As we have seen in last article that merchant exporter if fully depends upon the manufacture for the goods. There are several problems to the merchant exporters for procurement of the goods, which are listed below:
1. Price Fluctuations :
Issue: Merchant exporter quotes the overseas buyer after obtaining the rate from the manufacturer of supplier. If overseas buyer take longer time to response then supplier may not be able to follow the given offer rate. Prices of some agro commodities like onion are changes daily basis according to the demand and supply. In such a situation it is very difficult to quote the price before the delivery of the goods.
Merchant exporter can mention in the offer that price is valid for particular period. For agro commodities where there is high price fluctuation the merchant exporter can give the price range instead of exact price. Exact price can be given at the time of finalization of order.
2. Minimum Order Size:
Issue: Many times, the manufacturer has a predefined minimum order size per product. In case order given by the importer is smaller than minimum order size then procurement of goods becomes difficult for the merchant exporter.
Merchant exporter should also fix his minimum order size according to the requirement of the supplier.
3. Time Lag:
Issue: Merchant exporter depends upon the manufacturer for delivery of the goods. Manufacture delivers the goods as per his own schedule. It is difficult to the merchant exporter to match the time schedule off the overseas buyer.
Merchant exporter should fix the delivery time with the manufacture before finalizing the buying order. Merchant exporter can also require storage to keep the goods purchase from different suppliers. There should be proper co-ordination with manufacturer and overseas buyer and clearing agent.
4. Competing with manufacturer’s price
Issue: If manufacturer can export X product at $100 then merchant exporter can export the X product above the $100, say $103. It is very difficult to compete the price with the manufacturer.
Merchant exporter should make some value addition in the product of manufacturer. He can make packing, repacking, labeling, re-labeling, kit making or set making to make value addition.
The merchant exporter should have proper knowledge about various documentation that is involved in local purchase and export. Central excise procedure of rebate/exemption is little different from manufacture exporter. The merchant exporter should have proper knowledge of the VAT and its exemption for the export of goods.