The Return of the Barter Economy, Swapping Eggs for Toilet Paper
(Bloomberg) -- Since the beginning of March, unattended folding tables have begun popping up at intersections and the end of people’s driveways, offering everyday goods like rice, a jar of jam or bread. Take what you need and leave what you can, the signs say.
Barter, the trade system prevalent in the Middle Ages, is back in the time of coronavirus pandemic, with a modern twist.
Social networks Facebook and Nextdoor are flooded with posts from neighbors and friends seeking to swap eggs for toilet paper. Small and midsized businesses, whose cash trade has dried up from the economic fallout of shelter-in-place orders, are turning to online barter exchanges.
“When cash is extra tight, it behooves us to buy as much as possible on trade,” said David Yusen, director of business development for Seattle-based Heavy Restaurant Group, which recently bought 56 cases of Malbec wine for $15,000 worth of barter credits. The company’s 10 restaurants have closed, but some locations will start offering pick-up and delivery this week. “It saves us money, it helps cash flow.”
In normal times, the roughly 200 barter exchanges in the U.S. let roofers fix leaks and get paid in restaurant takeouts or accounting services. With tens of millions of Americans under lockdowns, those cash-free trade systems are seeing an influx in participants.
The International Reciprocal Trade Association represents 100 barter exchanges, each catering to thousands of businesses. Some exchanges reported a 20% to 35% increase in member signups in March, said Ron Whitney, president and chief executive officer of the group, known as IRTA.
“These are challenging times for us, but it also represents an opportunity for us,” Whitney said. An estimated $12 billion to $14 billion barter trades take place a year, according to IRTA.
Roger Becker owns home building and remodeling companies in Puyallup, Washington, the state that saw the first outbreak of the epidemic in the U.S. He expects business to drop by at least 30% this year, and signed up to the barter exchange BizX in February.
“A couple of months ago, I never would have thought of it,” Becker said. “It’s going be a game changer, because we are all starting to get pretty fearful about people tightening up their pocketbooks.”
Here’s how it works: Becker recently poured in $260,000 to remodel a 4,000-square-foot home in Leavenworth that was listed for $1.2 million. He is willing to accept a portion of the home’s price in so-called BizX dollars from the barter exchange, and will use these credits to buy services of other exchange members -- plumbers, electricians or nurseries -- so he can build and remodel other homes.
BizX, based in Bellevue, Washington, said its website traffic is up 30% just in the last few days. At International Monetary Systems in the Milwaukee area, traffic has doubled in the last two weeks compared with a typical full month. In Pittsburgh, exchange Green Apple Barter has seen a 20% rise in its membership in March, said President Justin Krane.
“A supply yard who has inventory sitting on the lot,” Krane said. “They asked, ‘Could you move inventory?’ A hotel property just got involved -- their occupancy rate is really getting hurt right now. Joining a network is going to give them another way to fill hotel rooms.”
Bartering between consumers is ramping up as well after people cleared grocery-store shelves and hoarded supplies at home. For now, it’s still being treated as a joke. A Twitter poll asked how many cans of beer a single roll of paper is worth (two or three cans was the most popular answer).
Laughter aside, barter of household items and food could more than double this year in the U.S., from $4 million to over $10 million, according to Richard Crone, CEO of payments expert Crone Consulting LLC.
Bartering has become especially popular with people who are most at risk to have severe forms of the highly contagious coronavirus and want to avoid stores.
Chell Garvin of Springfield, Missouri, 50, saw a post from a friend on Facebook who said she scored an 18-roll pack of toilet paper. Garvin contacted her, and exchanged an 18-count carton of eggs for two double rolls. She “cooks a lot, and she said she can’t find eggs anywhere,” Garvin said.
Allie Walker-Lavette, a 55-year-old living in Jacksonville, Florida, recently got a delivery of eggs -- an item her daughter had been looking for in vain. Walker-Lavette swapped a carton for an order of margaritas-to-go from a local restaurant.
If supply-chain shortages continue, “I do have a couple neighbors close by, I know I can come to them and say, ‘What do you have in your fridge?’” she said.
Grocery stores have said that shortages of supplies like toilet paper are only temporary. Still, Crone expects that the shortages could potentially give rise to new swapping consumer apps and marketplaces.
“There’s demand for products that aren’t on store shelves but are in people’s pantry or garage or second freezer,” Crone said. “What Uber did to enable a bunch of idle capacity with cars, this does this for the packaged goods supply chain. It’s a whole new supply chain.”
©2020 Bloomberg L.P.