SAN FRANCISCO (08/21/2000) - The U.S. trade deficit, which has already reached alarming levels, will get even worse if a marketplace that was unveiled today catches on. DirectSource Global Purchasing, a Bellevue, Wash., startup, plans to enable companies to import goods from Asia with just a few mouse clicks.
The company has teamed up with a number of large Asian distributors that represent factories in China and elsewhere. DirectSource is creating electronic catalogs for the products of those factories. It has also partnered with logistic and credit providers, and has developed software applications that can quickly calculate the total cost of goods being imported from Asia.
"Small and midsize companies haven't been able to get access to low-cost Asian products because of the cost of ocean shipping, quality control, taxation and so on," says Joe Giordano, president and CEO of DirectSource. "We're broadening the market."
DirectSource, which has raised US$4.25 million from Scripps Ventures and unnamed Asia partners, has about 5,000 stock-keeping units, or SKUs, in six categories: automotive, commercial and residential furnishings, hardware, housewares, lawn and patio, and personal accessories. It plans to add products in five more categories: components, lighting, plumbing/bath, sporting goods and toys.
Retailers who sign up with DirectSource go through a credit check, after which they can search the Web marketplace for products. As they add items - there's usually a minimum quantity - the site automatically calculates the cost of shipping to an address or port in the U.S. The site also calculates taxes and other fees, and displays the total cost of buying the products.
Many small and midsize retailers buy from distributors rather than importing directly, because there are often hidden costs associated with importing that can wipe out the profit margin on a given item. DirectSource says it guarantees its prices for 90 days.
Giordano says DirectSource plans to add features, including the ability to set up filters. "A retailer will be able to search for, say, all chairs they can sell for $34.99 with a 20 percent margin," he says. "The catalog will return all those that fit the criteria and let the retailer pick the ones he or she wants."
DirectSource would make a profit by buying the goods from the Asian distributor and reselling them to the retailer with a small markup. The company plans to promote the service at trade shows and in trade journals.