Tag: commodities

BLK is the first dedicated commodity & raw materials marketplace. In today’s world, raw materials are still traded the old fashioned way: huge trading floors, calls, emails.

But people want to buy from people. And digitalisation is coming. So we brought commodity trading online for everyone to buy directly from producers.

What you need to know

• The world’s raw materials consumption is over 9B tons per year. That’s over $4.5 trillion;
• Commodities are produced mostly by small businesses, and their price inflates x 10 by the time you or I can purchase them, without much value being added;
• The shipping costs for commodities amounts to a negligible fraction of their value: between 1 and 2 cents per ton per day;
• 99%+ of businesses in the UK and Europe are small businesses;
• 75%  of UK businesses are one-men companies;
• By buying from producers directly you can save on average 2.5 times what you’re currently paying.

The world’s economy is heavily reliant on raw materials.

Every year, the world consumes over 9 billion tons of raw materials, over $4.5 trillion-worth of trade. 

The energy we consume, the goods we use, the food we eat. It is the fruit of the collective labour of millions all over the world. Farmers, miners, growers. Small businesses, invisible players scattered across the globe, feeding supply chains with ores, grain, coal, fuel, rice, animal feeds.

Through many stakeholders in the supply chains, raw materials pass from hand to hand, their price inflating at every stage, as everyone takes their own cut. 

Before you or I can purchase them, raw materials’ price has increased by a tenfold. And yet they’re still the same. No value has been added – apart from transportation, which really accounts for a tiny fraction of commodities’ value.

Just to give you an idea, the cost of shipping crude oil is 2 cents of a dollar per ton per day. Shipping dry commodities costs just over 1 cent per ton per day.

Over 99% of businesses in the UK are small and medium-sized. That’s the very backbone of our economy. Looking at the rest of Europe, the situation doesn’t change. Italy, France, Spain, Poland, Germany; over 26 million companies. Indeed, in the UK alone, 75% of the businesses are one-man companies. People like us.

People buy from people. People buy from people they trust. That’s precisely why BLK exists. To let people buy from people, cheaper, global, direct.

Current Supply Chains Status

Wherever they are in the world, producers of raw materials are contracted to sell their produce to third-party, generally trading houses, which mass the output of thousands of individual producers to then ship it over via exporters/importers to major hubs where the goods are then broken down into smaller parcels and delivered by road or rail to larger manufacturers or distributors. These, in turn, repackage the goods and made them available for wholesale.

At this point, the same kg of cashew nuts that the farmer in West Africa sold for under 50 cents, costs you £20. That’s 5500% increase. And yet, these are the same cashews that left the farm in Africa 3 weeks before.

The Internet as the Great Equaliser

Let’s look back at what happened in 1994. An American entrepreneur starts selling books out of his garage. Yet he doesn’t have a single book in store. People go online and buy the books, the orders are passed on to the libraries and shortly after the readers receive their purchase home. It was the advent of non-inventory marketplaces.

Fast forward to 2021. Over 2B people buy online. That’s over 80% of the people with an internet connection. In fact, it would be unthinkable today not being able to buy something online. Shopping from the comfort of our own homes has become the norm for most of us and the same way we buy a new laptop while sipping a coffee over the kitchen counter, scrolling on our phone, soon we will be buying online for our businesses.

COVID-19 has forced even the elderly to become more tech-savvy than they ever were or would have been and with millennials entering senior management positions into the job market, we’re seeing this trend increasing on a daily basis.

With the internet, the small organic cosmetics manufacturer out of Manchester can buy Shea Butter directly from the farmer in Togo. The former saves thousands of pounds in procurement costs – paying only $2000/ton instead of $9000 – the latter makes a much higher profit by selling to the final user directly.

Thanks to the internet, to digitalization, we can now reach across distances and language barriers, doing what was never possible before. 

The Social Impact

Up until today, it was mostly about the many supporting the few. But with the internet we’re seeing a real shift. 

If all businesses were to buy directly from the producers using a marketplace we would see a total re-distribution of the world’s wealth, away from the few and back to the many, away from the larger corporations and directly into the pockets of those who work the land and work their craft day in and day out. 

It would contribute to create millions of new jobs, reduce poverty and vastly improve the living conditions for entire nations, reducing unemployment and supporting local communities.

The Environmental Impact

Quantifying the environmental may be difficult but we can try to run a quick calculation.

The UK imports over £200B per year of raw materials. A lot of these could be sourced locally, without the need for long sea journeys from across the globe. If just 1% of UK  businesses were to source raw materials locally, this would contribute to a reduction of 2 million tons of CO2 from the atmosphere, whilst creating 14,000 jobs and adding £2.6B to the British economy.

A Real-life Story

BLK’s first order was made by a family-owned business that produces natural cosmetics with organic ingredients. Since then, they have been purchasing key ingredients for their cosmetics 2.5 times cheaper on average, delivered to their door directly.

To Summarize

• The world consumes over 9B tons of raw materials per year. That’s over $4.5 trillion-worth of trade;
• Most commodities are produced by small businesses, and their price inflates x 10 by the time you or I can purchase them, without much value being added;
• The shipping costs for commodities amounts to a negligible fraction of their value: between 1 and 2 cents per ton per day;
• You could save between 40 to 60% on average by buying online through BLK;
• You could be selling directly to thousands of new customers, with higher profit margins, supporting local communities and reducing their overall carbon footprint.

Key Reasons to Buy/Sell on BLK

• Automated purchase order generation, invoicing and integrated accounting – saving you over 1000 man-hours per year;
• Find, benchmark and buy securely from a pool of vetted suppliers, saving between 40 to 60% on average on your procurement costs;
• 100% money-back guarantee;
• Secure: pre-vetted suppliers only;
• Find new customers and sell directly, without intermediaries, with improved margins;
• Quality, Cost, Service Delivery. Pick suppliers on the basis of what really matters to you;
• Reduce your carbon footprint and earn with carbon trading;
• It’s 100% free.

Contact us to find out more!