World is expanding like the theory of big bang. Every next existing or new organization is trying hard to be a part of world expanding business. Organizations are promoting their products by their cranky ideas of advertisement, to attract the customers. Spending heavily on promotion, advertisement, new schemes, and sales technique to sell their product.
Eventually they are spending very high budget on promotion techniques, they always look for other resorts to offset or subdued the prices. Few of resorts are:
- Increase in prices
- Elimination of mediators like wholesalers, distributors, agents etc.
- Staff cuts and layoffs
- Bonus and incentive cuts
If we go in details of understanding the psychology of human being, high prices, staff cuts, and bonus and incentive cuts will adversely affect the brand image and sales of the products, due to involvement of psychological and esteem factors of society.
High prices eventually shift the consumers to adopt other brands, due to presence of cutthroat competition. Henceforth, ultimate goal of an organization does not solve by increasing prices, which ultimately whop off the growth of organization. In same way layoffs, job cuts, bonus and incentive cuts are striking idea to hit self-motivation of their employees. It will shatter the image of organization due to frequent layoffs and employee's turnover.
Hence, not all these resorts are a clever idea to seek for offsetting the prices.
Last and ultimate resorts left with organization are elimination of mediators. Wherever possible put skills, knowledge, efforts, foresightedness, trends study, research and development dept, and traveling is the solution of elimination. Reason is to grab the suppliers, buyers, to reach the ultimate consumers are some of the major reasons to rely on mediators.
Let us take an example of buying agents, buying agents coordinate and liaison between buyer and supplier and eventually receive the proceeds of their liaisonning. Many times there interest rate goes high from 7 to 10%. Not only have they charged from suppliers for their services. They also charge from Buyers for their liaisonning a times. Buyers generally face below problems:
- Language barriers
- Lack of awareness of suppliers and their credibility
- Types of products are offered in the target market fabrics, accessories, stitching, designs etc.
- Proximity of suppliers
- Easy going system with the support of agents.
Henceforth suppliers end up paying high rates for services. Same problems which supplier face are Awareness of buyers, their requirements, quality standards, finally their credibility.
Suppliers and buyers are required to put little extra efforts to eliminate them. Nevertheless complete elimination of mediators is not possible, always depends on he geographical, political, economical condition of country. Countries like, Bangladesh, Pakistan, Vietnam, Mongolia, Nepal, Sri Lanka, some African and South American countries, they really need mediators, their economy still under developing stage, and political and economical upheavals are still concerning areas. Their language and technological advancements barriers are slowing the stage of their growth.
However, Countries like China, Hong Kong, India, Thailand, Egypt, Dubai, Indonesia, Taiwan etc, where barriers have almost eliminated. Political and economical stabilities, high literacy rates, updated education system have made these places highly competitive and more attractive for investment. Nevertheless, it all depends on the internal conditions and level of organization to deal directly with buyers. Let us take an example, if an export house operating from China/India is looking forward for dealing with international buyers directly.
What all Exporters need to have to approach them?
- Frequent traveling to buyer's country for presentation & sample display
- Attending international tradeshows and exhibitions like, HK buyer seller meet, Magic USA, Paris Prt porter etc.
- An upgraded office and showroom facility for meetings
- An excellent bilingual staff with up-to-date command over international language skills, English/French/Italian/Spanish etc.
- Payment terms-collection or letter of credit.
- E-commerce, Websites,
- A dedicating quality tech. & assurance team along with compliance department.
- Checking buyers credibility from Embassies/consulate offices in supplier country
Now let us discuss what all international buyers required to
do from their side.
- Factory visits to check their facilities, compliances, quality issues, capacity, and kind of products
- Checking credibility with Supplier's country consulate.
- Complete knowledge of product and their technicalities
- Price issues, their objectives, sales projection, estimates.
- An excellent bilingual staff with up-to-date command over international language skills, English/ French/ Italian/ Spanish etc.
- E-commerce, Websites,
- Payment terms-Collections or Letter of credit
Ultimately, it is costly affair for both parties to arrange for staff/ travel/ websites/ checking credibility etc. Buyer and supplier both travel to each other's country for their only orders. It is viable only when quantity is in bulk from half to one million pieces (a rough estimate). As I mentioned earlier, complete elimination is not possible. However, an effortful try can be helpful for small supplier and buyers to earn some profit. It is rule of trade, that as the product will pass on as many hands, it will add a cost to it. Supplier and buyer have to decide, what package they are looking for.
A complete hassle free limited profit or a little hassle with tons of profit.
About the Author
The author is student of Post Graduate in International Business at George Brown College, Canada.
The author expresses his views on Fate of mediators (apparel buying agents)