item - Cash$3.00 + 30BP (barter points) i.e. we pay $3.00 cash and 30BP is deducted from my account if I have credit in my account). I am actually in debt now!
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For me, I prefer to get new items like VCDs, aromatherapy, etc and sell in auction sites like eBay (now not functioning – technical error), and lelong.com (Malaysia-based).
But I sell the barter items at below the normal selling price as people always want to get things at a lower rate than at the price in the market, but I can still profit from it.
Non commercial entities like those without a business or trade can also partake in barter – like household with unwanted items such as old appliances, unused or no longer used.
My advice to those interested is that you seek out in your local area barter companies that accept trade in barter especially in household items if you are in a trade or doing business.
Check out the terms of bartering – a lot of barter companies charge both ways for the transaction fee upon sale and purchase but normally if it is 10% and above it is for both - 10% (5% for selling & 5% for purchase).
Then take a look in their store. Do not join at all if you are not allowed in.
If allowed in – ask about the prices if they are not displayed. (my first visit to a barter company – I rejected it as the prices of goods were over inflated – what I could buy for $5.00 in shops, it was priced at $25.00, just imagine how much not only for barter points but also of the transaction fee I would have pay); so be smart and also look at what they have and their members are giving to them – if it is not appealing to you or to your needs – reject them.
You probably also have to pay an entrance fee – if it is a small fee it maybe worthwhile to join.
Another way to barter (called swapping) is to put out classifieds advertisements in the internet – classifieds websites and other websites catering to selling and wanted - are readily available for free.
Look for them in the search engines.
Put in your estimated worth as the selling price - at the current value.
It is always easier to negotiate with a price among other interested parties.
If possible take a picture and upload (some classifieds websites may not offer this), but it is always better to have an image of the item so as when an interested party wants to look at it - you can instantly email to them.
Distance may be a barrier as shipping maybe costly so try bartering locally.
So get started and enjoy barter…ing.
