Amazon Canada Greensand SalesHello Fellow Verde Shareholders,
I recently ordered and received two twenty kg bags of Verde Greensand (regular and ionized) which cost about $200 Canadian, bought through Amazon Canada. This sale will be recorded at its gross value in the Verde financial statements, representing a selling price of about $5,000 per tonne.
Those of you familiar with the Amazon business model will know that there are 5 types of fee levied by Amazon against the business wishing to use its services to make and fulfill sales. Most telling for Verde beyond the expected selling commision are the storage fees which are calculted on the size and weight of the product required to be stored in the Amazon warhehouses (distribution centres). Based on my estimates, the total of these fees would run between $75 and $95 per $100 bag of Greensand sold. If after 6 months there are still bags of unsold product, these additional fees could well take the total costs charged by Amazon above the gross selling price of the product.
The conclusion from this is that while Amazon might be a novel marketing or promotional stunt for Verde, it is not a profitable way to sell its product in Canada. You might price the product at $5,000 per ton, but end up incurring selling and distribution costs of over $5,000 per tonne, actually making a net loss in the process.
Clearly better to focus on domestic sales to local farmers where the $100 per tonne realized selling price offers an 80% gross margin.
Cheers,
S.