Objectives Of Foreign Buying

Prestige- image store

& Uniqueness
Better quality
Lower cost
Specification buying
Foreign Buying Problems
Variation of quality standards
Deliveries and reorders
Size discrepancy
Monetary problems
Time involved
Other conditions
Language Barriers

Unethical practices (e.g. Child Labor)

Political unrest

Retailer may choose a method on the basis of
such factors
As size of the store ,
The planned proportion of the foreign goods
to domestic goods
The time permitted for a buyer to be away
from the store
The cost involved in buying the Merchandise
and
The degree of exclusivity and specification
buying required.
Methods Of Buying Foreign Merchandise
Domestic importers
Resident buying office
Foreign selling agents
Import trade fairs
Domestic sources
Liaison Offices
Foreign buying offices
Foreign sources
Direct Exporters
Many buyers want the special flavor of foreign
Merchandise in their stores but cannot make
overseas trips to buy these goods directly.
For these buyers and the stores they represent ,
there are many domestic sources that will sell
them foreign merchandise.
The Merchandise bought from these sources will
cost more than if it were bought abroad , but the
sources will absorb many of the problems and
disadvantages of direct importing.
1. American Importers
2. Resident Buying offices
3. Foreign Selling Agent
4. Import Trade Fair
Delivery
Proven specification
Availability of merchandise in selected
quantities
Availability of reorder
Very close control on the merchandise
planning and production
Accommodation of changes due to any reason
is easy
Planning and control of stock relatively easy
Permit the stock adjustment to new trends
These are American/Local companies that
stock foreign made merchandise and sell it to
buyers in much the same way an American
manufacturer sells goods to a buyer.
Goods cost more than through direct visit ,
however extra cost is more appealing to a
small store than the expense and problem
incurred in direct importing
Buyer can buy goods much closer to the time
of need.
Importer is taking the risk of buying and
stocking the foreign merchandise.
Buyers give up the ability to demand
exclusive styling or goods , stores all over the
country will be able to buy the same fashion
merchandise.
Taking advantage of the foreign purchasing
available through their RBO is another
method buyers use to obtain foreign goods
from a domestic source.
RBO will be placing orders for foreign
merchandise that are planned and produces
with target customers of members stores in
mind.
Individual store or buyers can place the order
as large or as small as they can absorb.
Being part of group purchasing usually means
a lower cost price to participants in the group
purchase .
In case of quality concern RBO will arrange a
rebate or other corrective action when they
deal with foreign producer in a new season.
However even in the case of RBO group
purchase , commitments must be made far in
advance of the selling season.
Foreign Selling agents represents a group of
foreign manufacturers who may or may not
carry stock .
These agents make periodic trips abroad and
keep buyers up-to-date with foreign market
developments.
Buyers can actually view the actual foreign
merchandise with the styling and uniqueness
of the foreign design and manufacture.
Size of the order does not have to be large
because the agent compiles many orders
before sending the orders overseas.
However there is no guarantee that quality
standard, size discrepancies or other
problems of direct importing will not occur.
Many foreign produces , recognizing that not
all American buyers can or want to make
buying trips overseas, have organized trade
fairs in United States.
Some trade fair feature merchandise from
only one country , others features from
countries world wide.
Many Manufactures and export selling agents
rent space to display and sell merchandise to
visiting buyers.
One of the largest and most successful is the
New York pret .
So many lines and styles in one place but
because of the space limitations most of the
manufacturers can only show a small portion
of what they can manufacture.
This type of foreign buying and selling is
growing and these fairs are becoming larger
and larger.
To buy directly from foreign sources usually
requires a trip abroad by the buyer.
More and more buyers are being sent around
by retailers to work directly with foreign
sources.
In making contact with any foreign resources
, the buyer usually requires assistance of a
foreign resident buying office.
This may be office owned and operated by
the the corporate owner of the store or by the
RBO . Often it is a foreign independent buying
house , called a commissionaire. The
Commissionaire usually charges the buyer a
commission for its service.

1 BUYING TRIPS ABROAD: Usually this method
of buying foreign merchandise is practiced by
the very large retail organizations. Buyers
who represents department store and chain
organizations shop foreign markets on a
regular basis and at regular intervals.
Large retail organization may send the team
of key merchandising managers, buyers ,
fashion directors and marketing and
promotion directors on foreign buying trips.
Advantages to a Buyer making a trip and
buying directly from a foreign source
1. The price quoted are often much lower than
can be quoted by domestic sources offering
imports.
2. Specifications can be developed by the
buyers with the foreign manufacturers to
ensure quality , style and fit.

3. The buyers can buy exclusive merchandise that
will not be available to competitors, there fore
allowing the possibility of a higher mark up.
4. Foreign fashion trends can be spotted quickly
and acted upon immediately by the buyers.
5. A continuing relationship with foreign
manufacturers can developed, this rapport can
lead to long-range planning and development of
certain suppliers as key resources.

Dis -advantages to a Buyer making a trip and
buying directly from a foreign source.
1. The cost of the buyers trip is usually very
high and has a direct bearing on the profit of
the department.
2. There is danger of overbuying because the
merchandise tends to appear more exciting
and salable in its foreign surrounding than it
will back in store

3. The buyers time away from the store or
direction of the operations can create problems
with sales and promotions of goods already in
the store.
4. The buying organizations must assume all the
cost of importing that would be assumed by
American importers or foreign selling agents
were the store to buy imports from them.
5. Foreign orders places on a direct trip are placed
far in advance of delivery dates and selling
seasons , and payment must be made upon
delivery to the foreign shipping port , there fore
tying up store funds that could be better used to
purchase current stock to produce sales.
These offices may be owned and operated by
a store or by an independent RBO
2. AMERICAN OWN FOREIGN BUYING OFFICE :
These offices are in the major fashion
centres of the world. They work year round
advising buyers about new trends, resources
and items. They also accompany American
Buyers on their market visits, acting as
interpreters and planning travel and market
itineraries.
Because of their daily contact with the market
, the market representative in these offices
are able to direct their American Buyers to the
best resources for their needs.
They also function as a follow-up service to
ensure prompt delivery and quality control of
the foreign merchandise bought in each
countries.
Most large stores and chains maintain a
foreign buying office in each of the large
fashion capitals of the world.
2. FOREIGN COMMISSIONAIRES
The foreign owned resident buying
offices are used by retailer in much the same
manner that they use a resident buying
office in America.
The commissionaire is usually located in
major city of a foreign market area.

LIAISON OFFICE
Store owned foreign buying offices
Located in major fashion centers & in exporting bases of
the world
Advise buyers about new trends
Accompany buyers on their market visits acting as
interpreters and planning market itineraries
Because of their broad & strong base in the local market
they get the best resources according to the need of the
buyer
Function as a follow up service to ensure prompt delivery
and quality control
Each liaison office works as a separate profit centre
Types of stores that have such offices are GAP,NIKE

The manufacturer- exporter undertakes the
entire export process.
Increases its profit margin by saving on
payments to an intermediary
Develops a closer relationship with the
overseas buyer.
Cost of establishing another market may
overweigh the monetary benefits of direct
exporting
The exporter may be exposed to more direct
risks.
Custom Regulations
Computation of the Landed cost
Landed cost is the cost at store after
importation from abroad.

FOB ( First Cost )
Commission
Duty
Ocean Freight
Insurance rate
US port landed cost

Apart from the elements of the landed cost
buyer must include the risk involved , the
advertising cost.
Manufacturing unit producing domestic or
export orders are segregated on this basis.
Most of the Manufacturer in India are now
doing both Domestic as well as Export
orders.
Generally manufacturer will have different
units for domestic and export orders.
Indirect Exporting :
Supply chain in which exporter doesnt sell
the goods directly to the buyer but sell the
goods for export through some
intermediates is known as Indirect Exporting.
Direct Exporting :
Supply chain in which exporter exports the
goods directly to the buyer is known as
direct Exporting.

The most common methods of exporting are
indirect selling and direct selling .
In indirect selling, an export intermediary
such as an export management company
(EMC) or an export trading company (ETC)
normally assumes responsibility for finding
overseas buyers, shipping products, and
getting paid.
In direct selling, producer deals directly with
a foreign buyer.

The paramount consideration in determining
whether to market indirectly or directly is the
level of resources a company is willing to
devote to its international marketing effort.
Other factors to consider when deciding
whether to market indirectly or directly
include: The size of your firm;
The nature of your products;
Previous export experience and expertise;
Business conditions in the selected overseas
markets.

Passively filling orders from domestic buyers
who then export the product.
These sales are indistinguishable from other
domestic sales as far as the original seller is
concerned. Someone else has decided that the
product in question meets foreign demand.
That party takes all the risk and handles all of
the exporting details, in some cases without
even the awareness of the original seller.
Seeking out domestic buyers who represent
foreign end users or customers.
Many U.S. and foreign corporations, general
contractors, foreign trading companies, foreign
government agencies, foreign distributors and
retailers, and others in the United States purchase
for export. These buyers are a large market for a
wide variety of goods and services. In this case a
company may know its product is being exported,
but it is still the buyer who assumes the risk and
handles the details of exporting.


.. Exporting indirectly through intermediaries.

With this approach, a company engages the
services of an intermediary firm capable of
finding foreign markets and buyers for its
products. EMCs, ETCs, international trade
consultants, and other intermediaries can give
the exporter access to well-established expertise
and trade contacts. Yet, the exporter can still
retain considerable control over the process and
can realize some of the other benefits of
exporting, such as learning more about foreign
competitors, new technologies, and other market
opportunities.


Exporting directly.
This approach is the most ambitious and
difficult, since the exporter personally
handles every aspect of the exporting process
from market research and planning to foreign
distribution and collections. Consequently, a
significant commitment of management time
and attention is required to achieve good
results. However, this approach may also be
the best way to achieve maximum profits and
long-term growth.
Functions of a buying house:
Identifying products
Sourcing
Design and development
Organising production
Quality control
Consolidation
Shipping

Buying Houses have Merchandiser as their Key-personnel
who are having good education and English knowledge of
different fabrics, Costing of articles, Sourcing, interacting
with large buying houses. Follow up production. Good
knowledge of computer.

Basically Garment Buying houses try to
communicate with buyers of other countries who
want to buy garment products. Then they contact
with garment factories who can make those
kinds of products and fulfill buyers demand.
Like this they create a contract between these
two parties.

Moreover, this house maintain the merchandiser
to follow up the product processing line perfectly
and also build a quality assurance team for
checking the actual quality of the product.