labels: marketing - general
Who says barter''s dead?news
Venkatachari Jagannathan
03 April 2000
If you are under the impression that the ancient barter system has vanished, then it is time to correct your view. Says Ganesh V, director, Trax Barter Network, Chennai, "The Fortune 500 companies had concluded barter deals worth $12 billion last year."

In India, Chennai, and to some extent Bangalore, are witnessing active barter trading.Given the difficulty in finding double coincidence of wants in a market place filled with a plethora of goods and services, one may wonder how barter trading is being done now.Answers Ganesh, "That is where we come in. Call me a middleman, a broker. But I call myself as a barter banker."

According to him, the advent of monetary economic systems did not prevent corporates from continuing with barter in an informal and one-to-one basis. He cites the hotel, airlines and media sectors, who do bartering on a major scale. "Now barter bankers like me are in place to bring barter trading to an organised platform."

Modern barter trading revolves around the simple premise that all companies have surplus capacity that they would like to encash. Similarly, corporates love to save on cash outflows while sourcing some of their requirements. This is what barter bankers facilitate. Trax Barter's business is to help in exchange of goods and services amongst those who are in need but are not willing to shell out cash.

The system is simple. "We contact business houses to offer their wares to our network, in return for products/services that are already available with us," says Ganesh. In other words, Trax Barter asks the corporates to offer what they have and take what Trax Barter has. And care is taken to list only those products/services which are much sought after.

The exchanges are done at the maximum retail price (MRP). The advantage, Ganesh says, is that the users of the system realise higher sums at a low cost. This is because the products/services that come for barter on the network are generally slow moving/surplus stocks and except for their production cost, don't involve any other overheads. This surplus stock, in turn, enables the parties to source their needs without paying cash.

Says Ganesh, "Once a person enters the barter network, he would think twice before going in for cash purchases." Though barter trading has several advantages, ideally corporates should offer only up to 10 per cent of their total capacity, as anything higher than that figure would impact their cash flows.

Speaking on the ethics, Ganesh says that a barter banker should scrupulously see that transactions are done at MRP; kill the encashment temptation; see that the supplier gets the first right on any other product that is being offered on the barter network; and invoice the products/services.

So what does Trax Barter get for its services? "We charge a transaction fee of 10 per cent on the value of the exchange," says Ganesh. According to him, barter trading is currently more popular with the hospitality, travel, media, and corporate event management industries.

"I have even real estate listed on my network," Ganesh claims. According to him, Trax Barter has about Rs 1.5 lakh worth of plots in Chennai suburbs for bartering. The other credits that Trax Barter possess are spot time on satellite channels like Vijay TV, Jaya TV and other such channels.

Sensing the potential in bartering in industrial products, Ganesh has now opened his network to listing industrial products. Side by side, he is expanding his network throughout India by appointing agents.

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Who says barter''s dead?