Buying Lighting from a Domestic Stockist: What You Are Paying For

Buying Lighting from a Domestic Stockist: What You Are Paying For

Domestic wholesale lighting is priced against an import programme, and the comparison is usually made badly. The unit price is higher and the total cost is sometimes lower, and which one applies depends on how predictable the demand is.

The four things you are buying

Speed, flexibility, working capital and risk transfer. Each has a value that can be estimated, and together they either justify the price difference or do not.

What you getHow to value it
3–7 day replenishmentThe margin you recover by not being out of stock
Mixed orders from 10 unitsThe cost of the inventory you would otherwise carry
No duty or freight exposureThe variance in your landed cost, times your annual volume
Documented compliance and partsThe cost of one suspended listing or one rejected container

It wins when demand is uncertain

New models, seasonal ranges, test markets and accessories all have unpredictable demand. Paying a premium per unit to avoid committing a container to a forecast is usually the cheaper decision, even when the arithmetic looks unfavourable on the price sheet.

It loses when the model is proven

A model that has sold steadily for two years at a predictable rate is the case for direct importing, where the unit price advantage compounds and the forecast risk is low enough to carry.

Ask for the four numbers

Stock on hand, replenishment lead time, minimum mixed order, and the current landed cost of the same model imported direct. A stockist who can supply all four is running a professional operation; one who can supply only the first three is not competing on the terms they claim.

The hybrid is normal

Most established programmes end up importing the proven core and buying the tail domestically. That combination is not a failure of either method; it is what the two methods are each good at.

Related reading

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