Founders of B2B used the increasing popularity of bartering and created an exchange house in the Russian Internet with its own currency. Having peeked the business model from the Americans, they decided to be intermediaries in multi-pass deals. The company is running for less than half a year, and its monthly turnover has already reached 10 mln rubles.

In December 2008, Ilya Volkov, who was working as a managing director for the Eurokommerz factoring company, together with entrepreneurs Mikhail Safin and Garry Budkov, created a company named “B2B Register.” “Mikhail has got his own telemarketing company, we became acquainted when I was promoting factoring services,” says Volkov, the CEO of B2B. The idea of starting a business based on swap deals emerged in fall, when the first symptoms of money shortage became apparent.

Instead of Depression

The trading site of B2B.RU started its work in April. By that time Volkov has already quit Eurokommerz. The investments totaled around $500 000, all from the entrepreneurs’ personal savings. The money was substantially spent for purchasing and refining special software enabling online deal servicing. The B2B.RU domain name was occupied and had to be purchased from cybersquatters, which cost “a heap of money,” Volkov notes.

“We did not invent anything new,” the entrepreneurs agree. They’ve just adapted the American experience of so-called open bartering, which emerged in the USA after the economy crisis of 1969 – 1970. “For a mutually beneficial exchange, two products need to meet each other, and B2B enables this,” says Yevgeni Sudbin, deputy director of Ascent Travel, a travel agency participating in the system. The latter allows tours and plane tickets to easily turn into advertising services or consumables for office appliances.

Instead of Money

To make settlements easier, the founders invented a tentative monetary unit and called it B2B Money (equal to 1 ruble), though the contracts that members conclude with each other and with the mediator state ruble amounts. The system is different in that it allows overdraft, where a member can get a product first and then pay for it, Sudbin adds. The owners of B2B get 6% from each deal. Besides, each member pays subscription fee of 18 000 rubles per year. The bartering house raises money on complex deals only. If a customer finds a member with which he can exchange directly, he don’t have to pay for the mediation services.

The “sales department” for the new project is based on the telemarketing company called T-Direct, which is owned by Mikhail Safin. It is his call center that housed B2B’s office – managers and brokers weaving and regulating the bartering nets. The company decided to take a proactive position and started inviting manufacturers of demanded goods and services themselves. The brokers ask a prospective customer is asked what he would like to get for barter and then search for a counterparty. By the beginning of summer, the project already had 260 customers.

The Finance magazine, published by Aktion Media, became a member of the system a month ago and has already made its first deals: the advertising campaign of the magazine, which started a week ago, was paid up entirely with B2B Money (it includes manufacturing and installation of 53 advertising structures), says Igor Maltsev, a publisher of Finance. In exchange, the magazine provides its own advertising space. Maltsev says that the scheme is a new one and it is difficult to appraise all of its benefits. But under the pared marketing budgets and dropdown of advertising space sales this is a good way to make a sound campaign.

Even if a product is selling, but hard cash is lacking, open bartering is profitable, says Ilya Stoletny, CEO of Model Arts, a manufacturer of bottled water called “Brilliant.” His company has already made deals of swapping the water (worth of 50 000 B2B Money) for transportation and printing services. The company also got interested in one other option of the bartering system, which allows paying a part of salaries to employees in B2B Money. As project members include travel companies, water can be exchanged for tours, which can be used as bonuses for the personnel, Stoletny adds.

Instead of Crisis

The last year saw the beginning of several similar projects: the Anticrisis Settlement and Commodity Centre by German Sterligov, Rosbarter by businessmen from Rostov-on-Don and the Barter Time membership club in Saint-Petersburg.

“There is enough place for everyone,” assures Anatoly Abadjan, CEO of Rosbarter. Customers of B2B are small and medium businesses, and initially it was planned that the average deal price would be 15 to 30 thousand rubles. Now this figure has grown up to 100 000 rubles, Volkov says. About 100 deals take place every month. Rosbarter specializes in bigger deals – 3 to 5 million rubles, but there are fewer of those, of course. Main clients of Rosbarter are industrial companies which swap machinery, metal, timber, tractors, and so on. For example, recently there was a deal with machinery and rolled metal worth of 30 mln rubles, Abadjan told.

In the USA barter trading is on the fast track, but the most interesting companies emerge in Europe and Asia, and B2B is one of them, says Ron Whitney, the executive director of the International Reciprocal Trading Association (IRTA). “The unavailability of bank loans made barter deals attractive, plus B2B is offering state-of-the-art technologies and can make good money from this,” says Sergey Guriyev, the rector of the Russian Economic School. However it is doubtful that bartering will spread up to the 90s’ level. “Even under the crisis the financial system is working better than then: soon bank crediting will restore and bartering will die away,” Guriyev summarizes.

But Volkov hopes his company will survive after the crisis. Now B2B has more than 400 legal entities as members, and by December the founders plan to increase this number to 3000. The system is already selling itself: for instance, one customer offered his renter to pay for the office rental with B2B Money, the renter agreed and joined B2B. “If a company manages to expeditiously attract a lot of members, the system will become rather effective,” Sudbin assures.

http://www.vedomosti.ru/newspaper/article.shtml?2009/07/06/203525