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Barter tries to stay relevant in age of bitcoin.

Dubai: For anyone who thinks cash is king, plastic a princeling and bitcoin the new powercentre when it comes to paying for goods, barter is not about to give up its niche without putting up a stiff fight.

"The market is competitive like never before; competition is increasing and becoming ever more fierce; businesses are always in a search for new ways to increase their sales to give them an edge," said Fadi Nohra, managing director at the UAE operations of Bartercard International. "That said, businesses will always experience lost capacity and slow-moving stock.

"Bartercard does not replace cash -- the aACAyA' economy - but instead enhances it by creating a barter environment -- a aACAyB' economy. It does this by utilising the lost capacity of the business and off-setting this against cash expenses."

This is the manoeuvre space that will ensure bartering stays relevant for the times. Particularly in marketplaces such as the UAE's where trade and the services sector have such dominant roles.

"If a hotel service provider cannot sell out their rooms over the year, we can assist them by facilitating the exchanging of empty rooms in the downtime against some of their running expenses, such as pest control, laundry or staff uniform provision, etc.," said Nohra. "The same applies for a manufacturer that cannot sell all of its production. Part of the unsold stock could be exchanged against advertising services.

"This could also apply for a trader who doesn't want to sell 100 per cent of their goods because doing so would cause a significant loss to their profit margin. Their stock could instead be bartered for a better return on investment." (Bartercard charges a minimum lifetime publication and subscription fee and a monthly administration fee, plus a 5.5 per cent cash fee and a 1 per cent trade fee commission on transactions.)

But isn't it the case that businesses will need a lot of convincing before agreeing to a bartering deal, seeing how dated a form it is? Not surprisingly, Nohra does not concur. "Countries barter, as do Fortune 500 companies. Media companies across the globe are now so familiar with bartering that they conclude their own direct barter deals.

"SMEs, who are our primary market, want to be as successful as the big corporations but lack the capacity. That's where Bartercard comes in. By providing the platform, software and experience, we can help SMEs act like a larger organisation. We can facilitate an increase in sales, generating new business for them and reducing their cash expenses by utilising what would otherwise be lost capacity, downtime, or a slow-moving inventory."

It is not just a direct swap of goods either. For clients experiencing a bit of a mismatch, services such as accounting and security could be put up for exchange.

"Any business that serves clients by operating legally within the framework of statutory employment rules and regulations can do the same with Bartercard clients; whether in the field of accounting and auditing, security, cleaning or any other sector where one firm offers services to another," Nohra said. All Bartercard members provide their products and services to the market on the cash economy... our role is to generate for them 10 to 15 per cent extra activity, operating as a method of payment.

"That is how businesses make a profit, by increasing sales and reducing expenses. Cash may be king but barter is smarter."

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Publication:Gulf News (United Arab Emirates)
Geographic Code:7UNIT
Date:Feb 18, 2014
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