Direct imports
Encyclopedia
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.
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):
With the advent of online direct imports that leverage the Internet, the supply chain is reduced to three entities:
As always, the removal of intermediaries in a supply chain i.e. "cutting out the middleman" results in high market transparency and efficient pricing.
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
Economy of India
The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity . The country is a part of the G-20 major economies and the BRICS, in addition to being partners of the ASEAN. India has a per capita GDP of $3,608 as per 2010 figures, making it...
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
Long tail
Long tail may refer to:*The Long Tail, a consumer demographic in business*Power law's long tail, a statistics term describing certain kinds of distribution*Long-tail boat, a type of watercraft native to Southeast Asia...
). 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
Predatory pricing
In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices...
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 ChainSupply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
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
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
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
Internet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
technology is a powerful force for disintermediation
Disintermediation
In economics, disintermediation is the removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate , companies may now deal with every customer directly, for example via the Internet...
in commerce. To illustrate, a typical B2C supply chain involving imports is composed of five entities (in order):
- Foreign Supplier/Manufacturer
- In-country Importer
- In-country Distributor
- In-country Retailer (online or offline)
- In-country Buyer
With the advent of online direct imports that leverage the Internet, the supply chain is reduced to three entities:
- Foreign Supplier/Manufacturer
- Online Direct Import Facilitator
- 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
- Ecommerce
- DisintermediationDisintermediationIn economics, disintermediation is the removal of intermediaries in a supply chain: "cutting out the middleman". Instead of going through traditional distribution channels, which had some type of intermediate , companies may now deal with every customer directly, for example via the Internet...
- Online Direct imports to India
- ImportImportThe term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
- IncotermIncotermThe Incoterms rules or International Commercial terms are a series of pre-defined commercial terms published by the International Chamber of Commerce widely used in international commercial transactions...