I nearly died.........rant

Attila

Yesterday I ordered a few things online from the UK .....came to GBP260.00 and Jees Louise, my heart almost stopped when calculating the exchange rate. translates to ZAR 3715.00 isn't that just wrong..... or an I just pulling a Hymie Berkowitz.

Well my minds made up.... I will support local manufactures and providers of stuff, rather than sending my SA Ronts off-shore.

Facts are we make some good shit locally and we need to get away from this MIA, MIM, MIC, MIGB just cause it a friken label ... rant over.

vic

Yes...and add now to that shipping plus SARS fees AND the waiting for the stuff to arrive in one piece....IF it arrives . ?
However there are items not readily available here....such as grill cloth,57/62 pups, etc. So on occassion we don't have a choice unfortunately.

Attila

IMO: there's the key "not readily available" that instant gratification thirst

Heres a guitar unrelated true story

In the late 1980's there was only two networking typologies namely Token Ring owned by IBM and ran NetBios for IBM PC's to communicate with mainframes and Ethernet owned by all the big UNIX companies Sperry, HP etc etc. and ran TCP/IP In the real world these two fought for ownership in the banking come insurance big business networking environments, of course there were numerous gateways and bridges to connect the two with no real success. Problem IBM expensive, propitiatory and ridged Unix, open cheaper flexible

So long short: Bankcorp (ABSA today) sez they only want 1 topology and that is Ethernet because more flexible and cheaper than token ring. so a little SA company called Punchline computers owned by Neil Rabinowitz and a little back office company called Punchline communications (later called LAN-design) owned by Kevin Torff and Neil, took on the challenge backed by Bill Venter to bridge the two protocals in other words to run netbios and TCP/IP on an ethernet network.

Result was the Elan-1000 which was the worlds first multi-protocol Ethernet card and drivers, designed and developed in Kramerville Sandton. I was somewhere in there at the time.

I guess what I am trying to say is that from an ideas to viable product we don't have to stand back for anyone... of course our local demand is much smaller ........ but we are part of the global economy ..........

Tokai-SA

Ahaa, so we're starting to notice the Exchange rate are we? ?

You guys buy some odds and ends online, one guitar, a few pickups, a pedal, some strings and occasionally one little amp, and the exchange rate is "killing" you.

Well, keep in mind, distributors buy all their stock at the current INSANE exchange rates, and not the exchange rate you see online, but the rate the bank charges us for international payments, plus bank commission.

Chocklit_Thunda

But most retailers/distributors sell that and (should) put a mark up on it meaning they make their money back and a little bit extra (for themselves and development of the company etc). Their selling prices should be enough to cover any fluctuations in the exchange rate (from 8 - 10 bucks a dollar or 13 - 16 a pound) allowing them to still make a profit without changing prices daily to match these little changes.

Most of us on here are buying for personal reasons... So that's money directly out our pockets, never to return again.

Attila

you have my sympathies Lance, its a constant moving target :'(

AlanRatcliffe

Another factor is replacement cost. If you have a regular stock item, it's no use discounting it on a sale if - thanks to yearly price increases and exchange rates - the stock you order to replace it is going to cost you more than you sold your existing stock for (it happens!). So retail prices often fluctuate - as new stock comes in the retail of the product will be adjusted to the most recent landed cost.

Now before we get the usual chorus of "Profiteering!" or "Rip-off!", this goes both ways - if the exchange rate improves and the next shipment lands at a reduced cost, the retail price will come down, regardless of existing stockholding that was bought at the increased rate.

What doesn't usually change is the cost price. An item keeps it's cost price, regardless of retail price fluctuations, so while they may have two of an item in stock, the costs can be different. This is another factor in discounting (and why discounts are not a standard, fixed rate) - if they look at a specific stock item and the cost was lower, they can discount it at a higher rate without losing out, but another of the same item might have been bought at a higher cost, which means less discount is possible.

There are rare cases where if an exchange rate change is high enough, the distributor/store may decide to average the costs between examples of the same stock item - bringing the higher costs down while raising the lower to compensate.

Norman86

It depends what you want!
but i agree, there are some great manufacturing companies here in SA.
it might be small output, but its great quality!

Tokai-SA

Chocklit_Thunda wrote Their selling prices should be enough to cover any fluctuations in the exchange rate (from 8 - 10 bucks a dollar or 13 - 16 a pound) allowing them to still make a profit without changing prices daily to match these little changes.

We're talking about a 20 to 30% fluctuation in 12 months.
January 2012, R9.80 to the Euro, January 2013 R12.40 to the Euro...that's 27%.
I'll tell you how you combat that, you don't...in 'this' business if you want to keep distributing the product you increase by 10% and take a 17% knock in profit.
In any other business, you increase by 27%. 8)

Attila

Forward cover may be

domhatch

Attila Barath wrote Forward cover may be

taking out forward cover could be as much of a risk as not taking out forward cover. the currency could move in your favour and then you have to exercise your cover at the higher rate. granted, in this environment, it's potentially less likely, but it's still a risk.

in a small business, i'd say forward cover is a large risk to take without proper advice - and not the kind you'd get from your bank. detailed analysis of your specific environment and requirements is needed, and that could cost you as much as the difference in the actual currency fluctuation, if it's worth its salt.

potential business opportunity for anyone out there with the expertise - financial risk management and forecasting for the small business with costs based on affordability and scope of the project at hand.

but it's just a thought
dh

Attila

of course you have a point there ...but you don't have to exercise your cover as far as I know, but it does cost extra.

6x9base13

Attila Barath wrote IMO: there's the key "not readily available" that instant gratification thirst

Heres a guitar unrelated true story

In the late 1980's there was only two networking typologies namely Token Ring owned by IBM and ran NetBios for IBM PC's to communicate with mainframes and Ethernet owned by all the big UNIX companies Sperry, HP etc etc. and ran TCP/IP In the real world these two fought for ownership in the banking come insurance big business networking environments, of course there were numerous gateways and bridges to connect the two with no real success. Problem IBM expensive, propitiatory and ridged Unix, open cheaper flexible

So long short: Bankcorp (ABSA today) sez they only want 1 topology and that is Ethernet because more flexible and cheaper than token ring. so a little SA company called Punchline computers owned by Neil Rabinowitz and a little back office company called Punchline communications (later called LAN-design) owned by Kevin Torff and Neil, took on the challenge backed by Bill Venter to bridge the two protocals in other words to run netbios and TCP/IP on an ethernet network.

Result was the Elan-1000 which was the worlds first multi-protocol Ethernet card and drivers, designed and developed in Kramerville Sandton. I was somewhere in there at the time.

I guess what I am trying to say is that from an ideas to viable product we don't have to stand back for anyone... of course our local demand is much smaller ........ but we are part of the global economy ..........

Eish, that dragged up a lot of memories - good and bad ! Got an old Sperry machine lying around at home which I keep threatening to get running for posterity sake. Got token ring stuff too - going to go home and exorcise my home of it by fire this afternoon ?

domhatch

Attila Barath wrote of course you have a point there ...but you don't have to exercise your cover as far as I know, but it does cost extra.

well, it'll depend on whether you have a contract or an option (i did all this a veeeeery long time ago). a contract is (duh) binding, and an option you can allow to lapse. however, a contract will, if i remember correctly, generally net you a better rate because the issuing institution is guaranteed the transaction and, on the due date, you have to exercise it at the set rate over the amount. (also duh.)

so yeah, if you've taken a forward cover option (as opposed to a contract), you don't have to exercise it, but the option itself will have some upfront costs - again, if i remember correctly.

either way, i don't think it's something the average small business should enter into lightly. it's essentially trying to second-guess the currency markets. dicey.
dh