Direct imports

Direct Imports are products imported directly into a country and not through the manufacturer's authorized agent/distributor. Since there is no factory-authorized middleman involved in the import of these products, the added costs are lower and the customer pays less. In addition, many items that are in short supply or are not imported at all by the manufacturer's authorized distributors can be procured as direct imports. There is no difference in the actual products. In most cases, they are manufactured in the same place by the same people and with the same materials. Occasionally, manufacturers will give them a different name.

It is perfectly legal to directly import and sell such products. The only caveat is that since they are not procured from a local factory-authorized middleman, the manufacturer's warranty may not be applicable. This type of business is fairly recent and follows the trends of the global economy.

In rapidly growing developing economies like India where the demand for international consumer products is growing much faster than in-country supply from authorized distributors, direct imports become the only way for consumers to procure a large set of products (especially long tail). In many cases, even if a particular product is available from an authorized middle-man, a direct import may cost much less since in-country middlemen use their exclusive territorial rights to price products much higher than in the country of origin. Perversely, in countries where such product and price arbitrage is the most obvious, the import process is typically very onerous and not easily navigated by the average consumer leaving the field open to predatory pricing from in-country middlemen.

Disintermediation by Technology

To help bridge this gap, a new breed of E-commerce companies acting as direct import facilitators have developed sophisticated E-commerce and Supply Chain technology to create a cross-border supply chain that allows consumers to shop online for international products and have them delivered duty paid to their doorstep. The entire procurement, international shipping and import process is handled turnkey by the e-commerce providers and the consumer transaction is a simple online purchase.

This is a significant example of how Internet technology is a powerful force for disintermediation in commerce. To illustrate, a typical B2C supply chain involving imports is composed of five entities (in order):

  1. Foreign Supplier/Manufacturer
  2. In-country Importer
  3. In-country Distributor
  4. In-country Retailer (online or offline)
  5. In-country Buyer

With the advent of online direct imports that leverage the Internet, the supply chain is reduced to three entities:

  1. Foreign Supplier/Manufacturer
  2. Online Direct Import Facilitator
  3. In-country Buyer

As always, the removal of intermediaries in a supply chain i.e. "cutting out the middleman" results in high market transparency and efficient pricing.

See also

References

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