- to seek fashion direction
- to purchase merchandise for copying or adaptation
- to buy for promotions built around a foreign country's name
- to search for unique items
- to obtain mass-produced goods at prices lower than those that prevail in the domestic market
- to meet competition's price lines
- to improve profit.
For example, if you go to Paris for fashion direction you may also have to visit one or more other fashion centers in Europe and some fashionable gathering places that may not be market cities.
On the other hand, if you go to Asia to commission the production of low-end fashion merchandise, you may want to seek out facilities beyond your immediate needs, so that you can expand your overseas operation later if you wish to.
If you face keen price competition at home, you may also have to probe to see if your competitors, too, are purchasing in the same market. If the foreign source is yours alone for the time being, you may be beating competition and are thus wise to purchase freely. If others are buying in the same market, you may simply be meeting competition, and therefore be less eager to buy heavily.
Special Problems
Foreign buying raises a number of special questions that demand consideration in the early stages of planning. Once you are abroad, it may be anything but easy to check with the store quickly. Among the situations to prepare for are:
- Styles and colors may have to be chosen further in advance than when you buy in the domestic market
- You may have to "style" the merchandise, telling the producer what to make, instead of being able to select from a line that is presented for your inspection
- Size measurements and designations may differ from those used in the United States. You may have to specify the body or garment measurements you want used
- Fibers and fabrics may be different or differently named from those in the U.S. You may have to detail to your foreign resources the Federal labeling regulations that apply to your merchandise
- Delivery dates may be uncertain, creating problems with your open-to-buy and your promotional plans
- Funds may have to be tied up for long periods. Foreign shippers usually require payment before the goods leave their country - sometimes before shipments leave their plants
- You may have to work with primary producers to achieve the end product you want. For example, in some countries you may have to work with yam sources before you can work with a knitter, or with fabric sources before you can work with a cutter. You may need every bit of knowledge you have about the productive processes involved in the merchandise you handle
- Shopping a market may require more time and travel than in an American city. You may have to go to different parts of a city, or to different cities, to see lines and compare values.
In relating the purchase price of foreign goods to your retail prices, you have many new factors to consider:
- Foreign producers may not work to a price line as those in America do. You will have to work from your costs to your probable retail price - sound merchandising practice, but likely to be more laborious and involved than what you are used to
- Customs duties have to be considered. If you don't know the rates that apply to the merchandise you contemplate purchasing, check early with your store's import manager, your resident buyer's import office, or the nearest U.S. Customs Office
- Transportation costs are usually higher than between points within the U.S., since your goods will travel from Europe or Asia to the U.S., and then from the port of entry to your store.
- Discuss routes, quantities, rates, and other factors that may affect transportation costs with your traffic manager before you leave the store.
- Currency values must be watched. You need to know the conversion ratio that will be used for U.S. customs purposes, as well as the present value in the open market of the foreign currency in terms of dollars. The figures are not always identical. Also, you should know if the value of the foreign currency is moving up or down in relation to U.S. dollars. Your store is probably watching this trend and will probably brief you on this subject
- Landed cost must be estimated. To calculate the cost at your store of what you buy abroad, you have to add to the foreign seller's price all shipping and customs costs, special packing charges, etc., converting foreign currency to dollars in the process.
Compare previous landed costs per unit with foreign shippers' prices per unit. Use the percentage increase as a rough guide to how much higher your own landed costs will be than the prices quoted to you.
In addition to all these elements of cost, bear in mind that you will probably have no advertising allowances, no supportive national advertising, and no opportunity to return goods or request adjustments for merchandise that is damaged or otherwise unsalable.
