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Increased transport efficiency and the digitization of information have promoted a global division of labour in recent decades.
More and more e-commerce companies are emerging and those installed in more traditional segments are tending to make the transition to e-commerce.
This process of globalization generates positive results, broadening the scope of markets, reducing fixed costs in tangible fixed assets, taking advantage of gaps between countries due to their productive diversification and differences in consumption patterns, promoting imitation and an endless number of features that result in improved accessibility, increased assortment, increased quality and reduced prices for the final consumer.
However, there is a great obstacle to the free market known as state protectionism.
When two individuals want to make a voluntary exchange, because each one appreciates more what they can get than what they have, if there is intervention, the transaction will not take place or will be more burdensome for both.
In this sense, it is the States that hinder international trade, through tax and regulatory mechanisms.
In addition to generating artificial price increases and shortages of products at destination, they also prevent developing countries from continuing to escape from poverty.
In AngelConn we emphasize the following factors, when evaluating and/or selling a company in the distribution sector:
We apply Porter’s value chain method, which combines primary activities (internal logistics, external commercial logistics production and after-sales service) with support activities (company infrastructure, human resource management, technology development and procurement) and the interrelationship with the customer and supplier value chain.
On the other hand, we consider the distance to the final customer, aware of the stability provided by the more distant stages of consumption and the adaptability required by the dynamic preferences of the public.
Different combinations between the unit profit margin and the rate of capital turnover can yield satisfactory results. That is, not only can economies of scale be profitable, where margins are adjusted due to competition and market size. We can also find companies whose market is more exclusive, but large margins allow for a favourable outcome. Therefore, the concept of value added can play a key role in this field.
Experience in the sector will be a crucial factor, since theory does not cover the daily vicissitudes that occur in the import and export business.
At AngelConn we classify products in three stages according to the degree of acceptance and margins: great innovation, first imitators and massification.