Not Your Ancestors' Barter.

• Author: Yoder, Steven Van
• Position: Exchange of goods and services on Internet

The exchange of goods and services remains mostly local matter, the Internet is taking corporate barter to new heights.

Airline Reservations Network in Orlando, Fla., sold $800,000 worth of airline tickets last year without receiving a nickel of cash. How? Company president Scott Bender says it's because his company embraces barter. "We barter airline tickets for printing, advertising space and employee benefits," says Bender. "Barter boosts our profitability by opening up a whole world of opportunity."

Of course, barter is practically as old as civilization itself, and before the advent of currency was the primary form of commerce. Although "barter" is, by definition, the direct, one-on-one exchange of one product or service for another, the modern incarnation of trading is a little different -- and far more sophisticated.

Today, the majority of business barter deals are facilitated through barter exchanges, primarily as a way to squeeze profit from unsold or under-utilized products or downtime. According to the International Reciprocal Trade Association, more than 250,000 American businesses bartered $9.4 billion in corporate goods and services and $1.5 billion in retail goods in 1999.

There are two types of barter exchanges. Retail exchanges, of which there are over 400 in the United States today, allow mostly small businesses and individuals to trade with each with the exchange facilitating the trade, providing a common currency or "trade credits" and receiving a transaction fee for each trade.

Let's say the owner of a sign painting company needs some brochures printed. Instead of paying cash, he goes to a printer within his barter exchange and pays with trade dollars. The printer doesn't have to spend those with the sign painter. He may decide to eat at a restaurant, seek legal advice for his business or pay his monthly courier expense.

By comparison, corporate barter can involve millions of dollars worth of goods, services and/or raw materials and is primarily conducted on behalf of large companies. The major goal is helping "sellers" obtain cost-of-goods value for their obsolete or excess goods (inventory, under-utilized plant capacity, unwanted real estate, etc). Corporate trade helps minimize loss from perishable goods, reduce inventory storage costs, extend geographical distribution and tap liquid assets. Income from barter is used to finance equipment and capital assets or to offset other business purchases.

World Trading Inc., a...