Global Sources Direct Shuts Down: Wholesaler Chinavasion Responds

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Online Wholesale firm Global Sources Direct announced on December 1 that it was closing its doors, perhaps due to the current global economic downturn. Sources close to the company are surprised by the abrupt closure and one, Chinavasion, thinks it may know of some of the difficulties the company faced.

Chinavasion

But most manufacturers in China cannot yet offer quality control or stock efficiency that is acceptable for international buyers.

The latest victim of the global economic downturn: China ecommerce site "Global Sources Direct". Sources close to the firm reacted with surprise at the abrupt closure, and reflected on the challenges of the Global Sources Direct business model.

Global Sources Direct was a venture of NASDAQ-listed Global Sources, in operation since June 2005. Offering no detailed public explanation, General Manager Jennifer Leung announced the closure with a simple website message on December 9, 2008.

Representatives of Wholesale Distributor Chinavasion reacted, giving their analysis of the critical difficulties Global Sources Direct faced.

The first issue identified by Chinavasion's representatives was the difficulty of managing 'virtual inventory'. "Virtual Inventory" is a concept pioneered by major ecommerce sellers such as Amazon.com. In such a system, items listed for sale come from the inventories of many different providers, and are not actually held on stock by the seller.

According to Chinavasion's Rose Li, this approach is impracticable in a developing economy like Mainland China.

"Virtual inventory means you rely totally on your suppliers. As the seller, you cannot afford inconsistency in product quality or supply," says Rose Li. "But most manufacturers in China cannot yet offer quality control or stock efficiency that is acceptable for international buyers."

In response to such challenges in the China market, Chinese Wholesaler Chinavasion has reported ongoing investment in its own in-house quality control process, checking all items before they go onto warehouse shelves.

Secondly, at Chinavasion, products are only advertised for sale if they are actually in stock ready to ship out. "Virtual inventory can never be a substitute for real inventory," summarized Rose Li.

Chinavasion's Rose Li predicted that Global Sources would now focus on its core activities of business-to-business media and advertising.

Chinavasion.com is the leading online drop ship wholesaler for consumer electronics. Accredited by Validated Site, ScanAlert, and Verisign, and listed in all the leading B2B directories, http://www.chinavasion.com is the market leading online wholesale electronics shop for eBay dropship sellers and importers worldwide. For more details visit: http://www.chinavasion.com/

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ROSE LI
Chinavasion
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