Put your cash away: bartering is back

When Tory shadow chancellor George Osborne visited California this week, he complained about the lack of a British equivalent of Silicon Valley, the land originally put aside by Stanford University so that graduates could start their own hi-tech businesses. Yet the latest business launched by Stanford graduates to capture the US public's imagination is based on an idea that several British entrepreneurs are already pursuing very successfully.

Swaptree's test site is currently attracting rave reviews in the US media - it's an internet portal on which members can trade their possessions, with no cash changing hands. Back in the UK, however, swap sites have gone well beyond the testing stage, with the leading services attracting thousands of hits everyday.

It's possibly the influence of the popular Eighties morning TV show for children, Noel Edmonds's Swap Shop, but for certain types of goods in the UK, online swap sites are becoming serious rivals to auction sites such as eBay or retailers such as Amazon.

ReaditSwapit, one of the leading British swap sites, was launched in 2003 by two friends, Neil Ferguson and Andrew Bathgate. To cope with a long commute everyday, Bathgate had become an avid reader but was fed up with his house becoming increasingly cluttered up with books he would only ever read once. Together with Ferguson, a computer programmer, he launched an internet site that aimed to put readers in touch with each other so that they could swap unwanted books.

Three years on, ReaditSwapit has 8,000 members who between them have 40,000 books up for swaps - some 45,000 books have been swapped since the beginning of the year alone.

What started out as an interesting project for Ferguson and Bathgate has become a much more serious endeavour. "We estimate that in total our users have saved £350,000 and more than 300 trees by swapping instead of shopping for books," says Ferguson.

In addition to the savings that regular swappers enjoy, Ferguson thinks many are attracted to the idea of being part of a club. "Rather than coldly selling their product on eBay or Amazon, members feel they are enjoying a relationship with another person on the site who has similar tastes," he says. "It gives them a feeling they are both saving money and moving away from a money-oriented market into a more primitive, friendly trading society."

Above all, the site works because it's so simple. You join up and post a list of the books you would be prepared to trade. Other members can then approach you with proposals for swaps from their own lists - or you can approach them to initiate the deal. There's no money involved and traders make their own delivery arrangements.

For now, ReaditSwapit's founders are keen that the site remains free - its costs are funded by advertising - but other people have become more commercial, or broadened the appeal of their swap sites.

For example, Swopex, which launched last September, enables users to swap DVDs and computer games, but the site charges 99p to put users in touch with each other.

Simon Miller, one of Swopex's co-founders, says the site was built to capitalise on the fact that Britons hoard items such as DVDs. "Since one person's Godfather is another person's Titanic, an efficient online swapping exchange will ensure we all get to watch exactly what we want, but at a far lower cost than renting or buying or even auctioning a DVD," Miller says.

Swopex operates on a credits-based model that is a common feature of swap sites. Once you have sent an item to another user, your account gets a credit that you can use to buy a DVD or game. The idea is that even before you've spotted something you'd like, you can offload your unwanted items and build up credits to spend in the future.

Like ReaditSwapit, Swopex is keen to stress its environmental and ethical credentials. Both sites have users who also use Freecycle, a model originally launched in the US that has now 300 local groups in the UK with 140,000 members.

Freecycle's premise is that if people can find new homes for unwanted possessions, the world will need less landfill space for trash. Once you've joined the site, you can list anything you want to get rid of on it. Browsers who find something they want are expected to come and get it, but they don't have to give anything back in return.

Darren Wyn Rees, who works for the UK arm of Freecycle, says the site is popular because it is attractive to both bargain hunters and to those who want to cut on waste. "We wouldn't be successful if we just appealed to one or the other," he says. "We do appeal to people who are into recycling and care for the environment but we also appeal to people with an eye for a freebie."

Freecycle is free to join, but other swap sites charge a fee. For example, eswapnow asks members to pay a £5 joining charge, "intended to avoid people joining who are not really interested in swapping". Similarly, Mybookyourbook charges £8.95, though for this you get some padded envelopes thrown in so that you can send your books through the post.

Just as sites have different charging policies, they also offer different types of swap - some have much wider offerings than others. Indeed, several sites allow users to trade anything they want. On iswap.co.uk, for instance, featured trades currently include a television, a fruit machine, a set of golf clubs and a mobile phone.

The key to success is clearly to be imaginative. On iswap, negotiations are conducted publicly - the fruit machine owner, for example, has already turned down the offer of an xbox and is now considering whether to accept a signed Newcastle United shirt.

Colin Wolfson, whofounded iswap 18 months ago, says there is no limit to the usefulness of his site. "One guy wanted to swap his aeroplane for a Ferrari using our site," Wolfson says. "We've also had people offering house swaps on the site.

Wolfson originally expected iswap to be used by people looking to swap holiday homes, but has found people much more willing to consider other trades than he expected.

One interesting niche of the swap site sector is the opportunity to swap gift vouchers. If you're given vouchers to spend in a store you're not particularly interested in, sites such as vouchertrader .co.uk enable you to swap them for vouchers for stores that are more to your taste.

Bear in mind, however, that this is much closer to dealing in cash than the swaps conducted on other sites. As a result, there is more chance of being ripped off, particularly if you want to swap sizeable amounts.

This applies to goods too, so take great care with anything valuable. Most swap sites offer a feedback facility so that you can warn other users about dishonest traders, but none can fully protect you from fraud. A spokesman for eSwapit, a particularly popular "swap anything" site says online swappers must be prepared for the risk of losing out. "That's why we only promote the swapping of unwanted or surplus goods," he says. "If you don't use money you can't lose it."

Wolfson says the key is "to apply the same common sense you would use if buying something for cash". If you're swapping cars, for example, get an RAC check. If you're thinking about property, you'll need the same support from lawyers, lenders and surveyors as with any property deal.

'Savings aside, it's a great way to get to know new authors'

Carol Kurimbokus, a 47-year-old practice manager in a London-based accountancy firm, joined ReadItSwapIt in January and has already traded more than 80 books. She found the site after looking for a second-hand book for her daughter's literature class but now finds herself logging in every day looking for books for herself.

Carol says she has saved considerable amounts of money through the site, but that this is not what she most enjoys about using it. "I hate turning down swap proposals," she says. "It's a great way to get to know new authors - often, I agree to books I would not normally choose for myself."

Until this year, for example, she had never read any of Alexander McCall Smith's books, but has now become addicted to the No. 1 Ladies' Detective Agency novels.

Space has also become an issue for the Kurimbokus family. "The original idea was to get rid of some books and make room at home - I had intended to leave my new books in the office for people to help themselves," she says.

"In fact, I have ended up getting books that I want to keep - I hide some of them under my desk at work, as my husband is threatening to move my books and myself out into the street in a cardboard box."

Carol says her favourite book acquired through the site so far has been James Patterson's Honeymoon. "I had been itching to read it and the charity shops from which I used to buy books did not have it at the time," she says.

She is also keen on the recycling aspect of the site. "I think some people make too much of the book condition," Carol adds. "This is a second-hand book site and you cannot expect new books at all times."