

Ask HN: How to Monetize Online Bartering? - will_brown

I am a lawyer and I ran into an interesting legal problem this past week.  Basically there is a physical good (&quot;Widget&quot;) which is illegal to resell (sell p2p), but is perfectly legal to trade.  As it turns out there is an entire &quot;under ground&quot; market dedicated to trading Widgets, the most analogous good I can think of are sneakers which have an enormous underground market, called sneakerheads, who buy&#x2F;sell&#x2F;trade custom, vintage, limited release, and rare sneakers p2p.  The only difference with the Widget and sneakers is the Widget can not be sold p2p, Widget can only be traded.  Therefore, if you need a specific product to answer, imagine the product would be shoes and the community would be sneakerheads.<p>How might one monetize or make a business out of building a online community for the sole purpose of facilitating p2p trades of Widgets?  I can think of advertising, paid membership and selling products to the community related to the Widget.
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endersshadow
I've thought about this a bit for homebrewed beer (illegal to sell, but
perfectly legal to give away and/or trade). My only thought is that you could
manage the shipping of the items--have each trader send you the item, where in
you inspect it, and once you've received both, you send both along, otherwise,
you return the original widget to the sender.

Charge shipping plus a fee for that service. Plus, if you have a centralized
shipping location, you'll be better suited to get deals on shipping costs.

This, of course, ignores the fact that it's illegal to ship alcohol via USPS,
and it's against policy for UPS and FedEx.

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Casseres
> This, of course, ignores the fact that it's illegal to ship alcohol via
> USPS.

Currently, but USPS has indicated they would like to get into this business.
It would be a worthwhile risk to set up a service that would take advantage of
this beforehand so they could be the first service to do this.

As being a man-in-the-middle, that would double the price of shipping, where
it already costs 10% to 50% of the widget's value. Though it might be a good
service to have available for new users who don't have any feedback in their
profile.

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endersshadow
Being a MITM would certainly increase shipping costs, but if you're able to
get bulk pricing, you could potentially drop the shipping costs to less than
what it could cost the users to ship it themselves.

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brudgers
Simple question: given the high barrier to entry and an illiquid market, are
the potential returns so massive as to justify the risk? To put it another
way, does this market have the potential to be exponentially more lucrative
than antiques?

The other question is about the culture. Is the current barter system part of
the attraction for people engaged in the trade? Think about the way the
internet changed the world of Grateful Dead concert recordings.

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natdempk
What is the price point of the product? How difficult is it to connect with
another to trade it? How frequently are these trades made by individuals? It
might be possible to charge a finder's fee if you built some sort of matching
service if the numbers look right to be worth your time. I could also see this
fee just being wrapped into a paid membership plan or one time fee if the
numbers went another way.

~~~
will_brown
>What is the price point of the product?

Much like shoes the price of the Widgets vary dramatically. But best estimate
trades generally being valued at $50-$200 with the shipping at $20-$30.

>How difficult is it to connect with another to trade it? Most of the current
trading I am aware of is done on craigslist locally or on Instagram, so search
is involved, but as you suggest matching trades could be automated. Though the
way the community is, traders probably want to limit the number of users they
trade with and build trusted relationships.

>How frequently are these trades made by individuals? Much more frequently
than shoes, people I know trade 1 or 2 times per month, but they will not
hesitate to do more trades for a Widget they really want.

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Casseres
How about a website where users can upload pictures (with description) of what
they have available to trade, and other users can match the appropriate items
from their inventory to make trade offers. With the user's profile, you can
have a trade history, feedback, the ability to make private trades (maybe a
premium feature), and a "showroom" where users can display their prized
widgets.

Of course forums, private messaging, along with advertising would be
appropriate. I've never built an online community, but I would wait to gauge
interest of users interested in purchasing widget-related products before
investing the time and capital to develop that.

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billmalarky
Most marketplaces have a small listing fee. Perhaps you could have paid
memberships and members don't have to pay the fee to list.

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NameNickHN
A listing fee or transaction fee would be my suggestion, too. Just charge for
the service, not for the goods.

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Casseres
Is the widget a digital, or a physical good?

Can the widget only be traded for similar widgets, or can it be traded for any
such as baseball cards? If it is digital, does it require a proprietary
service to facilitate the trade?

~~~
will_brown
Physical good. Legally the widget must be traded for other widget(s).

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forgottenpass
Offer escrow services for trades that can't be made face to face.

