Wheel Of Fortune
When cash dries up, barter keeps commerce flowing.

By Beth Fitzgerald
 
TRENTON, NEW JERSEY — Consumers are cutting back on their spending, so retailer Jack Grossman is bracing for a less merry holiday season. But he also expects to ring up new sales to some of his fellow small-business owners, who will use barter, not cash or credit cards, when they shop at Galaxy Communications, in Neptune. “I’m already doing more barter, and I will be looking at barter for more of my sales because of the down economy” said Grossman, whose business focuses on cell phone and car audio sales.

Barter networks say membership and sales volume are rising, and they credit the economic slump that’s made small businesses turn tight-fisted with their dollars. Grossman doesn’t barter face-to-face with other businesses. For instance, he won’t swap a cell phone for an oil change, a restaurant meal or a vacuum cleaner. But through his membership in Barter Depot — one of dozens of barter networks throughout the country — he turns goods and services into barter “dollars,” or trade credits. The credits can be spent on anything another member business has to offer: flowers, theatre tickets, computer repairs, hotel rooms.

At a Barter Depot trade show last month in Edison, New Jersey, Grossman bumped into his plumber, Bob Winston, owner of Rooter One Sewer and Plumbing, in Howell. Winston had replaced the hot water heater in Grossman’s home and repaired the plumbing at his store, all on barter. “About 15 or 20 percent of my business right now is barter” Winston said. People are thinking twice about spending, “even on something simple, like a clogged toilet” he said. “People are penny-wise, everyone is scared, and this is not the easiest economy to run a business in.”

Winston said he’s glad to get barter jobs right now, even though it doesn’t bring in cash. “It keeps me moving, it keeps me working and it gets my name out there.” Barter is also a form of networking; members refer cash customers to one another.

When a business uses barter to purchase advertising, “the customers they attract are mostly cash customers” said Tom Sita, executive director of Jackson-based Barter Depot. A business might use barter for services like printing, signs and office cleaning, and save their cash for the rent, phone bill, inventory and anything else that requires cash, Sita said. Barter Depot added about 300 businesses to its membership of 1,700 this year, “and I pin it on the recession” Sita said. “Businesses are taking a hit to their cash sales, and barter is sending them additional business.” Members pay a 12.5 percent cash fee to Barter Depot when they make a purchase, and pay nothing when they make a sale. There also is a monthly membership fee.

ITEX, one of the largest barter communities, is a public company based in Bellevue, Washington, that reports 24,000 members. The economic downturn is spurring growth. “We saw a 38 percent increase in new-member enrollment in October and November, the biggest jump in five years” said Alan Zimmelman, ITEX spokesman. Members pay a 6 percent cash fee on every transaction, whether they are buying or selling, and there also is a monthly membership fee.

John Castoro has the New York/New Jersey franchise for ITEX, and he said members should shoot for doing between 5 and 15 percent of their business on barter. “One of my members is a painter, and he’s worried, because business is way down” Castoro said. “I’m trying to convince him to paint houses on barter. He won’t have to lay off his guys, and he’ll have work for them.” One restaurant owner who belongs to ITEX used barter “for the security system, the phone system and a new bar” he said.

Barter brings you customers “you otherwise would not have had” said Susan Schork, a Barter Depot member who operates a spa called Minding the Body, in Point Pleasant Beach. She said her cash business is down 60 percent over the last few months, “because my business is a luxury business, and people are holding on to their cash. But I’m still getting barter business. This is a whole separate world. Without barter, business would be horrible.”

At the Barter Depot expo, Linda Verdi, owner of Family Florist & Gifts in Mount Olive’s Budd Lake section, was buying jewelry and stuffed animals. “I’m cash-poor this holiday season, but I’ve accumulated a lot of money in my barter account, and I’ll use it for Christmas shopping.”