Sourcing Handicrafts from India

 

What are the key sourcing models (ways of sourcing goods) employed by international retailers in India. there are three ways, either to have a direct sourcing office in India or to have tie-ups with buying houses or both of these together (like Wal-Mart).

 

  • Which is the most prevalent model?
  • In case of the third model, how do you decide that you should source a certain category directly and not through any buying house or sourcing agent

 

Case study of Wal-Mart
 they want to buy from Indian market for its foreign stores & sell to Indian Market as well for the upcoming stores they are opening in Indian Market in partnership with Bharti with a plan to handle the frontend of the retailing business by Bharti while Wal-Mart would take care of the supply chain, that is the reason they have their direct sourcing office in India and tie-up with factories also,

 

For Midsized companies ‘Tie-up with a Buying House’ is better due to cost heads in maintaining the company office, whereas a buying house cost on the buyer is only on the dispatches, a certain amount of commission on each invoice,

 

Risk factor is less in hiring a buying house coz buying house gets paid only if the merchandise received at the other end successfully with no errors or if incase of a faulty merchandise replacements and compensations are issued, this results in a higher responsibility of the buying house individuals so to dispatch the merchandise as per desired results,

 

Another benefit of a buying house over company owned office is the advantage of goods inspected by a 3rd party individual/company which is always preferable,

 

In case of the third model, how do you decide that you should source a certain category directly and not through any buying house or sourcing agent

 

In case of consistent orders where demand is more than supply a certain source can be imported directly by a buyer but again a risk of not getting a regular good quality is involved, to err is human for which regular checking is required either by the buyer or by its agents, in this case buyer may negotiate on commissions and agent will again be happy on dispatch of higher quantities to get higher commissions,