Import/Export

How do we eliminate the middleman and buy directly from a supplier in Asia?

Anonymous

November 15th, 2016

The local middleman adds horrendous markup on the goods well over 150% on top of the price from the supplier. Does anyone know how to skip the middleman and be able to purchase directly? The total cost for the products will be too much for our market.  

David M

November 15th, 2016

If you do not have a contract with them, and you can go direct, go direct.  Contact the CEO of the supplier and tell them you want their product but you are unwilling to be taken advantage of it.  If he wont do business with you, and you really want the product but someone else can supply it tell the middle man he will have to come down significantly or you will have to take your business elsewhere.

Anonymous

November 15th, 2016

We are buying this from an existing range. The middleman is just their distributor, they are not making anything except exchange of emails on our behalf with the supplier. They aren't adding anything except a huge markup. No there aren't similar products available locally.

John Hall

November 15th, 2016

Follow David's advice.  If these goods are as critical to your business as it sounds, you need a relationship with the supplier.  Consider also finding or developing a backup supplier.

Jeff Lehmer Cofounder in charge of Software Development at Vivos Software

November 16th, 2016

It's rarely as easy as doing an end-run around the middleman.  Typically they do provide some value-added service.  For example, the may be working with the manufacturer in China as well as navigating all the import/export restrictions to bring the product here. If this is the situation and you think the "premium" you are paying for this service is excessive you should find another middleman and get these guys to compete.  I'm sure you could solicit advice here on FD on how to find a better middleman.

Laurence Hutchinson CEO at Freshwater Solutions

November 18th, 2016

Make sure your order is large enough so that the company ends up working for you, you can control pricing and profit at both ends of the stick and sell surplus products elsewhere. This without having to find capital investment in a company you now virtually own. As long as the product specifications and quality suit your needs and those of the industry using them its a no brainer.

David M

November 15th, 2016

Are there no manufacturers in your country who can do it?  And yes I realize that greatly decreases your profit margin.   More info is needed.  Is the middle man fabricating a product design?  Is product manufacturing already established or are you having to find one?

Eric Klein Tockable - Intelligent Fashion

November 16th, 2016

Go on Alibaba.com and search for your item. If your current supplier (not distributor) is listed then order directly.

If your item is generic, chances are there are other suppliers on Alibaba. Order sample quantities to verify quality and logistics and if everything is OK,  place progressively larger orders.

Brian Moloney Exec. Dir., Head of Business Development, Chemistry Services Unit (CSU); and LabNetwork, at WuXi AppTec

November 18th, 2016

You didn’t say what type of products you were trying to purchase...

In full disclosure, I work for such a “middleman” - LabNetwork (part of WuXi). We are an eCommerce site for the purchase of chemicals, from >1,000 (maybe >1,500) Asian (Chinese) Suppliers, but we have over 2,000 Suppliers, with many outside Asia too.

Our customers have described us as the “Amazon of Chemistry” - think about that. You go on Amazon, do a search, and find the product(s) you want. You may find the same or similar products from multiple Suppliers, in multiple locations, with different pricing and shipping conditions, and you pick the one that best suits your needs. Of course you have now identified the Supplier, and you can bypass Amazon and go direct if you wish, but you maybe choose to purchase through Amazon because of convenience. I would not use a middleman that is not this transparent.

Also think about aftercare…what if the product you purchase (directly) is not suitable for any reason? Poor quality, arrived too late, or arrived damaged, etc, how do you handle such a situation? Of course the vast majority of Suppliers will be OK to deal with directly, but sometimes it’s good to have a middleman fight on your behalf.

Also, Trivago, Expedia, Kayak, and many other , are all providing the same broad search, price comparison, and eCommerce service, in many cases at the same price as if you went direct, as they get a commission on every order from the originating airline/hotel etc. Like Amazon, these are also middleman websites that millions use every day.

LabNetwork is basically the same, but we offer access to Suppliers that you may not be able to use directly, due to a language barrier, logistical hurdles, etc. Also, due to the nature of our business, we can enable you to purchase, say, 10 compounds, from 10 different Suppliers with 1 order, 1 PO, 1 shipment (if we consolidate), and 1 invoice. Amazon and others also provide a similar multi-product “shopping cart” service.

I don’t want this to be a sales pitch; I’m just saying that sometimes the middle man provides a service that cannot be matched by going direct. And that service comes at a cost…it’s up to you if that cost is worth paying.

David Rowell CEO & Founder at LifeLinker Inc

November 18th, 2016

Eliminating the middle man is a deceptively attractive concept that is not always as prudent as it superficially seems.

A good middle man can be an invaluable interface between you and an unfamiliar marketplace in which you source your product.  A good middle man will know which suppliers can be trusted to reliably deliver quality product, a good middle man will be familiar with market pricing and other suppliers and so can negotiate a lower price than you would directly.  Maybe the middle man is buying product on behalf of other companies like yours too and so can get better quantity discounts than you would directly, and has more bargaining power to get better quality, faster deliveries, and so on.

A good middle man can assist you with export documentation, payments, and all the other paperwork and administrivia.

If you have true genuine expertise in sourcing product from China - ie if you have reliable and relevantly experienced Chinese nationals as part of your team, then maybe dealing directly makes sense.  But if you don't, proceed unaided with extreme caution - the marketplace is littered with the corpses of companies who thought they could successfully deal direct with Chinese suppliers.

If you are a major customer and will have negotiating clout in your own right, maybe dealing directly makes sense.  But in most other cases, it is false economy to see only the middleman's markup and not perceive the benefits they are providing.

Perhaps your focus should be on improving your relationship with your middleman or choosing a different middleman, rather than eliminating that person entirely.

Another point - it is often not clear exactly who the ultimate source/supplier is.  That is my concern about the suggestion to go use Alibaba.  For every true manufacturer on Alibaba, there are a dozen (or more) middlemen all pretending to be manufacturers.

Alibaba is okay for low volume low value transactions, but not quite so good if you're seeking to buy in significant commercial volume.

Brian Moloney Exec. Dir., Head of Business Development, Chemistry Services Unit (CSU); and LabNetwork, at WuXi AppTec

November 18th, 2016

I know I'm biased (see my comments), but David is spot on.