Here are some answers

14 August 2002




By now many of you will know that LeatherXchange have formed a separate company, headed by Ron Sauer, called LeatherXchange Global Information Services, which deals with the distribution of a whole range of market reports and market intelligence which were formerly incorporated in the mother company. Ron knows a lot about the leather trade, and for sure everything about market reports. Reading the July Limeblast he saw the long queue of questions I raised, and he decided to answer them, almost one by one in a pleasant conversation we had. We can't call it an interview as I am not a journalist and on the subject he is like Victoria and Niagara Falls combined. Some people may think that what follows is a dialogue with the mirror. Well, maybe it is, maybe it isn't! My key question last month was: how much is a market report actually worth? Here is the flood of answers this single question provoked: That is really an interesting question I have been trying to answer myself for the last 17 years. My conclusion is that the value is subjective and depends on what you are able to get out of it. There is no absolute price in terms of money. I have done a lot of research on this, and have asked many people bluntly. The answers vary from: 'Sauer, you are my friend, but I wouldn't pay $5 for your nonsense' to 'it is my bible' (yes, they actually used the word), and 'I couldn't live without it'. Many official institutions such as banks, customs, ministries and chambers of commerce work with it. Prices have been used in arbitrations and similar actions as neutral indications to calculate market losses in cases of shipment defaults, to fix minimum export prices by authorities etc. The fact that I am getting more and more subscribers and data suppliers, some of whom I have worked with for many years, means that there is a market and a need for neutral information. Several hundreds of satisfied customers have no problem paying for this information! There are many factors that define how much you are willing to pay for a report. Let me submit some. How much information do you really need? How much is there that you don't know, but that would help you to take decisions if you did? Not everybody is prepared to admit that he or she doesn't know everything about 'the' market. Nobody knows everything, and that includes myself! If you are specialised in trading with Nigeria, would you consider it useful to be informed also about the market situation in other countries such as Sudan, Algeria, Pakistan? To know about the trend in those markets, which should not necessarily be countries that are directly competing with your Nigerian market? Should your views and market knowledge be confined only to the type of hides and skins your are trading, or should you keep an eye on the trend of other species in order to have an idea when a shift in fashion, and thus a change in the buying patterns, can be expected? Because let's not fool ourselves, fashion is closely connected to price, which in its turn is connected to the raw material that is used. The market is a maze of facts, rumours and lies. What we are trying to do is to come as close as possible to the truth, knowing there is no absolute truth, because there is also no absolute price either for any hide or skin. Everything depends and everything can be negotiated, hence the discussion on price develops along guidelines, and that is exactly what we supply, the guidelines that are useful for your decision making. If you have the wood and nails, we give you the hammer, but still you will have to do the constructing yourself. Because you want a reliable source, preferably a source that draws no advantage from the information you are gathering, you can't really determine your knowledge only on what your supplier tells you, or his competitor, or your own clients. Their indications, including your own competitors', are of course important because it is useless to buy or sell at non-profitable levels. The independent market report provides for a firm basis that can give the subscriber some credible guidance of which he is sure, that the publisher has no ulterior motivations other than just supplying information, because he is not buying or selling anything. Very strong motivations come from the fact that you don't really need information about your own markets or your own products, but you need the information about those factors that influence your market. Also, when you consult a market report, you don't express the need or willingness to buy or sell, hence you are not exposing yourself to those who want to deal with you, and who might take advantage of a vulnerability like a full or empty warehouse. Some people can't live without information. It's not that they always need it, but they have the compulsion to know, as they can't live with the idea that other people have information they don't have, just like people who have to attend a fair to be seen, which has always been an argument for fair organisers. The market report provides that information on the internet every time they wish to collect it. Very few connect to the market report on a daily basis. From log-in reports one can see that only a few check everything every day or week. The number of consultations is very subjective. Some people check several times a day, others only a couple of times per year, each according to his own necessities. It is not important that you read or need everything every day. What is important is that it is there whenever you want it. The problem is to make potential subscribers realise that if, because of the information they find on the market report, only once a year they were able to buy one cent cheaper, or sell at one cent more, or just find, via a contact service, one new supplier, or customer, they have already earned their subscription back. For many subscribers, these events happen more than once a year. Unfortunately you can only find out after you subscribe! Now that's the real catch, because if a potential subscriber could be sure that he would find any of these factors, he would not think twice. Still, and fully in line with the traditions of the hide and skin trade, there are plenty who expect to see the profit first and then subscribe, but that is mathematically impossible. You have to invest first in order to collect later. It is also impossible to quantify in terms of money the advantage one draws from a subscription as it varies from subscriber to subscriber. For some it is little, for others large amounts are involved. Also there is no possibility of putting a time limit on it, because the golden opportunity could present itself today, tomorrow, next month or next year. So to put a price on a report one should put things into perspective. How many companies, even the smallest ones, spend a couple of hundred dollars each month on a lot of small things. Complimentary cigarettes, coffee, soft drinks, cocktails, snacks, all amount quickly to several hundred dollars per month, and all are bad for your health and your waist. Therefore, by charging a company a hundred dollars per month, $1,200 per year for a complete information package of several reports, charts, trend indexes etc, which you cannot collect yourself, Ron argues, is not overcharging, and the expense should come under the monthly overheads, such as the Financial Times. It is obvious there can't be a large number of reports or websites that people should consult, because there is no time for that. The most comprehensive, the most flexible to customer demand, the most value for money report will survive and it is up to who runs a report to see that his will be the one. From where I stand, I see that Ron is in pole position. Sam Setter mail@samsetter.org



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