What are Direct Imports?

Terry Masters

Direct imports are products produced in a foreign country that are shipped into another country and received by the consumer at point of entry without going through a middleman. Imports typically pass through two or three levels of the supply chain before it reaches the consumer, including the importing agent, the wholesaler, and the retailer. Cutting out the middlemen decreases the total cost of the product. With the popularization of the Internet and the globalization of world economies, direct importing has become more viable for the average consumer.

With direct imports, products shipped from a foreign country are not subject to a middleman in the receiving country.
With direct imports, products shipped from a foreign country are not subject to a middleman in the receiving country.

Importing foreign products traditionally required specialists at every step of the supply chain. Brokering the deal with the foreign manufacturer was the job of the agent. Getting the product through customs was the job of the distributor. Holding the product for introduction to the market was the responsibility of the wholesaler. Retailers sold the product to the consumer.

Only the well traveled and politically connected had the ability to access direct imports without going through the supply chain. The average consumer paid the market price for the convenience of shopping for imported goods at a local retailer. That price, however, was padded with all of the costs incurred every time the product had to change hands.

Through the development of the Internet, direct imports became accessible to anyone with a computer and an Internet connection. E-commerce facilitators provide direct access to manufacturers in other countries. Consumers are able to shop on an online website for products made thousands of miles away, pay in their own currency, and have the item delivered directly to their door.

Economists call the removal of middlemen from the supply chain disintermediation. Although middlemen traditionally played an important role, these days their role is largely outdated in many respects. The cost savings using an e-commerce facilitator for direct imports is significant enough to have redefined the import market. This solution is an example how globalization affects a country’s economy and how it benefits the buyer at the extreme end of the supply chain. Even the manufacturer experiences a benefit by having direct access to consumers all over the world.

Direct imports do present some challenges. Jurisdictions wonder how to properly tax goods that are skipping important taxable points of entry into the market. Consumers that buy direct imports do so without the legal recourses of buying locally. Warranties mean little without a local distributor. Even the benefit of supporting the local business economy can be lost in the move towards Internet globalization in the direct sale of goods.

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