- George Matyjewicz
- George Matyjewicz of
- GAP Enterprises, a
management and marketing "solutioning" firm, can be e-mailed at
georgem(at)(at)gapent.com. He is the moderator of "E-Tailers Digest," an Internet
retail discussion forum located at www.gapent.com/etailer/.
Sourcing Product On the Web
transactions are the wave of the future.
According to industry experts, including many
venture capitalists, business-to-business transactions on the Web will be
the hottest Internet trend over the next couple of years. According to
Forrester Research, business-to-business sales have already surpassed
business-to-consumer sales, with annual business-to-business sales
projected to soar to $1 trillion by 2003. Another survey, conducted by
eMarketer, speculated that business-to-business sales would likely account
for 88 percent of all Internet dollar transactions over the next three
Let’s compare those numbers with the statistics for
Internet retail sales of gifts and collectibles. In 1998, Web sales were
$621 million, or 1.2 percent of total retail sales of gifts and
collectibles. Sales for 1999 were around $1 billion (or 2 percent of the
total market), and the projections for the future are $1.6 billion (3
percent) in 2000 and $7.2 billion (11 percent) in 2003.
A market research study conducted by USGift.com, a
business-to-business site currently in development, found that 50 percent
of “mom and pop” gift retailers are online. Roughly 70 percent of
those who were online said that they use the Internet to research new
products, and 82 percent said that they would purchase online if they had
Hallmark is now requesting that all of its retailers order
directly online. In time, Hallmark will do what many businesses in other
industries have done: It will begin to distribute its products exclusively
through the Net. Once that happens, if you aren’t online, you won’t be
able to do business with Hallmark.
How Does It Work?
How do you conduct business-to-business transactions
online? If you are large (or daring) enough, you can purchase directly
from the manufacturer, even if it is in a foreign land. If you are
smaller, or more cautious, you’ll need to find sites with a
“showroom” that allows you to purchase from different manufacturers.
In some cases, these showrooms are “trading hubs,” in other words,
they bring together manufacturers, wholesalers, and retailers in a secure
environment in order to transact business. Exclaim Technologies is one
relatively new company that does this.
You may find wholesalers that offer products online. One
new wholesaler is USgift.com. It aggregates purchases from retailers and
places larger orders with manufacturers, just as an offline wholesaler
would do. The only difference is that everything is done electronically.
The company has a database of 400,000 gift and home and garden retailers,
and it represents manufacturers with more than $500 million in sales. Its
site is the testing stage right now, and will be live in March. [USgift.com
and Exclaim will be included in an article about business-to-business gift
Web sites in the March issue of Gifts & Dec — Editor.]
Other sites worth checking out include Alibaba.com, a
“business-to-business shopping mall” that has posted trades from 180
countries; the China Area Network, a trading site based in Shanghai,
China, which posts trading opportunities in China; Tradepost-Chat, which
lists opportunities in Korea; and the International Export Directory,
which you can use to find vendors and products.
Going Direct: A Case Study
Thanks to the Web, you can purchase merchandise directly
from overseas sources, which is easier than you might think, as long as
you know what you are doing. Peter Greenberg, a travel editor at NBC,
imported items for his custom-built home from overseas sources. When he
called the U.S. Customs Service to see how difficult it would be to
receive the items without the help of a customs broker or an import/export
agent, he was told: “It’s easy. Anybody can do it; they just don’t
know they can.”
A manufacturer of handcrafted Christmas items, mainly
Santa collectibles, working from a base in Virginia, couldn’t produce enough
to keep up with the demand. This left her unable to introduce new
products. So she started looking for other sources. She discussed her
predicament with Silk Road Gifts Inc. CEO Andy Sventy, who accumulated 30
years of experience in Sino-U.S. trading while holding posts such as vice
president of Avon for the Far East. “Silk Road Gifts is the dot-com
spin-off of Peaktop International Holdings Ltd., an established and
reputable manufacturer of giftware and collectibles in China with more
than 7,000 employees,” said Sventy. “I’ve done business with Peaktop
for 20 years, when I was at Avon and in a consulting environment.”
Andy suggested that the manufacturer send him sketches of new
products, rather than models. She did, a price was formulated, and a
sample was produced. The quality of the sample matched that of June’s
handcrafted pieces, so she went ahead and ordered. In the end, she was
able to significantly increase her product line, and at a reduced cost.
Purchasing directly from the factory provides a retailer
with timely, accurate, and cost-saving results. “What makes Silk Road Gifts unique is our online
business-to-business site and our on-ground sales force, which can also
discuss a retailer’s particular needs and customization requirements,”
said Sventy. “This means that you can obtain quality merchandise
Buying direct usually involves large quantities, and you
may need a letter of credit from your bank to do it. Factories usually
have a minimum order amount, which may be as low as $1,000. There are bank
costs involved with letters of credit (much like interest on a loan). Then
there is the cost of contracting with a consolidator or shipping company.
Nonetheless, the sum of these costs is still far less than the total costs
of going through an import/export agent or a wholesaler.
There are many resources available online to help you with
business-to-business transactions or importing from overseas sources. One
of the best resources is the Association for International Business, a
nonprofit organization with 10,000 members in 175 countries. It has an
online discussion list that helps list members find resources (they were
very helpful when I was writing this article).
So, if you aren’t currently involved in online
business-to-business, you may want to put that on this year’s “to
- Alibaba.com — www.alibaba.com
- Association for International Business —
- China Area Network — www.can.com.cn
- Exclaim Technologies
- International Export Directory —
- Silk Road Gifts — www.silkroadgifts.com
- Tradepost-Chat — www.tradepost-chat.com/partner/partner.htm
- USgift.com — www.usgift.com ?