The use of barter has historically been built from a base of local need. As each community makeup differs, so do their needs. Barter exchanges are therefore essentially tailored to address one or more of the four different areas illustrated below.
Wealth & ‘traditional’ asset building
Save cash
Make purchases from new sales rather than existing cash
Reduce cost of warehousing
Offset many costs of doing business, travelling, and living
Reduce cash borrowings and subsequent interest
Repay shareholder loans in trade instead of needed cash
Goods and services procured always turn out to be cheaper than they would have been with cash, since there are purchased from the wholesale cost to produce the buyers own product or service (spare time = little cost, products sold = the difference between the wholesale and retail price)
Opportunity to convert excess capacity into cashless donations for which a tax-credit can be received
Realise value from underperforming assets Trade excess capacity for already budgeted for goods or services
Employee incentives – travel, entertainment, gifts, perks & bonuses
Receive more value than through discounting or liquidation
Conversion of bad debts into needed goods or services
Increase asset base
Add new customers without any additional advertising cost
Increase overall company revenue
Improve shareholder value
Add new product lines which are purchased on barter
Participants can trade regardless of the amount of cash in the community or other external economic factors
Borrower advantages
No interest charged on borrowed trade credits
Purchases are funded through the sale of the borrowers own goods and services (they are obliged to sell their own services to repay the debt)
Loans are provided on the basis of what the borrower can produce / sell – not their current turn-over
Borrowed funds guarantee additional sales for the borrowing group
If a loan is repaid through selling unsold product or spare time then the cost is minimal
If a loan is repaid through selling product for retail price then the cost is higher but less than it would be if the loan was repaid with cash
Increase cash sales
Referrals
Opportunity to convert lost capacity into advertising and marketing
Purchase of additional products on barter for resale in the cash economy
Valued customer give-aways and prizes
Increased market share
More market exposure
Another advertising outlet
Turns downtime into an increased work portfolio
Increased customer base
Increase number of potential word-of-mouth referrals
Greater exposure to the market of your product or service offerings
Expanding market reach
Risk-free method of purchasing / trialling different methods of advertising
Facilitate trade between groups historically not likely to trade
Build new customer bases away in new areas and use these as a base for references and referrals to acquire cash-paying customers
Repeat business
Take away customers from the competition
Suppliers become customers of your business group
Expanded group of customers
Provides alternate revenue sources
Allow for the exchange of goods and/or services in asset-rich, cash-poor communities
Provides additional customers without significantly greater advertising cost
Local welfare and sustainability
Local asset protection
Stocks of unused goods become mobilized, people become employed, and those traditionally at the “bottom” of the economy like home-makers, farmers and unskilled labourers find a place in the economy, and through it, in society
Opportunities for local import substitution are increased
Community relations and standards of living improve
Ensures that more local assets stay within the community
Economies of scale, transfer pricing, and capitalising on cheap Third World labour or raw materials enables larger multinational and interstate manufacturers and retailers to tip the so-called "level playing field" in their direction, to the detriment of local businesses
Builds community networks
Because exchanges plug members into a local information network, it provides new or isolated residents living in a local community with an instantaneous community support system, which avoids the embarrassment of introductions to strangers
Local welfare
To recognize, value and develop the abilities and skills of the members
Community wealth is not related to the amount of cash in a community, but the amount of assets, capacity and skills
Promotes local entrepreneurship
By increasing access to asset creation by the poorest members of society, the gap between the richest and poorest members of society is reduced
Addresses the need of fair trade between cash poor / cashless groups (school age, elderly, infirmed etc)
Creates loyalty and long-term relationships between participants
Environmental
Efficiency
Companies may elect to use the 'pool' instead of using first-line sales people to market special, redundant or unsuccessful lines in order to maximise sales for their latest or core products
Time / excess capacity are a priceless non-recoverable, non-recyclable limited commodities; selling under-utilized time and capacity means greater wealth for the seller and buyer
Both unsold products and services can be on-sold without loosing their value
Cost
Cost to acquire preferred / environmentally sustainable products is reduced
Greater purchasing power = more flexibility to acquire environmentally sustainable products
Pollution
Wastage is not primarily created because of over-consumption, it is created because of over-production and inefficient use of what is produced (throwing away instead of on-selling or recycling)
Less travel and transport required when dealing with local markets
More efficient use of assets
Developing and experiencing new habits as consumers
Copying and distributing this article
Ormita provides free updates about the generic benefits of barter to those interested in local currency, community currency, countertrade, reciprocal trade, barter exchange, time dollars, hours and other forms of community trade vehicles.
You may freely copy and distribute this article provided that you attribute the author and/ or source as the Ormita Commerce Network.
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
For Licensee, Franchise and Partnership Enquiries please visit : www.ormitacorporate.com
