Justin here, I wanted to talk quickly about where FGX sits in the supply chain going from purchasing here (in the USA) to delivery in an end destination internationally.
There are a couple of different models, really two major ones that I’ve found:
1. There is procuring in the U.S. and then deploying internationally into markets.
2. Procuring in the international markets through an international VAR.
You know all of this already, you’re working with the domestic VAR, that VAR is working with a distributor who has a relationship with the manufacturer, and this is a super competitive marketplace in the US. Everybody’s margins are held in check. It’s nice and clean… easy and it’s cost effective.
The same gear that you’re buying here, you need it in an international location, let’s say Russia. What we find is that most of our clients are working with an in-market VAR. So a Russian VAR. Generally in these markets there is only a handful of legitimate players. They understand that they’ve got a captive audience coming to them. Because they’ve got this captive audience coming to them, their margins are pretty thick and quite frankly the manufacturers are charging the VAR in the end destination more than they’re charging the VAR in the U.S. (even going through a distributor as there’s a distributor in the middle internationally as well). The important thing is that we find that there’s a different markup, let’s just call it the “international markup”.
It’s not normal for a logistics company to have this conversation. But what we do is we really just help you replace the international VAR with the domestic market for international deployments. So remove the international VAR, take back that margin; get back into a really competitive marketplace. The logistics and compliance has been the thing that really holds people back from being able to do it.
Procuring it here is one thing, but then getting it into Brazil, getting into Russia, getting into China, the Middle East et cetera, is the difficult thing. I think a lot of people have had pain in the past, having not met a company that’s spent years and years understanding the compliance, the import requirements, certificates of origin, all of the documents that are necessary to do one of these deployments in an international market. So they’ve sort of defaulted to going to that international VAR, and in doing so have just had to pay the “international vig”.
So that being said, we’re here to help. We really compete with the International VAR, but we’re a logistics and compliance company. We look forward to speaking with you; we think we can bring a lot of value, even if we just have some short conversations.