COVER STORY : Barter is business
Posted on Sunday, August 31, 2008
URL: http://www.nwanews.com/adg/Business_Matters/236039/
Businesses in Arkansas
and across the country
are finding alternatives
in the tight economy
to buy and sell products and services and enjoy a few perks without spending a dime of actual currency. It’s possible through the use of barter and trade exchanges, which link companies interested in trading products and services. Arkansas is home to the American Exchange Network, which has offices in Bentonville, and Little Rock-based Southern Barter Exchange, considered one of the top 10 exchanges in the country. “We’ve had several people call and tell us they’re interested in doing some trading with us because they need stuff they can’t afford to buy,” said Harold Rice, president of the American Exchange Network.
“Some things we could help with and some we couldn’t,” he said. “If they want to do typing at their house for people, that doesn’t sell too well. But everything else like restaurants, retail stores, clothing and office supplies, we’ve got plenty of business for them and they do very well.”
The American Exchange Network, based in Kansas City, Mo., also operates in Tulsa, Tampa, Fla., and Waterloo, Iowa. The exchange has fewer than 400 Arkansas members, located mostly in Northwest Arkansas and Russellville, and about 1, 000 total members. INTERNATIONAL CONNECTIONS
American Exchange Network members are automatically linked through the International Reciprocal Trade Exchange Association to foreign businesses interested in trading.
“It’s created a universal currency so somebody from Missouri or Arkansas can spend their trade money on a vacation in the Scottish Highlands,” Rice said. “Yesterday, a fella called who was in Brazil, and he wanted to take his family to Disney World and needed a condo to stay in. I never thought I would be selling a condo in Florida to someone in Brazil.”
Trades are regulated by the Internal Revenue Service, with trades and cash considered equal in value for tax purposes.
Angela Smith, manager and a partner of Delphia Dreams in Eureka Springs, said the two-store operation has used its membership in the American Exchange Network often over the past 10 years.
“We use it for hotels, for restaurants and things like that. We, in the past, have used it for braces for our children’s teeth,” she said. “It’s basically trading from company to company. With the dentist, they’ll come and shop at our store.”
The shops use special paperwork for trades and must call the exchange to confirm a customer has money in their trade account before a sale is made. “We don’t give discounts on any merchandise when we trade, and there’s certain items we don’t do trades on, [such as ] artwork and the vintage furs,” Smith said. The stores’ 10 employees also earn trade dollars as a commission to use in the store or any other business that is a member of the exchange, such as a mechanic’s shop.
TRADES GENERATE BILLIONS More than 350, 000 businesses in the United States and Canada participate in organized bartering in about 400 barter offices in both countries, according to the National Association of Trade Exchanges, which has U. S. and Canadian members. “Those businesses do between $ 3. 8 billion and $ 4. 3 billion a year in trading,” said Tom McDowell, executive director of the Mentor, Ohio-based trade association.
The sluggish economy is creating more interest in barter possibilities from businesses. For the past year, consumers have been taking hits on several fronts, including high gasoline prices, a weak job market, tight credit conditions and an eroded housing market.
“From what we’re hearing from our members, most are up about 12 percent in new members over the past two years,” McDowell said. “The big deals where you refit a whole office or print catalogs or put on conventions — those are the things we’re seeing people coming to us for instead of wanting to pay cash for.”
The bartering system has proved its benefits to the Good Earth Garden Center & Nurseries in Little Rock, said Steve Weiman, the nursery’s general manager.
“We’re seeing new faces that belong to the exchange that we didn’t necessarily see 18 months or two years ago, so that helps build our account too,” he said. “It works like a bank. People come in and make their purchases here at the nursery and it gives us credit at the Southern Barter Exchange. Then, we, in turn, frequent the vendors that are members of the exchange.”
The nursery has bought equipment in Mississippi and Louisiana through trades.
“What has been an advantage to us is we are able to sell stuff to other landscapers and then we can use that money for advertising or even to take our employees to a restaurant,” Weiman said. “It’s not cash out of the pocket.” TIGHT ECONOMY SPARKS INTEREST
The Southern Barter Exchange, which opened in 1982, has more than 600 companies in Arkansas and other states that members can trade with, said owner Kenn Flemmons.
“Trade has been around since the beginning of mankind, but it’s new to a lot of people because they are looking at us for the first time,” he said. “People are looking for [alternative ] ways to get things done. If you don’t have the cash, having trade is the next best thing. There are people who in a good economy would not necessarily give us a call, but... are now calling us.”
The bulk of Southern Barter Exchange’s trades are in Arkansas, although it trades all over the country.
“I just booked someone a cruise earlier today with trade dollars they had earned by making sales to local companies,” Flemmons said. “I talked to a lady in Montana this morning who has a trade exchange. She has a client that manufactures jams and jellies and we’re trying to put together a proposal [that would result ] hopefully in orders from several of our retail companies to stock her goods for sale.”
Flemmons said he made a list once of all the different barter items he talked about in a day.
“It was over 50 things that people wanted to trade or sell,” he said. “There’s a thousand ways to use trade to make things happen.” Barter exchanges 12 percent The increase in membership nationally in new members over the past 2 years, according to the National Association of Trade Exchanges. 400 The approximate number of barter exchanges operating in the United States and Canada. 350, 000 The number of U. S. and Canadian businesses, from restaurants to office equipment suppliers, using barter exchanges. $ 3. 8- $ 4. 3 billion The value of trades bartered every year.
Arkansas Democrat-Gazette