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June 26, 2001

ITEX Revenues Grow, As Do Losses

ITEX Corporation, a national trade exchange founded in 1982 and trading on the over-the-counter bulletin board (ITEX), reported a $870,000 loss in the quarter ending April 30, 2001. (Last year for the same period the reported loss was $261,000.)

Company revenues increased 9% to $2,772,000 during that (third) quarter compared to $2,544,000 during the same period last year.


Online Exchange Services Find It Difficult Going

One of the first business-to-business online trading systems was Chemdex—set up to serve the chemical industry. Their plan was tantalizingly simple: chemical sellers would pay modest transaction fees of 1% to 2% to find new markets.

The idea was that competition would drive down prices, and Chemdex would profit by hosting the online exchange as the service grew. In theory, purchasing would be streamlined with an easy online menu—an advantage over having to flip through catalogs, make calls, or fax queries to suppliers.

But setting up the Chemdex marketplace (now known as Ventro) cost the company millions—1.4 million product listings at $3 to $4 each to create, and an equal sum to change or update.

Then, due to low transaction fees, it would need to process billions of dollars in transactions to break even. Bottomline: The company was never able to attract the mass of clients to make the necessary trades which would create a profitable venture.

Even the companies that joined online exchanges out of fear of being left behind, then found their own well established internal purchasing systems to be more efficient.

Today, most of the roughly 1,500 b2b exchanges operated by third parties have sputtered and are struggling. Some online exchanges will undoubtedly succeed, yet it seems clear that one touted benefit of the Internet has been monumentally oversold...suppliers don't really want anyone between them and their customers.


ICON's New Hire Reinforces Service Commitment

Corporate barter company, ICON International located in Stamford (CT), has hired Carol A. Taber, former executive vice president and group publisher of Success, Working Woman, and Working Mother. She will serve as vice president of account management.

During her tenure as executive vice president of the three publications she achieved a 64-fold revenue increase on Working Woman magazine, and was a major contributor to the growth of the company with corporate revenues increasing to more than $100 million from $500,000 over a five-year period.

ICON says hiring Taber is a sign of their dedication to delivering the highest level of customer service in the corporate barter industry, as well as demonstrating the company's ongoing commitment to print media fulfillment. Icon's media services department executes buys for print, out-of-home, and broadcast media.



Here And There. . .

  • IRTA's Barter Odyssey (annual convention slated for Denver this September) has lined up four excellent speakers who will be presenting topics related to this year's overall theme—Train the Trainer.

    Vilis Ozols from the Ozols Business Group is the keynote speaker, who will focus on "Manager as Coach." Also making presentations will be John Tschohl, Bernard Leitaer, and Gerry Layo. The latter two were very impressive at last year's International Conference.

  • The National Association of Trade Exchanges' regional convention is slated for October 4 to 6 in Akron, Ohio. The link for available online registration is http://www.nate.org/natexc55.htm. Rooms at the Sheraton Suites venue are available to NATE members at 100% trade.

  • Network Commerce is one of at last 86 companies that have filed this year for a reverse split. It's a tactic that battered companies use to boost their share price, but such splits carry little weight with investors unless they come with a credible recovery plan. (Network Commerce is doing a 1 for 15 reverse stock split.)

    Approximately 18 months ago Network Commerce overpaid in the Ubarter.com acquisition. And, recently, they dumped Ubarter for pennies on the dollar.

  • The aerospace industry's oldest parts e-commerce company—Inventory Locator Service—has launched an online exchange for aircraft parts, where companies can buy and barter for aircraft parts. The announcement was made at the Paris Air Show, June 20th.

  • Up-front ad sales for the fall television season are lower than normal, all of the networks acknowledging that supply outstrips demand. The condition is opening the possibility for some of the top corporate barter companies to obtain inventory that was heretofore virtually impossible to acquire.

  • Lasso Technologies, a Dallas-based privately held company formed in 1999 and the developer of the Lasso Geometric Trading Engine (a platform for barter procurement), has named Craig Turner as Chief Strategy Officer. He will serve on the company's Advisory Board, too.

  • Swedish software developer Lemonbox has developed ClusterTraffic(TM), a system that functions as organized barter between related web sites and acts as an objective third party. Participating web sites are being organized into different clusters depending on business type and offerings.

  • Coca-Cola is "bartering" in Africa by trading on its massive distribution system and marketing muscle, rather than donating dollars, in the fight against AIDS in Africa. The company's contribution is part of a planned multi-billion-dollar global AIDS fund that the United Nations is trying to raise.

 

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