Web-bartering enters new era

Swapping possessions might conjure images of little boys haggling over baseball cards, but the art of bartering isn't just for tykes. In a series of 14 Web-based trades over the past year, Canadian blogger Kyle MacDonald eventually swapped a single red paper clip for a house. Yet Mr. MacDonald is far from the only one harnessing the Web to trade stuff.

Next month, Boston-based entrepreneurs Greg Boesel and Mark Hexamer plan to launch Swaptree.com, a website to help consumers trade books, CDs, DVDs, and video games. Using complex algorithms, the site immediately calculates what traders can receive after they create "have" and "want" lists.

The idea of bartering over the Web isn't new. Many similar platforms appeared during the dot-com boom of the 1990s. But bartering websites including Swaprat.com, Webswap, and Intellibarter later failed for various reasons, including poor business models, low Web traffic, and intense competition.

Some business experts question whether new bartering sites are viable in today's currency-obsessed economy.

"It's a hard game," says Arvind Rangaswamy, research director at the eBusiness Research Center at Pennsylvania State University. Currency has always packed a powerful punch, he says, because "money is fluid, divisible, [and] exchangeable anywhere."

Although no solid figures on online bartering are available, the total market value of consumer-to-consumer trading websites should reach $150 million this year, predicts Sucharita Mulpuru, a senior analyst who specializes in e-commerce and consumer behavior on the Web at Forrester Research in Cambridge, Mass.

Experts say that for bartering websites to succeed, transactions need to appear more attractive than traditional online exchanges, such as auctions found on eBay. These sites have "some potential to be ... a niche player," says Mr. Rangaswamy. "They're not stealing from eBay, they're creating a transaction that would not have occurred otherwise."

In the past, swapping sites have encountered trouble when they supplement or replace bartering with a fabricated currency system, like points or credits.

"Nine times out of 10 ... a gap exists between what a person wants and what a person is willing to give," says Krista Vardabash, executive director of the International Reciprocal Trade Association, a nonprofit organization which promotes bartering worldwide.

Effectively addressing that gap may be the key for sites like Swaptree to realize long-term success. At this point, Swaptree does not plan to use points or credits and all trades will be made person-to-person. During a demonstration conducted at the company's Boston office, Mr. Hexamer demonstrated why he and his partner believe the website can differentiate itself from competitors. Unlike some swapping sites, which charge transaction fees, Swaptree's service will be free of charge. Users only pay for the cost of US Postal Service delivery, usually $2 or less, if they ship by media mail (a USPS service that allows senders to ship books, CDs, DVDs and other similar media at a lower rate). Swaptree will generate revenue through highly targeted advertising, Hexamer says.

Customers list what they have to trade by entering the product bar code, which allows the site to post a picture, third-party reviews, and to automatically identify details, ranging from the particular edition to whether a book is hardcover or paperback or if a DVD is in normal or widescreen format.

Swaptree can also help execute three- or four-way trades, which Hexamer says, "explodes the system," giving users added flexibility to find an exact match, trading, for example, an unwanted U2 CD for a coveted copy of "Huckleberry Finn."

From there, members pick the most suitable swap. After all parties have confirmed trades, swappers ship using envelopes provided by the company. The correct postage is printed from their computers as the exact weight of each item is known because of the bar code information that each user first entered.

Another feature, "Swaptree Shopper," is a toolbar that can be downloaded to attach to relevant e-commerce websites, which alerts users when they can get the same exact product for free on Swaptree.

Swaptree was conceived in early 2004 after the founders, who are avid readers and book swappers, found themselves joking about how many books overflowed their shelves. Mr. Boesel traveled to India later that year and assembled a technical team, hoping to transform his bartering brainchild into reality. He returned home in late 2004 equipped with the first of several prototypes.

Although the website will focus on its four core products, the founders hope it will garner enough interest to branch out into other highly exchangeable items such as textbooks and baby clothes.

Swaptree's founders believe they can steer clear of the pitfalls that befell their bartering brethren of the late '90s. "Like all great Internet ideas, we already do it offline, and doing it online just makes it all the more powerful," Hexamer says.

How other swap websites work

Lala.com: Users create "have" and "want" lists for CDs and "la la" matches members. The more CDs users trade, the more they receive. La la will credit your account if a CD you receive is damaged. The website charges users $1 per every CD received, plus a 75-cent shipping charge, while 20 percent of la la's revenue from used CDs is given back to the musician.

Peerflix.com: Members make similar lists for DVDs. Every item has "Peerbux" value, the virtual currency assigned by the website. After another user requests your DVD and receives it, the website credits your account, enabling you to "purchase" a DVD of equal value. Although the first trade is free, users usually pay 99 cents plus postage for every DVD they receive.

Swapagift.com: This website gives users the ability to buy, sell, or swap gift cards. Users list both a desired selling price for the gift cards they own and what cards they would accept in exchange. A $3.99 listing fee applies.

Zunafish.com: Trade audiobooks, CDs, DVDs, paperbacks, VHS tapes, and video games. This multimedia website only allows like-for-like swaps. Users post a "have" list and request items from other users. The user-rating system allows members to post feedback on their swap partner. Cost: $1 per trade.

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