If You Thought Amazon Gave You Agita …

… just wait until direct-source portals like Alibaba and DHGate go mainstream.
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… just wait until direct-source portals like Alibaba and DHGate go mainstream.

For the uninitiated, Alibaba and DHGate are online, China-based marketplaces that give smaller retailers, and yes, even consumers, access to cut-rate CE and other inventory direct from Asian factories.

While much of the available merchandise consists of generic or tier-three CE, mobile phones, computers, networking products, and accessories, don’t be too quick to dismiss them.

Some of the factories also produce components or assemble finished-goods for some very recognizable tier-one brands, and their prowess shows. A recent sampling of mobile products manufactured by clients of DHGate included a totally serviceable 10.1-inch opening price-point Android tablet selling under the iRulu brand for $90.89 direct with free shipping, and a solid, entry-level Jelly Bean smartphone with 5-inch screen and quad-core processor (the DG330 Mint by a brand called Doogee) which is selling unlocked for $102.90.

There was also a no-name in-ear headphone with mediocre sound but a nifty zipper-like form factor that meshed and unmeshed the left and right speaker cables.

Then there was the OnePlus One. The unlocked GSM and 4G LTE phablet features a 5.5-inch 1080p screen, Qualcomm Snapdragon 801 processor with 2.4GHz quad-core CPUs, a 13MP Sony Exmor IMX214 camera, a build quality and feature set to rival Samsung’s Galaxy S line, and a respected pedigree, coming from some of the same folks that brought you Oppo, the low-cost darling of A/V enthusiasts.

The company, OnePlus, calls the $300 phone its “flagship killer.”

Recently-named DHGate COO Noah Herschman told TWICE that the main purpose of his portal is to facilitate B-to-B transactions with smaller, non-Foxconn-like Chinese factories. He said the model will benefit small- to mid-size U.S. retailers and independent dealers who can now source low-cost, high-quality products direct from the point of production with easy payment and shipping options.

But retail analyst David Strasser of Janney Capital Markets believes the advent of these offshore platforms could have dire consequences for the U.S. economy.

Based on the product sampling, it’s clear that the direct-trade model could make huge inroads into the global and U.S. CE markets, and the disruptive affect, for both retailers as well as vendors, could be catastrophic.

Two things stand in the way of wholesale disintermediation, however. One is the pending Marketplace Fairness Act, which will help level the playing field by requiring all large e-commerce players to collect sales tax on transactions.

The other is fashion, and ego, and the desire by consumers to own and display a respected, prestigious and dependable brand.

But should iRulu, Doogee, OnePlus or countless other overseas manufacturers crack the Apple, Beats and Galaxy marketing codes, even Mr. Bezos had better take cover because it ain’t gonna be pretty.


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