*Note: For confidentiality reasons I have removed the name of the business being analyzed because the business opportunity is of particular financial interest to me.
Business Analysis
Name of Enterprise
ANONYMUS
Location
CENTRAL AMERICA
Your Purchase
6x6 and 8x8 CANTS (large wooden beams) of Andiroba wood (carapa guianensis).
Purchase Price
With heart: $444.95/M3, without heart: $614.46/M3. This is an average price per CANT, there is discrepancy between the sell size of the CANTS and the actual size, as well the conversion from inches (seller measurements) to cubic meters (our measurements). Note: With heart means that the CANTS contain heartwood or the dead core of the tree. Without heart means that the CANTS consist only of Sapwood, or wood that is still alive.
Reason for Purchase
A friend of mine from Australia, who is the general manager for a solar lumber/hardwood flooring company, and I are looking to pursue new opportunities outside our current workspaces in order to capitalize on the cheapness of construction products around the world. We have found an opportunity brokering Lumber that would create an exceptional investment opportunity for outsiders as well as profitable business model for us as owners/partners. This purchase will be our first 20 foot container of product that we hope to resell after purchase.
Result of Purchase
As this is our first interaction with this supplier, we are not fully aware of the result. Based on the samples we have received and our customers' opinion of those samples, we are confident that the transaction will close smoothly and provide us with abundant additional opportunity. We are very happy with the seller's willingness to speak openly and honestly about their facilities and goals. Because of the price we are receiving (discounted from above average due to quantity of order), we believe that the purchase will result in a 20-50% return on the product.
Direct Competition
Because of the nature and species of this wood competition is limited. However, one direct competitor would be Gmelina Logs, based out of Ecuador. The nature/origin of the wood is differnt because Gmelina harvests standing trees and we target fallen lumber because we are trying to operate as environmentally consciously as possible.
Indirect Competition
Balsoma Cabreuva, based out of Ecuador and Sitco Lumber, based out of Bolivia. In reality, Sitco operates more like a broker than a direct supplier of Andiroba; however, if we were looking to purchase this product from someone other than the actual harvester of the product, we could turn to a company like Sitco.
Objective Competitive Advantages
Because of the nature of the lumber the number one competitive advantage is price. Our purchase price, after quantity discounts, will allow us to undercut the sales price of Andiroba to flooring manufactures in China and Malaysia such as Elegant Flooring by as much as 20%.
Subjective Competitive Advantages
The company has more subjective advantages than objective advantages. For me, as the customer, they have a major advantage because of their headquarters location in Tempe, AZ. Although this inconvenient for many, it is excellent for me given my location in Tucson, AZ. Another advantage is their management team's members and goals. They believe in sustainability, harvesting of storm/fallen lumber, and reseeding which are all goals of my team as well. Given the compatibility of our business models and the similarities in our goals, I view ANONYMUS as superior to other alternatives.
Reason for Enterprise Selection
As outlined above, the biggest attractions of this company to me are their location and their goals, specifically in the long run. Their team is looking to find customers, like me, interested in expanding their enterprise beyond its current operations. The management team has a number of opportunities in Nicaragua, both in the lumber industry and in other industries, they would like to expand into. Unlike most suppliers, they are willing to share these opportunities with trusted customers. This presents major opportunities for me, as the customer, beyond the initial purchase which is why I choose them.
Potential Additional Transactions
Currently, we estimate a shipping demand of 1-2 containers a month. However, my team has a goal of reaching 20 containers a month; thus, the potential for additional transactions is very high. If the product we receive in the first order is equal to the quality of the samples we have been provided, than we will pursue additional purchases immediately.
Recommended Changes
The company could benefit from a website with online purchase and trading capabilities. However, I believe it is their goal to remain small and limit public visibility. I am very confident that such a website would expand their sales but more than likely contradict their personal goals for their operation. As long as they maintain the promptness and quality of responses, I do not mind continuing to make purchase negotiations via email and telephone.
