At the Melbourne Gift Fair this week I have seen items for sale by a local wholesaler that I can purchase direct from the factory for a third of the price even after allowing for freight.
The items are exactly the same, from the same factory, with the same packaging.
While I understand that everyone needs to make money in business, a 300% markup by an importer / wholesaler is too high. By the time retailers apply their 100% markup, the items will retail two and a half times what I expect to sell them for in my business if I source them directly.
Overseas factories are offering lower mini mum order quantities for non-licenced items, making dealing direct easier for individual and small group businesses. This is a risk for local wholesalers that apply too high of a mark-up on what they import.
Thanks to online and direct reach-out from overseas factories small business retailers are more aware of direct purchasing opportunities. Some approaches are random while others are well researched, from factories where they are certain you would be interested in the products they make.
All of this is a risk for wholesalers that mark-up too high.
I understand the costs of importing: paying up front, funding freight, the risk of products that do not work, the stock turn rate and more. These factors need to be reflected in wholesale cost. However, good buying, smart marketing and a tech-engaged infrastructure can reduce these costs and thereby enable a wholesaler to see more competitively than is reflected in a 300% mark-up.
At the retail end, your buy price determines your sell price. If you are buying products at the high end as described here and a retailer near you has gone direct and landed the same products for less than what you paid at wholesale you will not be able to be competitive. The situation is more intense when the products are exactly the same, from the same factory.
The bottom line is – buy carefully. If you are in a group, leverage their buying. The better you buy the better you can pitch your business.
If only the government would stop protecting the vested interests and get rid of the remaining parallel import restrictions on books, DVDs, video games etc (or any other laws that exist that prevent or restrict grey market importing of those things)