We cannot discuss the concept of overseas sourcing without mentioning related terms like total acquisition cost (TAC) and low piece-price country sourcing. The two expressions above will help you understand the benefits of sourcing for products and raw materials overseas. In simple English, overseas sourcing means getting certain products from foreign countries where the cost is lower than it is in your own country. Now, the aim of every business is to maximize profit and minimize cost. It follows that very few business owners will argue against a practice that helps you cut cost and increase your profit margin. Below are some things you need to know about overseas sourcing.
Total Acquisition Cost
If your business is located in a country with a high cost living, you are likely to pay more for labor, rent and raw materials. You can save money on raw materials if you target countries with a lower cost of living because the materials you are looking for will be cheaper in such countries. When you factor in the cost of buying and shipping the products to your location, this is your total acquisition cost. If the price you pay for these foreign raw materials is lower than what you would have paid in your own country, it makes sense to get the raw materials in question from overseas.
Low Price-Piece Country Sourcing
Marketers usually apply this concept to finished goods like gifts, toys, pens and notebooks. For instance, Christmas is just around the corner and there is a huge demand for Christmas gifts in your country. In cases where demand for Christmas gifts outstrips supply, prices are likely to rise. Fortunately, you have discovered a country where you can get these items at substantially lower prices. The smart move here is to source these goods from that country and make good money. This is because your “price per piece” on the items you are importing will be quite low.
Original Equipment Manufacturers
One problem with sourcing your goods or raw materials from overseas is that you may not always get top quality products. This is because the companies in the country you are dealing with may not have the quality standards as the ones in your country. However, you can solve this problem easily if you deal with reputable companies. If you patronize original equipment manufacturers, you improve your chances of getting top quality goods.
As you see, overseas sourcing makes a lot of sense. Find the right country, choose the right suppliers and you will make money from this smart move.
