Cheap products against high transport Cost
Where there is a problem or challenge, there lies opportunity and it boils down to how serious one can be to leverage the in-between. Another thing to consider is the fact that being big has its advantages. In short, anytime it seems a scenario is presenting many challenges, check in-between and you will find out that there is a limitation of being big.
Nothing bad in making an early scouting in the early part of the year. As for early improvements when it comes to opportunities to add up in the year and also find something to write about. Here, we are talking of both. I was looking at how to leverage the online space yet again and this time, we are looking at e-commerce.
Most times what is sold high is not actually high, it ALL depends on where you bought it. I am not trying to talk mainly on any hyped market like the boutique business. Arbitrage has and will remain a big business. It is about knowing how to make profit from both time and place. The Christmas season peak holiday activity was summarized some days ago and if you were more of a service or product provider, it is easier to understand how the interest easily came in.
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Advanced countries have the advantage of easy production. Let's consider the business between Alibaba and China as a whole. I was looking at how cheap so many products are sold there especially when trying to get a bulk service. Does this present itself an opportunity? Of course, buying and selling is a day to day activity. I was scrolling through some easy to use products and how affordable the prices are.
It seems the middlemen are in huge profit. Calculating this against goods makes your suggestion seem very right but looking at the entire details, it will prove the Vice. So if it is this profitable why are so many people not jumping in to order goods from places like Alibaba and sell it high here with 200%, 300% or even more on the go.
Let's look away from the risk of long distance business and just consider the transportation cost. Buying cheap is one thing, receiving it cheap at your door post is another. In short, the current economic situation makes it very difficult. I can see why many smaller vendors are backing off from this long distance business.
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When it comes to transportation costs, at least I have some experience in our daily business. The cost of an entire daily pick up and delivery is always staggering. You just have to watch a reasonable some just shift grounds into the transport sector. How about sourcing for products too. If you fail to add it to the overall product's price, especially if a customer is asking for a unique product, then you’ve just inquired a loss.
Getting back to the shipping cost, I had to see the entire freight activities very staggering. I mean, you may have to spend up to a million (most have been N1 million plus) in transportation of goods worth let's say around N600,000. So in general, you might have to spend around N1.8 million to N2 million to secure these goods.
I had to press in a little to see why; tax, road settlement, high cost of transportation gas (fuel), settling of necessary middlemen activities (e.g the partnered freight vendors, border clearance), paperwork and others. Put all this together and the entire business has become difficult for individuals small buyers to see any tangible profit.
To conclude, let me add, does this make the entire business a ‘no go area’ for smaller vendors? I will be covering this in a different article to see how smaller vendors have strategized to offset these enormous shipping fees to stay in profit. As I earlier said, the rules of business are simple; solve a problem and get rewarded.
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