Global sourcing comes of age through the web

Global sourcing comes of age through the web
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First Published: Tue, Aug 19 2008. 12 12 AM IST

Since the global economic downturn set in, people have been asking me about its impact on e-commerce and Alibaba.com. While it is true that some businesses have become wary and have held back from international trade, it is equally true that many others are turning to more efficient and cost-effective ways of doing business—one of which is e-commerce.
Believe it or not, e-commerce is even more important in difficult times as it is a low-cost and efficient channel to promote and source products. Buyers using e-commerce platforms for sourcing can obtain goods or services at lower-than-market prices and translate this into better value for money for their end customers. In fact, our US members, which are most hard-hit by the recession, are actually more active this year than they were last year.
Bamko Promotional Items, Inc. is one of these US members who have experienced cost savings through sourcing online. Bamko is a provider of high-quality gifts and premium items ranging from clocks to calculators, bags and hats. Using Alibaba.com, Bamko has gained exposure to numerous suppliers that they could not have found any other way, and with so many potential suppliers at its service, the company can foster competition among them, to get the best price and bring attractive products to its clients all over the world.
Thanks to e-commerce, Bamko grew from a small local US distributor with one office to an international distributor with more than 50 employees in eight offices worldwide in just three years. Its competitive product pricing and high quality has won it over 200 loyal, repeat customers including big names such as Reebok International Ltd, Pfizer Inc., Boeing Co. and Revlon Inc.
Pricing is also a crucial business factor for Paul Greenberg from Australia, who operates an online department store, DealsDirect.com.au. Guided by the slogan “Love a Bargain”, Paul strives very hard to offer exciting new products, unbeatable prices and exceptional value to DealsDirect customers. He has a dedicated team of buyers who hunt for quality products with guaranteed low prices through a diversified sourcing strategy, which includes using online marketplaces, sourcing offices and trade shows. When DealsDirect was first launched in 2004, it had only four product lines. Today, the online shopping site offers 29 shopping categories, stocks more than 4,000 products, and sells at 30-80% less than recommended retail prices.
I have also heard about one of our Indian members who turned to the Internet for low-cost sourcing. Mardia Metals and Polymers, a Chennai-based importer and trader of raw plastics, is constantly in need of new vendors to sustain its supply chain and explore more products to expand its revenue streams. The company was started by Vivek Mardia and his father early last year. Although his father had 20 years of experience in the raw plastic materials industry, he only used old-fashioned business channels such as telephone and face-to-face meetings and merely had deals with regular suppliers in Malaysia. Vivek changed all that by introducing the Internet to his business. In just over one year, the company has expanded its supplier base to other countries and discovered new plastic products to add to its portfolio. Mardia Metals is now the sole supplier of a kind of recycled plastics originated in South Korea and is identifying opportunities to become the exclusive distributor for certain European suppliers in India.
A number of vertical and horizontal online marketplaces exist today, allowing buyers in India or abroad to find any product or service they want. By leveraging the myriad of tools provided by these online marketplaces, Indian companies can reduce costs, increase their supplier selection and accelerate their sourcing cycles in order to meet the ever-growing demands of their customers. Thomas L. Friedman put forth his famous view that “the world is flat” due to globalization. I would say that the world of global sourcing is even flatter and growing smaller by the day thanks to the advent of online marketplaces.
David Wei is chief executive officer of Alibaba.com.
This is the last in an exclusive five-part series he wrote for Mint.
Respond to this column at feedback@livemint.com
To read all of David Wei’s columns, go to www.livemint.com/ecommerce.htm
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First Published: Tue, Aug 19 2008. 12 12 AM IST