B2B Barter is a recent and leading-edge trading platform which has inherited the strengths of traditional trading systems and does not include its week points. In economic transactions, B2B Barter is a kind of transaction between business institutes in which goods or services are exchanged without any intermediary. Goods or services are interchanged for other goods or services in B2B Barter.
This method of trading enables a variety of businesses to trade with customers and suppliers in a barter type exchange network without needing to store cash. This will keep liquidity and can be beneficial in times of recession and economic downturn. Many of the barter club members utilize this platform as a secondary market to benefit the potential of gross production and also inventory reservation by providing services that are commensurate with economic conditions and without affecting standard prices in the primary market. The main challenge for many of these companies is that they can increase the number of customers and suppliers using this method.
Barter trading is the oldest form of economic transactions in the history of civilization, and although the type of products has changed in the past, the initial concept of barter exchange remains unchanged.
In today's economy, transactions are also underway with the Barter system. There are different views on whether or not a barter is unique to difficult economic conditions, but the interesting point is that presently the world's economic powers also benefit from this trading method in their economic cycle; therefore, the barter system not only being recognized and prevalent in economically underprivileged countries but also everywhere in the world. It is evident, however, that in strict economic conditions and currency embargoes and sanctions, the conduct of international transactions by Barter method can, to a certain extent, reduce the problems and limitations that have arisen and emerged. This sort of transaction accounts for about 20-25% of global settlements and deals, which can be used as an efficient mechanism in international trade.
E-commerce is the foundation of these types of transactions and is accounted as a kind of facilitator, which leads to increased transaction rate and precision in trade and creates a secure base and environment for the exchange of information.
Methods of Barter and Trading in Today’s Economy
BuyBack Trading: Buyback transaction is one method of the barter transaction. This type of barter is widely used in substantial and costly industries. Buyback can be explained in easy terms as: by this method, the equipment, machinery and equipment needed for production are delivered to a country by a particular supplier, and alternatively the products produced by the same equipment and machinery are received by the supplier within a specified period of time in lieu of the cash cost of the facility.
This type of contract can reduce the limitations applied by sanctions and enter new and advanced technologies to the country.
Switch Trading: Switching means replacing, exchanging and substituting. In this way, a company sells goods and services or, in some cases, builds infrastructure such as roads, railways, hospitals regarding another country, and the country receiving the services or products would be committed to delivering the equivalent of its value to the second party in another occasion.
Offset Trading: It is a kind of commodity to commodity transaction in which it is contractually agreed that a country purchase expensive military and transportation equipment from an advanced and industrial country, and the seller of goods also undertakes to cooperate with the buyer country in economically related or non-related fields. Of course, money or a transaction medium will be used in this type of transaction, but it can be considered as a kind of barter transaction.
The use of GS1 standards by the members of the barter exchange network has led to the creation of a powerful online profile and a kind of intelligent and automated marketing, creating an ideal perspective for them. These standards also reduce sales costs and create a systematic list of tradable assets of the parties.
Using the GS1 standards in B2B Barter E-commerce will ease transactions, reduce their costs, and optimize their timing. This platform will cause to improve the efficiency of supply chain management, integrate members belonging to this type of network, and simplify negotiations between the parties.
Advantages of using barter transaction instead of currency exchange are as follows:
independence on cash and resolving the lack of liquidity resources
creating new job opportunities in the context of trade between the parties
balancing trade by establishing balance between exports and imports
creating competitive benefits among other countries by conducting barter transactions