Past couple of years has seen a sudden rise in B2B (Business to business ventures). And this one too seems to be a Jack if not an Ace from the pack of cards.

Barter as most of you would know means to exchange goods/services for goods/services without involving the any need of currency exchange or even existence. The practice was followed expansively to carry out trade in almost all ancient civilization before people came up with the concept of Money

Still today mostly in Rural India, barter transactions are prevalent and thus often skip getting registered in GDP of the country.

All said and done, we (I and a friend of mine) tried to analyze the potential and risk of this venture called Back2Barter.

The website of the company lays stress over their potential to enable firms to transactions without hitting their cash flows, which sometimes sounds too sweet to believe.



I recently happened to peek-a-boo over this entrepreneurship venture called Back2Barter.com

To make it sound more plausible, let's look at the few scenarios.

Firstly consider a 5 Star Luxury hotel. Now hotels do have a seasonal occupancy rates. Suppose in a season when occupancy rates are low, the hotel wants to upgrade its existing dining tableware. The hotel would be really interested if their vacant rooms could be bartered for their requirements. In other words they could pay for their furniture requirements by providing vouchers for stay in their vacant rooms. Now, who will be interested to buy these vouchers? Definitely not the tableware manufacturing company. But probably some holiday planners. So if the mediator, in this case back2barter, has a network that is expansive enough to find use of goods given on barter. The tableware company on the other hand would be interested to get raw timber for its inventory. Again back2barter will come in the picture.

A more relevant scenario would be the holiday gifts given to employees. Suppose there are two companies, one manufacturing Case rolls and other Cutlery Set. With a barter between them they can give each other's product to respective employees as gifts. Thus this reduces the need of cash payment needed to buy/manufacture the gifts. To find such complementary parties b2b will again come in the picture.

Ironically, though understandably :) , Back2Barter charges a transaction fee (in cash) for its services.

Seems like a good business plan!!

Time for the risks then.
1) First and foremost the concept is easily imitable and doesn't require very special skills apart from networking.
2) Second issue is regarding physical transfer of goods; the expenses incurred and liability for risk covers in case of any damage in due course.
3) If this really works out for the companies, they might not return to the intermediary (b2b) and contact the other transacting party again.
4) There is a strong possibility of network deadlock, because a product bartered by a company may not actually get bartered because even after series of options explored among the b2b network, the product desired by the company in exchange couldn't be found. Would b2b risk buying it on credit then? That would be interesting to see.



Nevertheless we do feel the concept is good above all it gives you freedom about your inventory levels. That would include raw materials, semi-finished and finished goods. Whenever you barter, your sales would also increase by an equal amount!!

For imitators, maybe it’s time to wait and watch and then learn from the mistakes before taking a dip in the river, carefully.