What Goes Up...
February 15, 2021
Author: Guy Soreq
We often speak to industry professionals in search of a crystal ball to predict the future of the market. When prices are rising, as they are now, we naturally want to know how much longer they will continue that way. So we formulate a guess based off of data that is likely to change and then build more guesses off of the first to understand how that future will impact us specifically. This, my friends, is a recipe for disaster. But what are we to do instead? The truth is that we must make predictions with each and every purchasing decision - the larger the stock, the further out the prediction. The problem is that we do so completely blind to status of the market today.
Rather than asking ourselves what the market will do in the future, we should seek to understand what is happening upstream and downstream of our position in the market today. The waterfall effect of supply chains dictates that what happens upstream and downstream will reach us within a matter of time. If we don’t know the status of the rest of the supply chain, how can we possibly prepare for the changing winds ahead? How are we to know, for example, the inflection point at which a climbing price has plateaued upstream so that we can negotiate our next purchase effectively?
Studies have shown that prices rise much more quickly than they fall. This is something that we are all too familiar with in practice. Price increases are quickly passed on from one customer to the next. However, decreases in price are passed on more slowly. Sometimes this is a matter of customers having already purchased sufficient stock for the future, and other times it is due to the seller’s hesitation and preference for risk mitigation. As a buyer, if you’re not in a position to change your supplier, perhaps because of a preference for quality or restrictions due to location, you need to understand how prices are changing upstream. In our current market, buyers need to understand the moment that prices stop increasing.
This is where Glowlit comes in. Users of our free product can use a single quote to compare their current market price to those around them. Our Glowlit Pro users have access to an arbitrage map showing current prices for their product in every location for which we have data.
In a world where information is power, this information is the key to ensuring that when our current rising prices do plateau or begin to trend downward, you are not the one left holding the bag.