The barter system dates back to 6,000 B.C. when money had still not been introduced. The concept was introduced by tribes in Mesopotamia, and went through several iterations before it returned during the Great Depression in the 1930s. During that time, it was used to obtain food and various other services.
This age-old system, however, lives and thrives in our everyday lives ever since.
If you are from my generation, I am sure you have bartered books with your classmates, and if you are from a younger generation, exchanging Pokemon cards was the coolest thing to do.
It all started with real estate barter
Real estate companies in India were into bartering too, except they dealt with real estate worth crores of rupees. This is how Harinder Singh, who spent over a decade in the real estate business, got the idea to reintroduce the same system to the C2C market in India.
“Barter was a concept that started mostly in exchange for media. Almost 30 to 40 per cent of the money that came in was going into marketing and the media vehicles used then were television, radio and the print medium. Someone came up with the idea that we could give brands like Times of India and Hindustan Times property that was under construction at a discounted price in exchange for media,” says Harinder.
Times of India has a treaty vertical called Brand Capital that has over 1,000 crore rupees worth of property that they have acquired through property barterswith real estate agencies. Harinder says he had also closed such deals with some large media companies in India.
How the C2C idea for BarterDaddy was born
Delhi-based Harinder had a background dealing with bartering. He had seen startups introduce online platforms for books and wondered why nobody had ventured into a platform to barter anything that came to the mind – be it services, electronic goods, electrical appliances and property.
Earlier this year, Harinder and his friend Divyanshu Devgan, another real estate marketing expert, launched BarterDaddy to let consumers exchange products or services online.
“For example, someone owns a house in Gurgaon and has to move to Bengaluru for work. Instead of the double transaction with a landlord and a tenant, he can just barter his house for a house in Bengaluru. I’m sure there are many people who move from Bengaluru to Delhi. It will not be difficult finding a barter partner,” says Harinder.
The website has over 3,500 listings under seven broad categories: automobile, business and services, electronics and computers, home and furniture, mobile and tablets, real estate and others. It has a wide range of advertisements for exchange, including mobile phones, values for which start from a couple of hundreds, and luxury cars that go up to Rs five to six crore.
“In this day and age of startups, it will be interesting to be able to barter services. One person may be great at coding, while the other may be good at marketing. They can exchange services with each other to complete their projects sooner,” says Harinder.
Challenges in the barter system
It is not usually as easy as it sounds, as experts feel there are two major problems associated with the barter system: first, a transaction can occur only if each of the parties has something the other person wants. Secondly, the purchase and sale transactions cannot be separated, and must happen simultaneously. This means that either one cannot be deferred for any reason.
Harinder says that bartering is an implied behavior, and out of the ten things that one owns, the utility ratio will certainly vary on them. That is the sweet spot BarterDaddy is hitting at – optimise use by bartering.
Most current listings resemble online classifieds listings, where people advertise products they want to sell or exchange, and even quote prices for the same. Soon the platform will let advertisers list out options for customers to choose from.
Once the advertiser puts up an ad on the platform and gets a response from a potential customer, the transaction on BarterDaddy is over. The final transaction happens like on online classifieds portals, where the parties contact each other and decide a place and time for the exchange.
The market, competition and the future
According to a recent Google report, the increasing internet penetration and growing preference for shopping online will drive the e-commerce market in India to USD 15 billion by 2016, with a whopping 100 million people going online to shop. Compared to the eight million in 2012, about 35 million people are now buying everything from apparel to electronics to cosmetics and furniture from online stores, the report stated.
Though there are platfo
rms like AdalBdal which serve
the same purpose and other more niche barter platforms like barter.li exist especially for books, electronics etc., Harinder says that his biggest competition will be from classifieds portals like Olx and Quickr.
About the future, Harinder says,
“The online exchange is highly scalable: you need to spread awareness about the concept, and you may grow vertically as well as horizontally. With a simple benchmark that exchange shall be 10 times more than new sales. Even today we have trucks, buses, cranes, tractors and luxury cars like Rolls Royce, Bentley and Ferrari available for exchange. So I see an endless market to cover on this business model.”
YourStory’s take on BarterDaddy
The idea is novel, but it will take a long time before it catches up. People are used to physical barter of books, but online bartering will take some time. It will be a rare case where both parties’ expectations will be matched, which is why the founders have done the smart thing of adding a ‘sale quote’ as well. This will allow customers to buy the product, in case they do not find anything to exchange it for.
In short, BarterDaddy is an Olx or Quikr with an extra feature to exchange products to complete the transaction. For a bootstrapped company, this is going to be quite a gamble.