Tuesday Report - January 15, 2002

The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

January 15, 2002

Barter Industry Continues To Evolve...
Future Looks Bright As These Examples Testify

The growth and development of the commercial barter industry, particularly the trade exchange industry, continues onward despite the tribulations of the companies, well-funded by VC firms, that have tanked, i.e. All Business and Tradaq.

Here are a couple of examples which show enormous progress in the industry's ability to perform, as well as the all-important acceptance of trade dollars for valuable assets sellers are exchanging.

A recent real estate deal in the Southwest saw a $725,000 appraised home sell for a cash/blend purchase of $325,000 cash and $450,000 trade dollars.

And a savvy member of two trade exchanges--one located in the midwest and the other on the east coast--is busily constructing a million dollar home as well as a $1.5 million Bob's Big Boy restaurant, on full trade.

Such types of deals are significant accomplishments and simply were not possible to achieve decades ago, prior to the extensive growth of some of our industry's top trade exchanges. (Exchange owners from around the globe are invited to e-mail Bob Meyer at bmeyer@barternews.com with their stories, which we will share here.)

Formula One Racing Coming To American Radio

Available To Stations On A Barter Basis

The largest and most prestigious auto racing series in the world, the Formula One World Championship (consisting of 17 race events), will soon be heard on American radio beginning March 2002.

The U.S. Formula One Radio Network holds exclusive radio broadcast rights. Syndication of the Network will be handled by Chicago-based Creative Broadcast Consulting, and is available to stations on a barter basis, which includes local spot avails. For affiliation details call 800-743-1988, ext. 201.

Retail's Future Is In The Store, Not The Net

According to 1 to 1 Magazine, evidence shows that bricks-and-mortar stores are still the leading channel through which most consumers buy products...and analysts are backing that up.

Boston-based AMR published a report late last year entitled, "Retailers Must Make Their Stores Centers For Multichannel Commerce." The report argues that while consumers are increasingly moving toward channel bundling (using multiple channels to make a purchase decision), bricks-and-mortar stores are still the heart and soul of retail.

What's more, the energy expended on building online stores often far exceeds the scale of the channel. Figures from the U.S. Commerce Department show that $25.8 billion in online sales in 2000 accounted for less than 1%--0.8%to be exact--of all retail sales.

And even though AMR predicts that online retail sales will reach $100 billion by 2003, it will represent just 3% of all retail revenue.

However, analysts also say that retailers will increasingly rely on e-tailing to offer better, more personalized service, as well as to learn more about their customers' buying habits and product preferences, both online and off.

It comes down to the fact that what works in the store works well online. If you remember that it pays to know your customer, and if you don't put the cart before the horse with a lot of glitzy technology, you'll do pretty well.

Here And There. . .

Total U.S. research and development spending, including corporate, federal, university and foundation expenditures, will increase about 3.5% in 2002 to $286 billion according to a report produced by Battelle Memorial Institute and R&D magazine.
Despite the global travel slump after America's September tragedy, China's tourism revenue increased 9.8% last year. This year 90 million overseas tourists are expected to visit China. The Economist magazine predicts by 2015 China will lead the world in tourism.
Pip Coburn, the global technology strategist in the technology group of UBS Warburg Equity Research says B-to-B exchanges, run by third parties, are unlikely to get lift off anytime soon.

Even so, many companies are still pursuing more efficient in-house systems that let them automate buying or trading other information with suppliers. The CRM (customer relationship management, or software that lets companies keep tabs on their customers) vendors are doing very well.
Huge corporate debt has been taken on during this recession. Since the downturn started in the first quarter of last year, non-financial corporations have issued new bonds to the staggering total of $137 billion. In comparison, non-financial corporate debt rose only $5 billion during the 1990-91 recession.
GE Capital, the large acquisitive financial arm of General Electric, is making another move toward more real estate and unusually stable holdings by purchasing the assets of Security Capital Group--a company with large positions in self-storage, grocery-anchored retail and parking, for $4 billion.
Serial entrepreneur Bill Gross raised $1 billion from investors to start Idealab. Now the company is making an offer to their investors to buy back stock at 10-cents on the dollar, "take it or leave it." (Reportedly the investors, who are without a board seat, and therefore have little power, are very disenchanted with the offer, which expires this week.)

The buyout would cost Idealab $103 million. They have $200 million in cash and about $180 million of stock in one of its most successful companies, Overture Services, formerly known as GoTo.com.
Economist Gary S. Becker, the 1992 Nobel laureate and professor at the University of Chicago, says the recession will end during 2002 as the great inner strengths of the American economy--human capital and entrepreneurship--come into play.

Becker also believes the same will happen in Europe and Asia. The only things that could derail a recovery, he says, are misplaced public spending and tax actions that do more harm than good.
CEO's at the Line56Live! conference said they want measurable value and return on investment in new internet initiatives. Every IT penny is being scrutinized, and offerings must articulate a clear return on investment in 12 months, and preferably six to nine.
Globalization is a powerful force for reducing poverty in developing countries, according to a World Bank report. The report showed that 24 developing countries that welcomed greater integration into the global economy in the past 20 years achieved annual growth rates of about 5% in the 1990s.

In comparison, developed economies grew an average of 2% per year, while "less globalized" countries saw their economies stagnate or decline.
Donald Trump is trading on his name, working with a father-son team of south Florida developers...Michael and Gil Dezer. Trump is providing the "branding rights" to his name for their condominium and hotel projects in the Miami area. In return he will get a fee as well as some percentage of the profits.

We welcome your comments, questions, and observations.

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