Whitespace: Business bartering – the new era of collective consumption

Issue 65: September 2010

In the book One Red Paperclip Canadian Kyle MacDonald describes how he managed to barter his way from a paperclip to a new home in just 12 months, an entertaining story that in many ways is indicative of an important new trend for both individuals and business: bartering is back.

The global financial crisis is often identified as the tipping point for the renaissance of bartering. But while Australia may have been insulated from the worst of the downturn, futurists say there's more to bartering than making do in a difficult economy.

The new era of collective consumption isn't just about swapping unwanted household items or exchanging handyman type jobs. It's a broader movement with the potential to improve the bottom line of organisations of all sizes and offer new approaches to social responsibility.

Bartering your way up

Given its grassroots appeal, it's not surprising small businesses are driving the growth of bartering. The most successful SME barterers are prone to think creatively about what they have to swap. For example, a recent Reuters article reported on a New York funeral director who offered to provide a free funeral in return for completing building work on his home.

SMEs are finding each other largely via specialist bartering websites and online auction lists. Craigslist, one of the world's most popular auction sites, is experiencing growth in this area with specialist barter pages devoted to advertising everything from photography services to dentistry.

Favorpals takes a more structured approach to B2B swapping by finding equivalencies amongst services. A recent BusinessWeek reports claims Favorpals achieves this by measuring 'units of service' which would see one dental filling being equal to one tax return completion or leaky tap repair.

A new kind of stock exchange

Bartering isn't just about SMEs with many larger companies trading instead of buying. The socialcritic blog cites figures from Barter Business Unlimited claiming 65 per cent of corporations listed on the New York Stock Exchange are using barter to reduce surplus inventory.

Globally the trend is suggested in statistics from the International Reciprocal Trade Association, which claims its 400,000 members have traded an estimated US$10 billion worth of excess business capabilities and underperforming assets.

Organisations like Barter Business Unlimited and the International Reciprocal Trade Association are keen to point out that excess capacity doesn't just include unused stock sitting in a warehouse, it can also involve service industry firms with excess time and skills on their ledger.

Going green and cashless

Bartering is an effective means of achieving social responsibility outcomes for those organisations prepared to think laterally. One way of being good by doing good includes becoming involved in local produce exchanges such as community-supported agriculture (CSA).
According to futurist Douglas Rushkoff CSA members have the option of swapping services or working on a farm to pay for a year's worth of produce; an idea that's transferable to the workplace by involving staff in the collection of fruit, for example, served at the office.
A media friendly story about locally grown produce is also playing out at Californian restaurant Forage. The restaurant calls upon local market gardeners to swap produce for restaurant fare, an exchange that reinforces the sustainability value of eating local produce.

Out with the old…

In Australia collaborative consumption is making its presence felt in the fashion stakes with the proliferation of clothing swap events. An innovator in this area is The Clothing Exchange, a professional swapping service that claims to deliver "a better wardrobe and a better world".

The Clothing Exchange's events involve fashionistas buying tickets for events where they swap high-quality unwanted clothes. A similar idea is offered one by British website Big Wardrobe, which currently has 90,000 items of clothing to swap amongst its global audience.

The Clothing Exchange and Big Wardrobe are obviously commercial concerns however clothing swaps are also becoming a new and engaging way to raise funds for charity with some events being held in workplaces.

The bottom line of bartering

A word of warning…

If you do a Google search on the term 'bartering Australia' you'll be given over 100,000 results including a number of specialist online bartering sites. In addition to these you'll find the Australian Tax Office featuring ominously in the search results.

If you wish to enter the world of collaborative consumption the ATO warns that it's important to remember "bartered goods are assessable and deductible for income tax purposes to the same extent as other cash or credit transactions".

But once you have the taxman factored in there appears to be little to stop businesses of all sizes cashing in on this cashless trend to bolster profits and social responsibility by connecting with like-minded organisations across the streets or the globe.

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