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April
1, 2003
Written
by Bob Meyer, Editor of BarterNews
Bartercenter,
Central America's First Trade Exchange, Off To Auspicious Start!
Panama's
Bartercenter opened for business in 1999 with a very healthy self-image.
"Right from the beginning we wanted to be perceived as bankers
and we do everything within our reach to project ourselves in this way,"
explained general manger Carlos Medina.
Does such thinking
work? Apparently. Bartercenter clients include major corporations that
generally are not members of a trade exchange, such as Yamaha, Suzuki,
Skoda, Generalli, and HB Fuller.
Medina says the
key to their success is networking, and looking to find market niches
that Bartercenter then points out to the larger client—a competitive
advantage if they are willing to embrace the barter formula.
What is Bartercenter's
formula—the one disliked by most trade exchanges? "I have
seen a need to find a balance between my 100% barter system, and my
50% barter-50% cash system," Medina disclosed. "So we allow
these larger corporations to sell under the 50/50 formula, as long as
they agree to honor the first $10,000 on a 100% barter basis."
Bartercenter has
signed on Aseguradora Mundial, the second largest insurance company
in Panama, as well as Generalli—one of the major insurance companies
in the world. According to Medina, Mundial is trading under the 50/50
formula in amounts of over $250,000 a year...working primarily with
seven autobody shops.
But before Bartercenter
approached the body-shops they made overtures to major paint manufacturers,
signing on HB Fuller. All of the body-shops in Bartercenter now use
ICI Autocolor on the 50/50 formula.
"However,"
Medina pointed out, "since our members do not paint cars themselves,
HB Fuller also works with the exchange providing paint at 100% trade
through their house-painting centers."
Bartercenter reports
that after three and one-half years in business, they reached $4.2 million
last year in transactions with their 255 members. Less than 6% of the
members go on "stand by," and 95% of members renew their membership
once the promised $10,000 minimum in new business is attained.
Carlos Medina and
IRTA Director Cristobal Banados, of Barterhouse of Chile, have recently
concluded a joint venture agreement that encompasses offering franchises
in the Latin America market.
"We are very
optimistic about being able to duplicate our success in the countries
in our region, since we have a bartering system that has been custom
made for our culture," Medina affirmed. (See www.bartercenter.cc
for more information.)
Perspectives
On Barter Today
A business newspaper
for Suburban Chicago, The Business Ledger, recently quoted Chris
Sweis of Ibart and Jack Schacht of ITA, which we feel you will find
of interest. Here are a few selections from the article:
Sweis suggested
that the reason for barter's slow growth is a distrust of barter perpetuated
by partial bartering, or couponing. "The problem is, if you trade
your product or service to a restaurant in exchange for 50% off a dinner,
there's little value," he declared. "You could go buy an entertainment
book and get the same deal from a coupon."
Many businesses,
according to Sweis, trade out at 50%, but raise the price of the product
to start with so bartering customers aren't really getting the value
they should. All this can leave barter clients with a bad impression
of the industry.
Growth in barter,
Sweis warned, is bound to result in more regulation and more consolidation
by companies. "Right now, there are a lot of companies trading
with each other on their own, without any formal structure." Oftentimes
what's traded never gets figured into the company's revenue, Sweis suggested.
(Companies take a loss on the product they barter away, without recognition
of what they receive in return.)
Sweis predicted
the government will force companies, which are trading direct with each
other, to be more honest in reporting their barter transactions. "It's
like the wild west out there now, it needs more regulation."
Schacht
Says The Problem Isn't The Transaction, But Understanding
Jack Schacht, President
of Illinois Trade Association, pointed out that many clients think barter
is just like cash, although it's not. "Barter has its own supply
and demand," Schacht explained, "and you can't always measure
barter for cash."
Schacht said that
the intricacies lie in the cost-percentage of the product the business-owner
pays. For example, he explained, a tire retailer pays about 75% for
a tire, while a restaurant may have costs of only 30% for each meal.
For the two businesses
to trade at a fair level, Schacht's organization raises the barter price
of the tire to compensate. "You have to level the playing field
or you'll never see a wide variety of companies involved in barter."
He noted that barter
as a formalized process is more mainstream today, and businesses aren't
as suspicious of barter as they used to be. "That bodes well for
barter," he related.
What hasn't been
good for barter, Schacht disclosed, is consolidation. "We used
to have no problem getting office supplies, but now we do, because they've
been taken over by the superstores."
On the positive
side, Schacht said he's working with large corporations to facilitate
exchanges for them, often in the hundreds of thousands of dollars.
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More
Wine Available On Trade As Grape Glut & Imports Place Wineries Under
Financial Pressure
Wine
consumption is growing in the U.S., but California vineyards yield more
grapes than wine drinkers consume. An influx of inexpensive, quality
imports also has hammered U.S. producers. As a result, in California
we see wine increasingly available on barter, and in the near future
we expect more wineries will join the ones already trading.
Every
barter company in the world is listed here click
through to our global list of barter companies.
PLEASE NOTE: The
Global List of Barter Companies has been updated. Check out the new
companies added, as well as changes made to the existing listings. (Corrections
and additions to the USA companies will be announced when completed.)
If
you haven't read the current issue of BarterNews, get yourself
a copy now! Orders are shipped the same day we receive them. (Click
on Order Form.)
Get
New Money-Making Ideas, and Valuable Contacts!
You
can obtain these ideas and contacts in every every available back-issue
of BarterNews.
Here
And There. . .
- Follow-up on
last week's lead story on Australia's Business Barter Exchange...
BBX's 10th Anniversary is being celebrated by providing hundreds of
members with thousands of prizes, which will total $500,000 over a
three-month period. The promotion, BBX says, demonstrates their maxim—"The
rewards are yours today!"
- Major record
companies, strapped for cash amid flagging CD sales, are teaming up
with advertisers willing to help finance costly videos in exchange
for product placement.
Case in point
is rapper Ms. Jade's recent music video, where she's swerving on
a dark city street to the beat of her song, "Ching Ching."
The sparkling, tank-sized Hummer H2 she's driving (as is a rival
racing alongside) seems to get as much screen time as Jade.
(That bit of
product placement cost Hummer's manufacturer, General Motors, some
$300,000...more than half the expense of the video that was produced
by Interscope Records.)
-
Have you
signed up to receive a summary via e-mail of the Tuesday
Report every week? If not, go to the top of this issue (right
hand corner)to sign up!
-
The Sarbanes-Oxley
Act of 2002 is getting mixed reviews by corporate America. While
changes in controls and compliance practices have been sparked in
85% of large U.S. multinational corporations, only a third of executives
believe the Act will restore investor confidence in the capital
markets or aid the ability of their companies to create shareholder
value. And only 9% of executives believe it's a good and adequate
response to problems in accounting and reporting. Half surveyed
said they believe the law will have no impact in and of itself.
-
Foreign-tourist
revenue fell by $10 billion from 2001 to 2002 in the USA. Congress
consequently allocated a one-time sum of $50 million to fund promotional
efforts to get international travelers to consider America as a
vacation destination. (No definite way has been set to spend the
money, according to the U.S. Dept. of Commerce, which will supervise
the funding.)
Both Florida
and Hawaii have begun to tout themselves as peaceful havens, with
safety as prominent as comfort, escapism, or economics.
-
Electronic retailing
makes up approximately $186.3 billion of an estimated $3.2 trillion
in total retail sales for 2002 in the United States. (Consumers
bought more than $14 billion in infomercial products, $7 billion
from home shopping channels, $85.7 billion from short form spots,
$39.6 billion via radio, and over $40 billion via the internet last
year.)
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