Hi,


I have been trading in electronics and other small goods but have recently gotten into the raw goods market.  However, there are some part of it that I do not understand completely.


Here is a message I received from my buyer:

I'm looking for Product ABC 10,000 MT.

I am in a small trading office in California and I have a client in need of Product ABC.  Currently, our customer ships in 1,000 MT per month but is looking to expand to 3,000 and even 5,000 MT next year.


I understand this message, but when I relayed it to my supplier, they told me they can only provide a minimum order of 12,500 MT of Product ABC.


I told my buyer this and they said it was ok.


My supplier then told me:

Our price 299 USD/ MT, our commission is 1,00 USD per MT. We have a total of 1400000 MT

My problem is that I do not completely understand the deal.  When I dealt in electronics, I made my own commission based on what the market could handle, but here my supplier is telling me the commission we will share. 


Here are my questions:


1 - Do I up the price to my buyer and create a higher margin for myself?  They buyer does not have a target price.


2 - Does the 1400000 MT mean that that is the total amount my supplier can supply to this customer before they run out?


Really embarrassed to be asking such basic questions when I am already in the middle of the deal but that is what Alibaba is for, right?


Thanks in advance,


Ryan

Hello,


I see two points I would have liked to have cleared if I were you,


first, is the 140K MT a capacity (/month, /year, etc.) or a stock? If any, are they willing to supply you at the same price for the whole term?


second, is the commission of USD 1,-/MT included in the price or not? Or, is it the commission the supplier is willing to pay to you?  You have to settle this very clearly, as you may end up without any commission. If I were you I would charge a commission to the supplier and the buyer as well. This way you could share the commission between the supplier and the buyer and so they could have a good feeling about decreasing their costs. In fact you are doing a job for both parties.


c[] 

Quoting from [Gabor Bathori]:


Hello,



I see two points I would have liked to have cleared if I were you,



first, is the 140K MT a capacity (/month, /year, etc.) or a stock? If any, are they willing to supply you at the same price for the whole term?



second, is the commission of USD 1,-/MT included in the price or not? Or, is it the commission the supplier is willing to pay to you? You have to settle this very clearly, as you may end up without any commission. If I were you I would charge a commission to the supplier and the buyer as well. This way you could share the commission between the supplier and the buyer and so they could have a good feeling about decreasing their costs. In fact you are doing a job for both parties.



c[]

Thanks kindly for the reply.  The commission is included in the price they gave to me.  The 140K MT is a capacity per year.  Thanks again for your reply.  I am just trying to get the ropes of this type of business, so it is a bit touch and go right now.

Quoting from [EnglishRyan]:

Quoting from [Gabor Bathori]:



Hello,




I see two points I would have liked to have cleared if I were you,




first, is the 140K MT a capacity (/month, /year, etc.) or a stock? If any, are they willing to supply you at the same price for the whole term?




second, is the commission of USD 1,-/MT included in the price or not? Or, is it the commission the supplier is willing to pay to you? You have to settle this very clearly, as you may end up without any commission. If I were you I would charge a commission to the supplier and the buyer as well. This way you could share the commission between the supplier and the buyer and so they could have a good feeling about decreasing their costs. In fact you are doing a job for both parties.




c[]

Thanks kindly for the reply.  The commission is included in the price they gave to me.  The 140K MT is a capacity per year.  Thanks again for your reply.  I am just trying to get the ropes of this type of business, so it is a bit touch and go right now.

Dear friend:

i would like to introduce a good company who trades mainly in electornic products.

Now the company is under sales promotion,all the products are sold nearly at its cost.

They provide the best service to customers,they provide you with original products of

good  quality,and what is more,the price is a surprising happiness to you!

It is realy a good chance for shopping.just grasp the opportunity,Now or never!

The web address:   http://www.electronics-brand.com

Hello,

you are welcome. So in this case basically you are their sales representative and you have to communicate these conditions to the buyer. If you undertake to do any administration or inspection for the buyer you may ask for some payment for them as well.


As stated the capacity is a continuous total capacity for a period of a year, therefore you must make your buyer clear that they must book the amount they need well in advance, and that possibly the prices will vary during this period. If you can, you can make a good service to your buyer if you can settle a fixed price or a fixed high for this period.


c[]

Quoting from [Gabor Bathori]:


Hello,


you are welcome. So in this case basically you are their sales representative and you have to communicate these conditions to the buyer. If you undertake to do any administration or inspection for the buyer you may ask for some payment for them as well.



As stated the capacity is a continuous total capacity for a period of a year, therefore you must make your buyer clear that they must book the amount they need well in advance, and that possibly the prices will vary during this period. If you can, you can make a good service to your buyer if you can settle a fixed price or a fixed high for this period.



c[]

Hi Gabor,


Thank you again kindly for your advice.  I still have a question though.  Concerning the 12500 MT, would it be sent all at once?  It just seems like a huge order to be sent at one time.  But neither my supplier nor my buyer have mentioned anything about breaking it up into smaller shipments.  Should I assume for now that the order will be sent as one bulk shipment?


Thanks again,


Ryan