Changes Ahead For Barter Industry As High Tech Marries High Touch

A look back from
Tuesday Report October 5, 1999

Changes Ahead For Barter Industry As High Tech Marries High Touch

Editors Note: Predicting the future is exceedingly difficult as the following article, written five years ago in 1999, shows. As you may recall substantial new capital came into the commercial barter industry for the first time. And most thought dramatic change would soon be at hand, led by publicly-traded barter companies.

As we now know, the venture capital money made some key acquisitions but they never made it to the IPO stage before the dot-com implosion, which began in March of 2000.

However, technology has continued to push onward and trade exchanges have taken advantage—in various degrees—of the technological advances. And consolidation is taking place within the industry, although they are far different players than what was projected five years ago.

Furthermore, independent trade exchanges within various geographical areas are moving forward in more cooperative endeavors...case in point, the forward thinking Barter Financial Group located on the East Coast.

Here then, is the story as written five years ago. . .

Last week we pointed out the biggest change in the 40-year history of the trade exchange industry is underway, coming in the form of a new "clicks and bricks" business model. This phrase was succinctly explained by Val Vaden (partner at Vector Capital) at the International Reciprocal Trade Association's 20th Annual Barter Congress held September 23 - 26 in Vancouver.

Vector Capital and El Dorado Ventures are funding a new company, BarterTrust.com, which is headed by Mike Edelhart (an internet guy and former VP of Softbank) who will provide the "clicks," or internet, expertise.

The "bricks," or off-line, expertise will be supplied by the three trade exchanges BarterTrust.com has acquired: Ray Bastarache's Barter Network, Sue Groenwald's BarterCorp, plus Chris Haddawy and Greg Pavlov's Barter Business Network.

Wall Street, Publicly-Traded Companies Will Fuel Change

Industry leaders anticipate that members of trade exchanges will benefit from the new business model of "clicks and bricks." Barter companies now publicly-traded (OTCBB) are: Ubarter.com, eBIZnet, Cinnabar, Mutual Exchange International, and ITEX. Next year it's anticipated several better funded companies will be on the scene with IPOs: BarterTrust.com, Bartercard of Australia, barter.com, and TradeBanc.

Better, Faster Service

Operationally, Patti Falus, a top broker from Ubarter.com, provided a look into the future with her comments at the IRTA convention. "Things are going to change dramatically. There will be a greater array of products and services available as the industry grows. Our industry is going to be huge, and it's happening much quicker than expected.

"For example, who can wait for samples to be shipped? It's important to have the information online to view, it's just so much easier, faster and cost effective. I even see prices dropping for some goods/services. Think of the magnitude of being able to trade at a price lower than cash! It's unbelievable what's happening and what can happen when you bring the internet into play."

More Consolidation...Greater Cooperation

The industry will change as consolidation continues. There will also be a flurry of joint ventures and strategic alliances forming. Look for independent exchanges within geographical areas becoming much tighter. A "circle the wagons" mentality will likely surface, and working cooperatively with one another will become the norm. Ultimately, the winner will be each trade exchange's client base, as service will become paramount...online as well as off-line.