Forget Wal-Mart: China Cuts Out the Middleman – China Real Time Report – WSJ

Wal-Mart and Amazon have become America’s main conduits for cheap, mass-produced goods from China’s factory floors. But who needs them anymore? As the WSJ’s Dennis K. Berman reports:

I am holding in my hands a men’s down jacket with fur trim, sent four days ago direct from a warehouse 67 miles west of Shanghai.

The $52.19 jacket won’t be confused for Prada. The fur appears to be “fur.” It came out of the box smelling like plastic and solvent.

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What the jacket represents is far more interesting: It’s the final and direct link between China’s manufacturers and the global consumer. In the same way Chinese companies took over the production of goods, they are now increasingly capable of merchandizing those goods, using the Web and modern freight transport. Bentonville, you are being outsourced to China, too.

This is in part why China’s Alibaba has a $268 billion market capitalization. And it’s why United Parcel Service Inc. recently bought a company called i-parcel, to help U.S. suppliers penetrate the thickets of customs, fraud and language that still exist.

The jacket came via LightInTheBox , a Beijing company listed on the New York Stock Exchange. Run by Chinese with deep experience in America, the site can shapeshift into 27 different languages, from Arabic to Bahasa to Swedish, and ship goods piecemeal all over the world. For the 12 months ending in September, LightInTheBox sold $349 million of merchandise, a 25% increase from the year earlier. It is still far from profitable, posting significant operating and net losses. Its stock has fallen 23% this year.

LightInTheBox got its start selling wedding dresses, and it’s now selling about 800 different designs for under $200. It sells 400,000 a year. For wedding dresses, “the manufacture price in China is less than $100, but the store price in the U.S. or Europe was thousands of dollars,” company co-founder and CEO Quji “Alan” Guo said in an interview. “That was a category where there should have been better availability, but it was not there.”

via Forget Wal-Mart: China Cuts Out the Middleman – China Real Time Report – WSJ.

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