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Is it more profitable to deal directly with the manufacturers for wholesale supplies?

Choosing the right wholesale product sourcing decides the fate of a retail business.  It is important to examine different procurement modes and then deciding the best one from them. Buying channels can be classified into different classes, like directly from the manufacturers, from distributors or from wholesale suppliers.  Each mode has its particular pros and cons but it depends upon your specific needs as to which method is more preferable and profitable for your business. The task of choosing the right source can get easier if you have a complete list of your needs and requirements. End customers need constant supply of quality products and that too at the right prices. Deciding the right supplier is necessary for all business involved in this supply chain.

There can be huge difference in prices of the products of same quality and the difference lies in the fact that businesses are getting their products from different sources. The one selling at low price obviously has got the products at low prices, while the one selling at higher price must be buying at high prices from suppliers.  Not all procurement methods are suitable for a wholesale business, and there’s no single type of supplier that we can recommend as the best available option. The buyer determines the specific mode depending upon the size of wholesale business and available procurement channels. However, getting the products directly from the manufacturers can be the most low cost option.

Getting wholesale products directly from small sized manufacturers or producers is often a profitable deal because they will sell at amazingly low prices. Their operating costs are less and because there is no middle man involved, which means they can sell at relatively lower prices. Manufacturers will prefer to sell directly to customers because they don t have to pay commission to some distributor or wholesaler to do the selling for them.

When you are buying from a middleman or broker, they will surely charge for providing its logistics services and it will make the wholesale products more expensive. The more the people involved in this process, the more higher the price will get. Also when you are dealing with the manufacturers, you can ask for specific changes or customization in the products which can be a great competitive advantage.  An important aspect to this is can you check the quality of the items you’re purchasing overseas before you buy a huge amount to sell.

One of the biggest factors is ordering from China or Taiwan and having to order a 100 ft container of goods.  Most small businesses don’t need that kind of volume and once they receive it, where are they going to put it.  Ordering from a place like Fairway Manufacturing Company is a much better solution.  Fairway gets hundreds of people to order a product, have it shipped overseas and then distribute to shops and stores in smaller amounts that can be handled with no need for a warehouse to store your goods. Then there is the paperwork of shipping overseas.  There are rules and regulations, tariff and taxes, import licenses, getting products tested for lead or other poisons (it’s a law now)  that may be in the paint used on some goods.  This is a huge cost above and beyond what shops can handle, just to order a dozen yo-yos.  If you choose to order from a place like Alibaba, then you’re going to have to handle all this yourself.

Importance of understanding trade policies while entering international market

Internet has turned the whole world into a global village and capturing the global market has become important for every business nowadays. Wholesalers and traders who want to earn more profit and save more money also enter the international market. There are a lot of wholesalers and traders who when enter in the international market fail. They fail because they do not work on the policies and agreements laid by that country. Therefore, before entering into the international market it is really important to understand the trade policies.

The following is some information for you to think about:
The very first benefit is that they trade only those products which are allowed to be traded by the government. At times, the wholesalers make a mistake of buying or selling products to a country where the import and export of such product is restricted. In such situation their shipment gets blocked and they lose the amount they spent on those products. Understanding the policies of different countries educates a person whether he should trade a specific product in a specific market or not.  Buying in this space in many cases places you solidly into the “importer” category. Trade regulations will apply in ways that they effectively don’t for the individual consumer, meaning significant risk to you and your business if you don’t understand the laws surrounding import of the kinds of goods you’re pursuing. Some countries do not have healthy terms with other countries or they have certain barriers for a specific market or country. Whereas, those who don’t, concentrate on this issue sometimes face severe problems in surviving. For instance, if someone wants to trade products in European countries he must have complete know how about the EU terms. He must know what rules and regulations are prevailing there and how the trade can go in his benefit.  European Union has laid down certain barriers for countries other than EU. They have a single currency and allow free trade only within Europe. Therefore, it is really important for wholesale traders and also for the manufacturers of other countries to know the terms and policies before to start trading with them.

Just like EU there exist NAFTA, WTO and other agreements. These are in every country and there is no getting around these regulations.  Wholesalers willing to enter the international market need to have a grip on all these policies and agreements laid by different member countries. Understanding the trade policies help wholesale traders to analyse the international market accurately, calculate which market will be favourable and which will be unfavourable and understand the trends and the prevailing demand of specific wholesale products in a country.  Fairway Manufacturing Company is a business that has that understanding.  It also provides knowledge about the quality standards laid by other countries. In short, understanding trade policies is a complete guide for wholesalers who wish to become successful in the international market.

Amongst would-be and small  sellers, Alibaba and similar “manufacturer direct” marketplaces around the web often seem like the mythical golden goose. Here are thousands and thousands of manufacturers on the Pacific Rim and elsewhere, selling direct to Internet shoppers at below-wholesale prices.  Business to business is not the same as shopping eBay, even online. While sites like Alibaba look a lot like eBay, transactions on them don’t always work like they do on eBay.  In many cases it’s not just a matter of clicking “Buy,” paying by PayPal, and finding a box of a thousand manufacturer-direct widgets on your doorstep next Thursday— though it’s possible for things to work this way at times.

Fairway Manufacturing has a complete understanding and  knowledge of regulations and costs. You can do some basic research on importing the kinds of goods you’re looking to sell. Google and local government offices are your friends here. However, Fairway has been in business for over 64 years and knows exactly what to do, who to buy from and how to get the best value for your money.  Your business model does not include you knowing law and tariff regulations.  You want to get products at the best possible price.   Minimum orders can be very large. Because these are often manufacturers doing production runs for orders, you may find that it’s difficult to start with a “small” order of just a few hundred items; some listings may make clear that small or even single quantities are available, but others ask you to buy in quantities of 1,000, 10,000, or more— quantities that really aren’t compatible with the smaller business model.  Form an idea of what’s at stake if you choose to decide to order your goods directly, and know what laws you must comply with, and any regulatory or other similar costs involved before you begin.  Fairway takes these risks out of your way, so all you have to do is order great merchandise for your store.

Things being taken for granted in the consumer space are often not a part of the deal in the overseas ordering space.  For example: A cosmetics order may include just the substances themselves, without cases, brushes, mirrors, branding, much less retail shelf packaging or any of the other things that typically go into a retail product. Turning the raw materials into units that individual  consumers want and expect to buy may require much additional work and/or additional partners in a well-thought-out supply and logistics chain.  It’s like ordering from Ikea, you get all the pieces and have to assemble it yourself.  Once assembled, you can then sell it as a table or desk.  Fairway Manufacturing guarantees you will have out of the box, pre-assembled products, that are read to be displayed on your shelves.  They have the staff to manufacture all the elements into one product.  This still keeps the prices low for you.  They are able to purchase large amounts of products and manufacture them on the fly.  There is no need to wonder if you’re going to get a play set that you have to assemble yourself, including ordering the bags they go into, the cards the items are attached to and the header cards with the name of the product having to be printed by you.  They have been working with companies overseas since the 1950’s and know how to correctly order products.

Payment methods and terms of sale are another matter to take into consideration and will differ by every retailer. Rather than paying with your credit card, you may be looking at arranging for payment using international letters of credit on terms that split payments amongst phases (initial order, post-run, upon delivery, and so on). Don’t assume that you can easily return any defective items in the batch; a small percentage of defective units or a small level of quality variation may be a part of the deal— when sourcing in the business to business space, you may find that it is effectively your customer service job to “eat” the bad apples as you sell your stock.  When ordering from Fairway, you always know you can return defective products.  They in turn contact their suppliers for a credit.  You don’t have to deal with the factories directly and this is a huge cost saver.  Being able to return broken items right away enables you to get a refund quickly and easily, unlike having to wait months to receive one from an overseas supplier directly.

Communication is required; language is an issue.  Fairway has been dealing with overseas sellers since the 50’s and completely understand the language and terminology used by the companies overseas.  Because there are uncertainties and details to be negotiated in many cases, you may find that you need to communicate clearly and effectively in order to arrive at a deal that works for both parties. At the same time, many listings on websites like these are made by companies or representatives with minimal or idiosyncratic English skills. For large orders in particular, this means that you are unwise to risk time and dollars on a complex negotiation worked out in confusion and across a language barrier.If you don’t understand a listing or the technical terms used in it, you probably don’t understand either what is being sold or the terms under which it’s being sold.  Don’t go by pictures, or by the half of the terminology that you do understand.  You could make a huge mistake and it could cost you thousand of dollars.

Keep these points in mind if you decide to order direct from overseas:

  • Have some idea of what you want, how much you’re willing to buy at once
  • Know when you’re out of your league.
  • Know your own limits
  • Consider a trade agent
  • Learn the laws and custom requirements
  • Or use a company who’s been trading overseas for over 64 years, like Fairway Manufacturing Company.

Sourcing in the international business-to-business space can be a great opportunity and can yield long-term win-win relationships for all involved— but it’s important to realize that if you plan to rely on this kind of sourcing for your business, there may be much more than “point, click, buy, re-sell” involved.  The user agreements of many online marketplaces for import/export clearly suggest that you use their listings at your own risk. This is no accident; even when everyone is on the up-and-up, international trade in volume can be fraught. And not everyone is on the up-and-up. Check references and make extensive contact; don’t just take the supplier’s word for things, or rely on the ratings shown on the website.

Be smart and you can find great partnerships and deals; fail to think like a serious professional and you could end up in deeper water than you imagined, even if there’s no “catch” involved.

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