Buying Directly From AsiaBy Greg Harris and Gil Orozco
Jameco has received a handful of comments from customers recently suggesting that we are overcharging for the products we sell. "I can get the same thing directly from Asia for a fraction of the price. I just paid $1.50 for the same product and the shipping was only $3.00." After going back and forth we learned that it wasn't exactly the same product and we pointed out that Jameco's shipping prices start at just $4.00, but nevertheless the point was a good one.
There are more and more companies selling directly from Asia. Sites like eBay increasingly have given companies around the world access to an e-commerce storefront capable of accepting orders from anywhere in the world. Pay Pal has given any merchant the ability to easily accept payment and even the US Postal Service is helping out by providing some very low cost delivery options from Asia into the United States.
We decided we should learn more. So we approached the customers who wrote us and even made a few purchases ourselves to see what we could learn.
Yes, it's possible to buy some very low cost products directly from Asia. We bought a phone case that was of a reasonable quality and the total price including shipping was less than $5. It took a couple of weeks to arrive, but overall it was a good purchase.
We concluded that this is not a risk-free channel though. We spoke to one customer who purchased a laptop battery which was advertised for a specific laptop model. Yet when it arrived it was clear that it didn't come close to fitting the computer it was advertised to work with. The customer service between the US and Asia was difficult. All support was via email and the response time was delayed. The communication was difficult and it took three emails over three days to communicate that they wanted an RMA (returned material authorization). An RMA was finally provided, but the seller refused the buyer's request to pay for return shipping. While they acknowledged that it was their mistake, they said they didn't have the ability to issue pre-paid return postage.
We met with a small startup company to discuss taking them on as a supplier. They had developed a complex product with lots of electronic components. When they showed us the prototype, they indicated that a few parts were purchased online directly from Asia. Our potential supplier went on to tell us about all the problems they were experiencing with these parts. From failure rates to return issues and expensive return shipping costs, the experience proved to be more costly than first appeared. Ultimately, the supplier readily replaced some of those components with Jameco components as a safer choice.
There are a few points to consider when deciding whether to purchase from Asia:
1. Freight. Freight costs from Asian suppliers vary widely, and large heavy packages often cost much more than standard UPS from within the US. Make sure you understand your responsibility for import taxes and fees. Packaging quality is often compromised resulting in "dead on arrival" components.
2. Lead Times. If you are buying finished goods inventory, the shipper may be using a consolidated shipping strategy which typically can add two or more weeks to the transit time. For build-to-order products or volume purchases, the manufacturing lead time could be 7-10 days or longer.
3. Minimum Order Quantities. It is not unusual for Asian electronic component sellers to delay shipping by establishing minimum order quantities.
4. Negotiated Price. For consumer transactions there is little price negotiation but for business transactions the e-commerce platform and language challenges can make price negotiation complicated.
5. Volume Price Breaks. Most US component suppliers will discount product based on the volume purchased, but eBay as a platform doesn't do a good job of supporting this, which means that the larger the purchase the harder it might be to get a good price.
6. Support. A dedicated sales rep, customer service and support are all areas that may be sacrificed.
7. Warranty. Take extra care to understand the warranty and return process. Sometimes we make assumptions that are different when sourcing directly from Asia. Most US based distributors have quality inspection programs that may not be present overseas.
8. Documentation. Some businesses need documentation for the components that they purchase and this may be difficult to acquire.
If the lowest possible cost on a small order is what you are looking for, you might have some fun experimenting with purchasing directly from Asia, but be aware that customer service and quality standards differ around the world. It reminds us of the old adage that you get what you pay for.
Jameco will continue to benchmark its pricing against all major competitors, but a few things you won't have to worry about are service, support and quality. Whether you are calling our Technical team, our Customer Service team or even writing our Management team, Jameco strives to respond within four business hours to all customers. Jameco, like other quality firms, has a "customer first" approach to our business that takes the risk out of buying electronic components.
Have a good story good or bad about buying from Asia? Let us know. Write us at [email protected]
Greg Harris is VP of Marketing and Sales at Jameco. Gil Orozco is Jameco's VP of Purchasing, Product Marketing and Tech Support.