Reasons Why Even Beginner Trading Companies Should Pay Attention to Exchange Rate Monitoring Released

Beginner trading companies will be quite busy just managing the inventory, delivery fulfillment, payment processing, and shipping of the goods they are importing/exporting.

However, for exporting companies, even if they make and sell products well, they may not make a profit, or for importing companies, the unit cost of imported products may be much higher, losing market competitiveness.

When simulating the estimated costs related to imports and exports, it turns out that logistics costs for imports and exports surprisingly occupy a low proportion of the unit cost.

Depending on the characteristics and unit price of the goods, it may vary, but for typical goods, logistics costs usually occupy a very low portion as a cost element in the unit purchase cost.

Even when increasing the purchase quantity to achieve economies of scale, the cost-saving effect from logistics costs often feels even more negligible.

However, exchange rates can significantly increase or decrease the unit purchase cost depending on their fluctuations.

This is because they occupy the largest portion of the amount spent for procurement of the goods.

Therefore, if the price of the product itself has significant volatility, the purchase cost for procuring the goods will also increase accordingly.

For these reasons, exchange rate fluctuations during imports lower purchase costs, and during exports, they act as an important factor in enhancing product export competitiveness.

Considering these points, beginner trading companies, although it may feel difficult at first, should experience the training of monitoring exchange rates to find the right timing when deciding when to execute funds, how much inventory to secure, and at what timing.