NEW YORK Thomas Daley had been helping friends swap sports
tickets for golf course green fees and concert tickets as a sideline. But on
the advice of a friend, he set up an online trading site, Joe Barter L.L.C.,
two years ago where college students could trade textbooks, small companies
could trade equipment and accountants, and plumbers, business consultants and
others could advertise their services. I was told our site should be for the average
Joe, so Joe Barter, get it? said Daley, 36.
The company is still struggling to make its
mark, he acknowledged in an interview, though he said he hoped an upgrade for
the Web site, scheduled for August, along with a stepped-up marketing effort
would significantly expand the membership. The site has 2,500 individual members, who pay
nothing to join the network, and 400 business-to-business members who pay fees
for consultations and referrals in connection with transactions. Last year,
the companys revenue totalled about $80,000.
Whatever its prospects for success, Joe Barter
is tapping into one of the largest little industries of small companies in
America, the barter or trade exchange business. "It is a business for the
little guys, said Robert Meyer, a onetime pitcher for the New York Yankees
who since 1979 has published Barter News, a magazine and online site that
reports on more than 500 trade exchanges in the United States.
Mr. Meyer said about 450,000 companies do
business with many networks of retailers, services and
manufacturers in trade exchanges. The trade business has developed broadly
since 1982, he said. Still, Mr. Meyer said, the largest trade exchanges are relatively small, about $14 million each in revenue per year.
One of the biggest advantages of
trading, said Steven White, chief executive of ITEX Corporation of Bellevue, Washington, one of the biggest
trade exchanges,
is that it conserves cash for a small business and it brings in new customers.
The company, a trade exchange that has 24,000 small-business members who pay
registration fees and commissions on transactions, illustrates how the
business works with a hypothetical example:
A
dentist provides dental work for a lawyer or accountant who also belongs to
the network and thus earns value, denominated in special trade dollars, in her
account. She may then use those trade dollars to pay a decorator to work on her offices.
In a
small business, you have to pay cash for your mortgage and insurance and other
necessities, Mr. White said. But commercial trade helps you conserve that
scarce resource. Now 50, Mr. White has led ITEX since 2003, but he said he
has been in the trading business since 1982, when he founded Cascade Trade
Association, a company he eventually sold in 2000. With ITEX, he said, he is
intent on expanding the trading network by working through brokers and ninety ITEX franchises and by
acquiring other trade exchanges. In the last four years, ITEX has grown by
about a third to $14.1 million in fees and commissions in 2007. Its exchange
processed $270 million in business transactions in 2007. Distribution is the
key to the business, expanding the membership so we can offer more
services, Mr. White said.
|
Thomas Daley, Robert Prata, Bill Jones, Bill Kulp and Terry Anderson,
founder and management team of Joe Barter L.L.C.
Trade
exchanges are growing. In 2007, the total value of commercial trade transactions reached $6.5 billion,
up slightly from the previous year, said Krista Vardabash, investor relations
director for International Monetary Systems (IMS)of New Berlin, Wisconsin, also one of the
biggest trade exchanges. The company has been growing much faster than
that, reaching $14.2 million in revenue last year on $110 million in
transactions, up from $3.9 million in revenue five years ago. Acquisitions of
other trading sites have propelled some of that growth.
Donald F. Mardak,
71, founded what is now International Monetary Systems in 1985 after building
a chain of piano and organ retail stores in Milwaukee and other cities. In
1989, he raised $8 million in a public stock offering, and he has driven the
companys expansion by acquiring trade exchanges in sixteen states. The
company now has 18,000 business members. The idea for the trade business hit me when
I traded one of my Baldwin pianos for a Mercury Cougar, Mr. Mardak said in an
interview. The two were comparably priced, but I had paid wholesale for the
piano and got retail value for it. So there is leverage in the trading
business, and that is one of its attractions.
Mr. Mardak said he, too, planned to continue
expanding. Some of our employees are brokers, Mr. Mardak said. We tell them
to drum up business. Trading doesnt happen unless you make it happen. He dismisses the idea that trading Web sites
like eBay are competition for International Monetary Systems. EBay is more of
an exchange for liquidating, not trading, Mr. Mardak said. As for smaller
companies, like Joe Barter and other exchanges that have fewer business
members, he said, Theyre only swap sites; they have no supplier network.
Mr.
Daley of Joe Barter says he thinks the spread of Internet commerce supports
his business vision. He plans to avoid using special trade dollars in transactions, relying on Internet trading
enhanced by new technology. I want to keep it simple, he said. His company
is intended to earn its way through business referral fees and online
advertising. The evolving technology works for us, Daley said. We can target more specific groups; Im going to hire people to
market across the country.
|
