A couple of weeks ago I wrote a somewhat negative post about an unlaunched startup in Boston called Swaptree. Ouriel wrote a follow up post comparing Swaptree (unfavorably) to a French service called SplitGames.
Since that time I’ve had a chance to talk at length with Swaptree founder and CEO Greg Boesel about some of the perceived shortcomings of the service that I pointed out. That conversation, and an eye-popping demo he walked me through, made it clear that I had made some incorrect assumptions about the service.
Swaptree will allow users to swap media items (books, CDs, DVDs and video games) with other users without the use of cash. Swaptree will not charge a transaction fee, relying instead on contextual advertising revenue that will be placed on the site. For a new user, the idea is that you type in a few items that you own and are willing to trade (using the UPC or ISBN code) and you’ll see thousands or tens of thousands of items that people are willing to trade for your stuff.
My assumption was that Swaptree was going to have a difficult time creating a demand curve. Getting a new user to type in a couple of things they are willing to trade is easy. Getting them to type in things that they want and associate them with things that they already have to trade would be much more difficult. At the end of the post, I suggested that actual money served as a very nice stored value currency, and that’s why eBay has been so successful.
It turns out that Swaptree actually has a fairly interesting and much simpler way to build the demand curve of items. In addition to maintaining a list of items that a user wants to trade, they simply build a long list of items they want to own as well. This list can be created by clicking on items on the Swaptree site, or even easier ways like importing your Amazon wish list or using a plugin to click on items on Amazon directly and have them included on your Swaptree “wish list”. When I saw the demo, I was convinced that large numbers of users could be enticed to do this. If there is a match, any match at all between an item that you have and an item that you want, Swaptree suggests that a trade occur to both parties. If both accept, the trade is confirmed.
There are a number of really nice touches as well. Swaptree will analyze have and want lists and try to organize trades among as many as four users, so the possible number of trades increases exponentially. They also allow you to print out an address form and postage directly from your printer. They actually lose money on postage sales after credit card charges, but they felt is was important service to offer. They also have envelopes available and will send you new ones automatically as you use up the old ones. The list continues - basically Swaptree has done a very good job of thinking through the details and making swaps occur as easily as possible (Frankly I wish eBay offered these kinds of services as well).
Sometimes, I love being wrong.
The service is still some time away from launching a private beta, which I will eagerly participate in. Sign up on the Swaptree home page.
Screen Shots:
Comments
Michael, You’re up early/late…
How does the system ensure both parties get what they wanted? Or is it based on the honor-system? At least with an electronic cash transaction, you can involve escrow - like what Ebay does.
The envelopes are a nice touch.
Michael, glad you admit. makes you a even cool writer. Sounds like a great concept and great design. I would like to actually swap the chair i sit on ..
Interestingly all those items can be easily shared. We do it all the time with friends - i think this service slowly catch up. Not sure how much it would effect business for ebay and amazon. it would be interesting to watch. cheers!
Although it’s a useful concept, the service details will play a huge role in whether it will succeed or fail in the market.
I’m looking forward to get into the beta, and see how it works.
What I still don’t understand is where will they get thir income? Ads?
Yes: “relying instead on contextual advertising revenue that will be placed on the site”…
uh.. Now I feel really stupid. Sorry that slipped my eyes.
Social barter - seems like a great concept.
Good for Swaptree to go the extra mile to win you over. And admitting you changed your mind is just one of the things that make you a great blogger. Boston.com will be watching Swaptree. I’ve got more than a few books to swap…
I have a question about the service that I can’t find answered anywhere, and they don’t have their contact on the website, so I thought that you may know, Michael… Is this going to be an USA-only service, or is it going to launch worldwide?
Sweet! I hope Ebay/Amazon inspires with that service and brings it to the masses.
Swaptree sounds like a well thought out bartering service, but I think Michael’s original point about actual money being a lubricant of commerce is still valid. If you consider Swaptree as a generalization of the business models of Lala and Peerflix, then eBay can be thought of as a further generalization of the Swaptree model. You can trade anything for anything else with the aid of a system that’s thousands of years old, understood by everybody, has more market penetration than Windows, and is fine-grained enough to allow the middle man to take a percentage of the transaction. I think where Swaptree really has an advantage is the easy shipping model that they’ve developed. Given the often outrageous shipping fees eBay sellers charge for small items, Swaptree transactions can turn out to be attractive to a lot of people.
I agree with Chris (#1). What insurance do I have that I will receive the trade? Are they validating credit cards and going to charge the user who doesn’t fulfill his part of the trade? If it is just using the honor system, no thanks!
I am not really sure about their algorithm that help to match all the items that I can trade with. Are they allowing the people to add a value for the item? If not, two people may value the same item differently. That may be problem during transaction. Algorithm must be super smart to understand people’s values. Otherwise, it seems like a pretty good tool to get stuff out of my basement!
-Guna
Any suggestions on how to get in touch with a purchasing person at Swaptree? My company manufactures custom envelopes much like the one shown above.
If I could take a guess at how the trade would work it would be:
They keep a credit card on file and the envelope they provide for you tracks the shipment, only if the shipment doesn’t arrive after a certain amount of time passes, they will charge the credit card.
I also wonder if they will have a feedback system like eBay so we know how trustworthy the trader is…
While I wish Swaptree the best of luck, trading with strangers is fraught with trust issues. http://BillMonk.com takes a different strategy; make it easy to build a community lending library with friends, with an emphasis on tracking so you don’t lose a favorite book. Tell it what you own, browse your friends’ collections, request to borrow things, and track who is borrowing what.
Damn! I just listed all my stuff and have already built up a balance on barterbee.com which does pretty much the same thing. Wouldn’t it be interesting (but unlikely) that you could swap your balance from barterbee.com to swaptree.com? Or maybe you could transfer into Linden dollars or PayPal?
How about for a small transaction fee? I think there’s an opportunity here. . .
It’s cool to see other people figure out new ways of doing things.
I own the site http://www.SwitchDiscs.com and we use an internal currency called “switchbucs” to facilitate the trades. It allows us to monitor the swaps and provide refunds when needed.
But SwapTree looks cool and I’m interested to see how it works.
cheers,
Chris
I will be interviewing Greg Boesel later this afternoon for http://www.npost.com. Let me know if you have any questions or additional comments that I should ask him.
Thanks -
Nathan Kaiser
http://www.npost.com
nathan@npost.com
Sounds like http://www.barterbee.com
Nice. In Germany we have a site like that called Hitflip.de, to swap media like DVDs.
as you said Mike. It is good to be wrong sometimes, and i include myslef in it
The ability to easily source ‘wanted’ items is one of the keys to success, the other is ensuring reliability of the transaction. I like the idea of being able to import (or subscribe!) to an Amazon wish list (or the wish lists of countless other commerce sites). The ability to do the same with desktop-based programs (including iTunes and Delicious Library, for example) would also be nice.
I wonder if they’ve added proximity into the matching algorithm? These barter services might also work well in Europe where travel distances are much smaller.
Now, I wish all of my old power tools had ISBN numbers…
Another good option is:
http://www.SwapAce.com
http://www.SwapAce.com
I agree with some of the other postings … if this is a swap between 4 people, what if it breaks down somewhere in that chain?
DVDSwop.de
And check out the German DVD trading network http://www.dvdswop.de .
It’s great to see that this model is finally starting to get some positive comments. I’m a cofounder of http://www.lendmonkey.com and there are a number of reasons why we chose to build our site rather than use eBay (shipping fees are reason enough). We also allow swapping of books, music, movies and games and we’re open to a global marketplace (though our pages are not localized yet). If you’re interested in a trading site which is similar to swaptree but allows you to trade with your neighbors, coworkers, and friends rather than having to mail everything; then please check us out.
SwapCorner.com is another site that’s already up and running, that doesn’t make use of a point system and that’s comletely free to use.
This is not a new concept, there have been sites like this since 2000 - I can think of several in the video game and baseball card spaces. This model requires quite a bit of work and eBay will always be easier for your average internet user to grasp.
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