Sunday, February 3, 2013

The sharing economy, an exchange systems that is making barter popular.

The global financial crisis is a bug that has left no country unscathed. Most businesses have innovated different ways to surviving the crisis. In order to reduce the cost of excess inventory and improve cash flow, some have taken to barter. Firms who make use of barter as a form of exchange cut across the entire business world. From libraries ready to barter old books for booze, to fashion houses who want to swap your old clothes for equalized items. If one has to do a count the list is immense.

The sharing economy: new hands trying out old tricks.
Barter cannot replace money. Barter cannot be as efficient for our modern world, yet she does have her advantages. Mathew Winn, the owner of Molasses knows that too well, so he is ready to trade your used books for coffee . Or even, for more books. Or take the tale of another consumer, Johanna Lassonczyk, 31, who will be turning her back on the fashion industry. Interviewed by Spiegel Online Magazine, she has resorted to swapping things instead of buying new clothes because the fashion industry is in pretty bad shape . She is amongst many Germans who have started attending swap parties to exchange the old stuff in her closet with other items.

Nationalities are not left out of the trend. Threatened by American sanctions since June of 2012, Iranian companies, cash strapped and threatened by the sanctions, have resorted to bartering their produce for food. The News, a Pakistani online newspaper, reports that cash-strapped Pakistan Steel Mills (PSM) and the Government Trading Corporation (GTC) of Iran have, in principle, agreed to arrange barter trade between themselves to make their survival possible.

Social status is attached to the trend.

The idea might be great, a brain child to the green movement that is presently sweeping the corporate world after years of hiatus. It offers poor people, especially the younger generation, the opportunity to buy goods where their disposable income cannot be adequate, and the opportunity to enhance their social status. Some might call it the sharing economy. People share living space, clothing and cars. It might be a new form of consumption, a response to troubled financial economies. Only time will tell if the trend will sustain its current momentum.

The platform that makes all these possible is the Internet. Barter exchanges who serve several roles, especially that of connecting people with similar wants and needs, are springing up on the Internet. Thousands of businesses are availing themselves of this opportunity to improve their cash flow, acquire clients who usually would not have thought of trying out their products, and those who are not price sensitive because money is not at stake, but their wants and the equivalent goods they can exchange it for. The Internet makes the sharing economy profitable. It has been dubbed “the relationship economy,” driven by the principle of reciprocity. In Canada, the Trade school , a school that is based on barter, catering to people who love practical wisdom, mutual respect and the social nature of exchange, just launched on January 19 in Vancouver. Rather than ask for money, teachers ask for items from their students. The new sharing economy is all about giving back to the society, to your community, and has been enhanced by the spate of Web 2.0 social networking sites that have sharing as their main themes.

Not limited to National borders.

Bartering is not limited to national borders. Some exchanges cater to international clientele, like the Ormita Commerce Network. Although headquartered in Italy, its network of 220,000 members operates in many major cities around the world. Tough times call for tougher measures. If a business has enough resources, the lack of money should not hinder it from carrying out production. It should only be a transactional problem. Networks like Ormita reduce those costs.

Iranian companies like the GTC which was mentioned earlier have seen security in bartering due to factors which lie in the realm of politics and not economics. The economic sanctions from the United States has bitten her hard that International trade in money currencies has become very difficult.

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