PARALLEL EXPORT IS WHEN A RETAILER BUYS MORE MERCHANDISE THAN THEY NEED AND SELL THE THE EXCESS FOR OTHER RETAILERS.
This is a practice that’s often used in closed markets -like the EU, where open trade is a normal procedure. Retailers buy large quantities of the merchandise that they’re selling so they can get them for a lower price.
By getting the merchandise for a lower price, retailers increase their profit margins by lowering their cost. The excess merchandise is sold for other retailers with a small profit margin. Combining the profit from selling the excess products to other retailers with the higher margins from getting the products for a lower price makes parallel export a lucrative practice.
Despite its advantages, parallel exports do have its disadvantages. There are many reasons why you should be careful when using this technique. Knowing more about parallel export will help you decide whether its right for your business or not. Before you start using the parallel export method for your business, you should take the following points into consideration to make sure it’s the right choice for you.
Are the Profit Margins Worth the Risk?
The risks that you might be faced with when using the parallel export practice range from not being able to sell the extra merchandise that you buy to legal and logistical issues. Fully understanding your situation and the market that you’re in will help you make a sound decision.
Remember that there are different types of risk associated with different merchandise. Make sure to take these into consideration as well to avoid making a business decision that you might later regret. Taking the time, you need to assess your situation is always the right thing to do.
Do You Have a Proper Network to Sell the Excess Merchandise?
When you’re using parallel export, you’re buying more merchandise than you can sell. That is how you can get suppliers to sell you for discounted prices and increase your profit margins.
With excess merchandise that needs to be sold, the question that you should be asking yourself is whether you have the network you need to sell the merchandise. Being able to sell the excess merchandise requires lots of market connection with vendors who are willing to buy.
If you are using parallel export without having the connections you need to sell the excess merchandise, you’re assuming a great risk. The results of not being able to sell the excess merchandise can be devastating, especially for a small business. Before you commit to the extra merchandise, be sure that you’ll be able to sell it.
Parallel Export: Advantages and Disadvantages
The parallel export practice has its own unique advantages and disadvantages. Knowing these will help you decide whether this practice is right for your business or not.
Advantage: Improving Your Profit Margins
This is the major advantage of this practice. If you’re looking for creative ways to increase your profit margins without raising your prices, parallel export is worth considering.
Being able to make more money by selling the exact same number of products to the same people means extra expenses associated with things like marketing aren’t necessary.
Disadvantage: Associated Risks
Buying merchandise and not being able to sell it is something that shouldn’t be taken lightly. When using the parallel export method, this is a risk that you must take. Even if you have a network of retailers who are willing to buy your products, you’ll find yourself stuck with the products if anything goes wrong.
If you’re able to minimize the risks associated with the partial export method, it can help you take your business to the next level and achieve great results.
How can Sniffie help?
To be able to decide whether parallel export is worth it is not, you must be up-to-date with the price that the product you’re buying in bulk is being sold for. Tracking the price for which a product is being sold by different vendors is a labor and time intensive process.
Instead of using a manual way to do all the required research to find where your offers stand compared to those of your competitors, you can use a tool like Sniffie.
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