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MerchMiner® Ease of Trading Metrics

MerchMiner® Ease of Trading Metrics

MerchMiner EoTM is analyzing the most important factors that determine the risk parameters of a given product within international trade. It identifies the safest products to buy and sell. The primary function of EoTM is to reduce the risk of making wrong buying decisions by identifying the risk factors and revealing then in a simple format. EoTM comprises the 12 most important (key) factors that affect profitability and a sustainable business structure in international trade.

Parameters Explanation
EASE OF TRADING METRICS MerchMiner EoTM is analyzing the most important factors that determine the risk parameters of a given product within international trade. It identifies the safest products to buy and sell. The primary function of EoTM is to reduce the risk of making wrong buying decisions by identifying the risk factors and revealing then in a simple format. EoTM comprises the 12 most important (key) factors that affect profitability and a sustainable business structure in international trade.
Price (Cost of Goods) In AU$ This is the cost of goods and this parameter is analyzing the pricing point of the item. Cost of goods including purchase price, foreign currency exchange rate fees, transportation cost, custom duties and taxes. All major costs occurring from purchase until items arrival to your warehouse. We also included cost of sales (e.g marketing cost such as ebay fees) in to cost of goods. Cost of sales are door to door cost of the goods. This parameter is important because it has something to do with optimizing and leveraging your financial resources. If you heavily invest on high cost items this may negatively affect your cash flow.
Exchange rate Fluctuations on foreign currency exchange rates will strongly affect the cost of goods you are importing. Since US Dollar is the major currency in international business and you must buy USD in order to pay your overseas supplier. For example, Australian buyer will convert his/her money to USD first and then pay the supplier in USD. In this transaction, you will pay fees to buy foreign currency. But what we are investigating her is more the fluctuations between the currencies and its negative affect on your home currency. For example, if Australian Dollar is strong against the USD then you can buy more goods with your AU$. But if US$ is stronger against AU$ you may end up buying much less goods with the same amount of AU$. Therefor Exchange currency factor is one of the most important factors in international trade.
Product Obsolescence Manufacturers design and produce products in such a way that they become out-of-date, obsolete or no longer function properly within a calculated time period. The main goal of this type of product is to ensure that consumers have to buy the product multiple times, rather than only once. This naturally stimulates demand for an industry's products because consumers have to keep coming back again and again. Consequently, the value of older products will fall because new products will replace ones. A typical example of this is mobile phones. As a retailer, you don't want to have this type of product in your inventory for long or you will lose money. The productions costs of some products can fall between the day you pay for your order and the day the shipment arrives, meaning you will have to sell quickly to remain competitive against a lower price for a competitor's cheaper subsequent consignment. It is important to identify these kind of products to avoid unnecessary financial losses.
Weight (Kilograms) Product weight is another important factor when planning a purchase. Heavier products will generate higher transportation costs, storage and administration. If you have to replace a defective heavy product, shipment costs cannot be compensated for, so instead your loss beyond a replacement product is compounded.
Minimum Order Quantity (MOQ) Manufacturers and wholesaler usually don't sell one by one like retailers. In China, manufacturers operate with low profit margins, as low as 2-3%. Low profit margins means the supplier must produce a large quantity of products in order to break even. Additionally that decision is often governed by the cost of raw materials and factory overheads, wages etc. For example, the cost of switching between production lines for smaller quantities, or workers' relocation may be too high to manufacture lower quantities. However, in many cases there are ways for retailers to overcome high MOQ's and for many common products and these can be money-saving factor for retailers and merchants.
Size (m3) Product size is important because of transportation and storage costs, basically the size of a product can negatively affect a retailers' logistics costs. Once again bulky goods are more costly in terms of additional revenue outlay in the event of having to replace a faulty product.
Lead Time (Production) In international business, buyers will usually pay payment deposit in order to secure the purchase at an agreed price from the manufacturer; this can be up to 50% depending on industry. That means the buyer is out of pocket until the production is finished and products are delivered. The longer the production time is the longer that money is dead and not generating any revenue.
Competitors in Market (Number of Sellers) Number of existing sellers in the market place will determine your market share and therefore your success rate and your profitability. If there is an enough supply in the market then your market penetration will be difficult for the same product. Solution here will be; the identifying under supplied segments and product lines. If you have to compete in high competitive markets then you need to differentiate your product or service offer. Your value proposition will be important determinant for your potential buyers.
Sales Support (Before & After Sales) Sales Support (Before & After Sales) How often buyers may need to contact the supplier to get technical or other types of advice and support in order to use the product properly. It could be the case if the product's user manual is poorly written or if it's difficult to operate then buyer must contact the seller to get information and that will cost operators of business money. Here we are looking at how likely to get calls or email s from customer before or after sales to provide some form of support.
Transit Delivery Similar to lead time, the longer the delivery schedule, the more expensive the economic cost of goods will be because it takes you longer to start selling and making a return on the revenue you have invested.
Importation Risk – Duty, Regulations, other Government factors
This parameter analyses the import duties and tariffs, regulations, certifications, legal and other governmental factors. It will help to identify high risk items that may stuck at customs and make you to lose money. In some cases, you may not be able to clear your goods from the customs if you don't comply with regulations.
Return Murchandise Authorisation (RMA) This parameter analyses breakdown likelihood and replacement risks to help you understand the risk to replace the product after sales. It will help you to make decision and compare with other less sensitive and less troublesome products before you import. Back and forth, shipment can be expensive and can create additional administrative work, which will be costly exercise.