Razor thin gross margins requires massive efficiency

Photo by maselkoo99/iStock / Getty Images

In the world of interconnect voice, wholesalers still exist and, believe it or not, even the pure arbitrage folks are still out there, scratching and crawling to survive and sustain themselves. It’s no revelation that the wholesale voice world’s business model is not for the faint of heart. In fact, it’s depressingly disgusting. People want to talk about razor thin margins in retail? Try the gross margins associated with wholesale voice. Maybe only pork bellies, FCOJ, wheat, or corn have thinner gross margins (thank you Trading Places). We have a few pure play wholesale voice carriers that use our platform. To describe their gross margin percentages as razor thin is like trying to say that the wing on a mosquito is thick!

We have a company focusing on Pakistan termination generating 1.9% Buy/Sell Margin. Think about that. For every dollar of revenue, their gross profit, before they pay any of their bills, is less than 2 cents. In order to succeed, they have to do a ton of volume (which they do) and they have to operate efficiently and ‘inexpensively’. In the world of wholesale voice, that means you can’t have wasted overhead and you have to leverage automation and technology. That’s where we come in. We provide carriers with a tool set that allows them to grow and sustain a business with 2% gross margins. Normally, that’s not something you tout. But think about it. Think how great our tool set is that we enable a company to succeed where their business is operating under the pressure of a 2% gross margin ceiling. That is pretty amazing. That is what great technology and execution can do for a company. That’s what we do here at GCS!

Andrea RonaComment