Barter is smarter in a recession
Bartering (the age old system of exchanging business services without money) has become increasingly popular during the economic downturn. The internet allows companies to exchange globally, generating an estimated $3 billion in the US alone. In Scotland’s Sunday Herald newspaper (29 March 2009) a double page spread was devoted to the subject. You can read the article here.
One of the main Scottish based bartering websites The Business Exchange (TBEx) is a private trading platform with over 200 clients. They include a variety of businesses, the Edinburgh and Aberdeen chambers of commerce, Premier League football clubs and luxury hotels. TBEx, which is based in Aberdeen (Scotland), does business with similar exchanges overseas and sells its technology to clients in North America, Europe and South Africa.
Richard Logie, managing director of TBEx, reports a tenfold increase in inquiries from people seeking advice about setting up bartering exchanges. He says: “The banks have had their day. With the collapse of the banking system, people are going back to basics. There is a need to look at alternative mechanisms of finance.”
Bartering is appealing during a downturn because first, members can find new customers and use excess capacity. Second, a satisfied customer often refers cash-paying customers to the business in question. Third, participants can conserve hard-to-come-by cash. Bartering of goods, however, are treated like a cash sale by the tax man and should go reported to the HMRC in the UK.
Edinburgh Chamber of Commerce in partnership with TBEx, are launching the Edinburgh Chamber Business Exchange (ECBE) – a new exclusive FREE bartering portal service open to all members.
For individuals bartering sites such as U-exchange and Lets are reputable websites for exchanging anything from houses, services and material items. Asda (supermarkets) has started barter boards in a few stores such as Elgin (Scotland) and if successful the store will roll out this service nationwide.
Specialist sites such as What’s Mine is Yours and Read it Swap it allow users to swap clothes, books and CDs.
As the recession deepens, bartering will continue to grow.