Retail barter is a relatively new phenomenon where businesses can engage in bartering without the need for reciprocal trade.
Typically retail barter exchanges have membership bases of small to medium sized businesses that join in order to:
Swap spare time for goods or services that they need
Attract new customers outside their area / advertising reach
Trade their product or services for other products or services that they require
Purchase products/services at a discount (not a direct discount, instead, the difference between the cost to generate business and provide products to new customers acquired through the barter network versus the cost of taking existing cash out of the business to purchase the same goods or services)
Alleviate the requirement to pay for current or new expenses from existing cash-flow
Rather than businesses engaging in direct “swaps” between one another, a retail barter exchange acts as a both a marketing agent (providing a list of all goods and services offered by each member of the exchange) and a third party record-keeper of each barter transaction.
These multilateral barter networks work via a system of mutual credit.
Each member is provided with a credit limit in “barter dollars” which they may spend with any other member of the barter exchange network.
This barter dollar credit limit is equivalent to a unit of the official currency where the barter exchange is located (for example, a Canadian barter exchanges “barter dollars” will be the equivalent of a Canadian dollar for the sake of record keeping).
Members spend these barter dollars with any other member of the exchange, thereby eliminating the need for a double coincidence of wants between members.
As one member spends, another member earns. The sum of all barter dollars for all member accounts in the network is always zero even though some accounts will be in debit and others in credit.
In the barter market, prices are the same as in the cash one: sales are officially made at full retail selling price.
Retail barter exchanges generally provide the following services:
Actively seeking out new businesses to provide goods or services required by the existing members of the exchange
Print a membership directory of all members along with details of their products or services – thereby enabling each member of the exchange to seek out products and services on barter rather than cash
Produce regular newsletters promoting specific members who have spare capacity, are in barter dollar debt, or who wish to acquire new customers
Conduct networking meetings between businesses to allow each member the opportunity to see what is available on barter and to promote their businesses to each-other
Provide bank-account style accounting for each member, producing “barter dollar” statements for each member and debiting and crediting each members barter account as transactions take place
Ensuring that any unrecoverable deficit balances are accounted for and balanced out with new barter dollars brought into the system (usually through the exchange purchasing another members barter dollars for cash, or through the retailing of cash-purchased goods or services by the exchange to its members for barter dollars) and/or an increased speed of barter dollar flow between members
Being responsible for credit control within the exchange and ensuring sound fiscal policy and ensuring liquidity of the barter dollar (monetary flow between members, ensuring that no member is in credit or debt for any great period of time)
In return for this service, the barter exchange charges a membership and a transaction fee in cash for their services.
Originating in the 1950s in the USA, organized barter among companies has recorded a dramatic growth in a few decades, giving rise to a completely new industry. At present, the barter industry is spreading in almost all industrialized countries, attracting an increasing number of businesses.
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About Ormita
The Ormita Commerce Network spans 5 continents, with direct representation in more than 17 countries plus additional partnerships in a further 59 countries. The business allows companies to exchange goods and services on a reciprocal trade arrangement.
Some of our Websites
Ormita Commerce Network Australia – www.ormita.com.au
Ormita Commerce Network Canada – www.ormita.ca
Ormita Commerce Network India – www.ormita.co.in
Ormita Commerce Network Mexico – www.ormita.com.mx
Ormita Commerce Network New Zealand – www.ormita.co.nz
Ormita Commerce Network United Kingdom – www.ormita.co.uk
Ormita Commerce Network United States of America (USA) – www.ormita.com
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