Four years ago, executives at the online barter site BigVine.com boasted that their technology was going to bring the business bartering industry into the 21st century.

Things didn't quite work out.

Backed by millions in venture funding and boasting snazzy Web technology, BigVine.com failed anyway - and Ron Whitney, chairman and chief executive of Chadds Ford, Pa.-based Barter Network Inc., isn't the least bit surprised.

"This [idea] of creating a Web site, and just calling it BarterWorld.com or whatever, and expecting it to succeed is erroneous," said Whitney, who founded Barter Network in 1993. "BigVine.com attempted to create, basically, an eBay of barter on the Internet. It failed.

"With the collapse of BigVine.com and other online bartering sites, the bartering industry again has been placed in the hands of those who sustained it for years before the tech revolution - smaller, regional networks such as Barter Network, which has quietly grown into one of the largest barter companies in the nation and serves hundreds of member businesses in Delaware, New Jersey and Pennsylvania.

Through barter networks, businesses can trade goods and services with other businesses in their network. A restaurant, for instance, can offer meals to a network member in exchange for trade dollars that can later be used to buy interior design services from another member. Barter Network charges a one-time membership fee of $250 and an initial trade fee of $100. After that, members pay a small monthly fee and a 12.5 percent commission to the company only when they make purchases with their trade dollars.

Whitney and industry analysts said Barter Network and similar companies have succeeded where the Web startups failed because of common business sense.

"The dot-commers that came in were well-educated MBAs from Harvard and Stanford, and they had this illusion that if you just put [barter] up on the Internet, the small businessman ... was going to be online all day looking for things," said Bob Meyer, publisher of BarterNews, an industry magazine based in Mission Viejo, Calif. "They blew through a few hundred million and weren't successful.

"Barter Network, meanwhile, is thriving. In June, the company bought out The Barter Connection, a Chester County, Pa.-based exchange with 150 members, and now has 1,300 members in the tri-state region. That places the company in the top 10 percent of exchanges nationwide, Meyer said. Whitney said the company did about $6 million in sales last year and is aiming for $8 million this year.

The company enjoys a strong reputation in the bartering industry, and Whitney has been nominated to join the board of the National Association of Trade Exchanges, said association Executive Director Tom McDowell.

The key to the company's success, Whitney said, is simple. Though technology has proven to be a useful tool, the company still relies on salesmanship, reliable brokers and customer service to keep its regional base happy.

"It's very important that an exchange focus on brokers and customer service," Whitney said. "Barter is a quid pro quo on any level."

Actually, it's quid pro quo on a multibillion-dollar scale.

According to the International Reciprocal Trade Association, $7.5 billion is exchanged each year through commercial barter, and the industry is growing at a rate of 8 percent a year. Roughly 300,000 businesses participate in barter, and participation in business bartering doubled nationwide between 1990 and 2000.

"If you look at [the industry] it's growing at about a 6 to 8 percent rate on an annual basis," said McDowell of the National Association of Trade Exchanges. "We're growing in trade volume. We're growing in the number of businesses participating."

Doc Loughran, publisher of Dining & Entertainment Magazine in Upper Darby, Pa., said Barter Network provided just the boost he needed when he was building his business. He didn't have a lot of money at the time, he said, but was able to get what he needed through trades.

Though it takes "a little bit of work" to find goods and services, he said he uses the system regularly. He recently used it to acquire laptop computers, copy machines, business cards and coffee service.

"If you're an entrepreneur, and not a millionaire, then you've got to be very foolish not to use this system," Loughran said.

Carol Truitt, co-owner of Cook & Smith Florist in Dover, uses Barter Network only occasionally. But the system provides her company another way of getting what it needs - most recently, Truitt said, Cook & Smith sought out a network partner to replace some steps.

Being in the network also brings in more business, she said.

"A lot of the people in the network use us for their flowers," Truitt said.

The growth of the barter industry will only be helped by technology, McDowell said.

BigVine.com and other Web-based barter sites may have erred in relying on technology to handle everything, but that's not to say Web-based applications can't be useful.

The Internet has already helped barter networks connect their customers more quickly and easily to business opportunities, McDowell said.

"The biggest [benefit] has been the ability to provide information to the memberships," McDowell said. "When members want something - day, night or weekend - they can just go online and do a category search, and find out who the other members are that can provide the service they need. From that standpoint, it's really been nice."

Whitney said the latest bartering applications are as sophisticated as some banking systems and allow network members to search for goods and services, make transactions online and view their account status.

All of which helps. But at the end of the day, it's still old-fashioned salesmanship that sets the successful barter exchanges apart from the Web failures, Whitney said.

"This is still a business," he said. "You still have the basics of sales and marketing and customer service in barter today that we've always had. We have these [technology] tools, but it still requires an enormous effort on the sales and marketing side to bring in new members to the program."

Copyright 2004, The News Journal Co. August 15th, 2004