With all the business education you can find today at the click of a mouse, I am still amazed at some of the unrealistic expectations people have when it comes to product sourcing. Those who have chosen product merchandising as their business model have the naive impression that most wholesale suppliers will be able to provide almost any popular retail product affordable to them at any price. Reality, however, always seems to get in the way of our ideals. Most of the current and trendy branded products usually have restrictions in the way they are distributed. For example, LV bags are never sold “wholesale to the public,” or to anyone with a resale certificate. And while there are exceptions, you’ll never see too many “half-price” sales of Louis Vuitton bags, even at the retail level.
Additionally, unsold inventory is not transferred to wholesalers or the secondary surplus market. Excess product that is damaged is sent to their corporate service centers for repair. What cannot be sold or repaired is destroyed. In terms of online retail sales, the only web portal that sells LV handbags is Eluxury.com. Moet Hennessey, one of the leading luxury goods groups, owns Eluxury.com, as well as the rights to sell a number of additional products under the Louis Vuitton name. Moet Hennessey also owns most of the retail stores that carry Louis Vuitton products. Not all brands are as restrictive, but some corporate purchasing policies can still provide barriers to entry in different ways.
Both Nike and Reebok do not limit the sale of their products to wholly owned corporate or online retail stores. They distribute their brands to retail giants like Footlocker and will supply most independent clothing or sporting goods stores if they have the infrastructure and funds to meet their monthly or yearly purchase minimums. Most small business start-ups do not have the finances to support the costs of carrying popular brand name products. However, a limited amount of Nike and Reebok merchandise may find its way to the secondary surplus and wholesale market. But mostly these are shoe or sneaker products that might go out of style for a year or two. You will never find current styles of Nike or Reebok shoes sold by any wholesale distributor.
Despite some of the strict buying hurdles that corporations can provide, this doesn’t stop some people from giving up their search for their brand-name merchandise of choice. Some will attempt to circumvent a company’s wholesale distribution chain or corporate purchasing restrictions by searching for the original equipment manufacturer. Since most of the hottest apparel, apparel, sneakers, and electronics are made overseas, the ever-watchful entrepreneur typically turns to importing as a means of securing items that have popular retail status here in the United States.
Take, for example, Shenzhen, China. In Shenzhen, there is a closed shopping center called Luohu Commercial City. The mall is six stories high and sells a wide range of items, including handbags, name-brand clothing, shoes, audiovisual products, souvenirs, and digital video discs. It can all be had for a price that is half to a third of what you would pay here in the United States. Some DVDs can be purchased for four Hong Kong dollars, which translates to fifty cents in US currency.
The biggest problem with all the merchants selling their wares within this mega-complex of retail activity is the undeniable fact that most are counterfeits. And, like the endless parade of counterfeits that is part of the Luohu retail environment, finding your way to the authentic manufacturer or wholesale distributor of a particular brand-name item is like looking for the proverbial needle in a haystack.
The paperwork, doesn’t make it authentic! There is a prevailing wisdom among some brand seekers that receiving a certificate of authenticity from an overseas brand manufacturer will provide reassurance that the item is genuine. Providing documentation to overseas customers as “proof of purchase” for branded products is basically a fallacy. Any tags, labels, paperwork, or certificates of authenticity that assure the buyer of the certainty of the brand may be counterfeited along with the product itself. The only people or companies that need to have proof of authenticity are those that are authorized to resell the brand item or the original equipment manufacturer (OEM) of the brand in question.
If there is a legal challenge to the authenticity of the product they are selling, then documentation can be provided to confirm that they are legally sanctioned to sell or manufacture a particular branded product. To the best of my knowledge, no wholesale supplier of name-brand merchandise, whether abroad or in the United States, will offer their customers documents proving authenticity. The proliferation of counterfeit items within the People’s Republic is staggering. The replication industry in China, as well as other Asian countries, depends on the production of counterfeit goods and has become an industrial staple. It is estimated that 8.5% of China’s GNP corresponds to the production of counterfeit goods.
Also, if you’re thinking of importing brand name products through online trading forums like Alibaba.com and EcEurope.com, I have some less encouraging news for you. Most business contacts in both forums require extensive research and a working knowledge of the import business before thinking of doing business with any of the listed companies. However, I don’t want to be totally negative about business leadership forums. I think they serve their purpose in terms of finding leads for non-branded general merchandise, manufacturer leads, and industrial equipment purchases. But I would be very skeptical of anyone presenting themselves as the original wholesaler or manufacturer of American branded goods.
Trying to forge a relationship with someone who claims to have the genuine article can also be a financially dangerous endeavor. Most overseas business providers require payment in the form of bank transfer or telegraphic transfer (T/T). The minimum purchase that some suppliers ask for is a freight container. Transferring cash to an offshore business account can be a recipe for disaster. Once the money leaves your account, it is gone forever. If the seller doesn’t deliver, you basically have no legal recourse in terms of getting your money back. The only way to recover the funds would be for the seller to transfer the cash back to his account. You are basically at the mercy of the provider.
The conclusion is the following. If you want products like Nike Air Jordan, you have to go to Nike and find out how to buy their products. The same is true with almost any name brand merchandise you want to buy. If you can’t afford a particular product, then sell an off-brand item. There are many product niches that you can explore. That being said, I don’t have the last word when it comes to importing brand name products. Find out and consult the corresponding legal, commercial and import and export resources.