Industry News: January 3, 2008


Series: Counterfeiters Go Away


Article 1: Counterfeiters continue to fill the pockets of the Escrow services

How long will it take for the counterfeiters to go away? This is the billion dollar question that no one seems to have the answer to. Let's analyze one area the counterfeiters are exploiting, the "Escrow Service".

The scenario is as follows: An upstanding company sees a part listed on "XYZ" search engine. The vendor showing the part is in another county named "Anihc". The customer is not sure who this vendor is so they look into a service the "XYZ" search engine offers called an Escrow Service. The customer pays anywhere from $100.00-$200.00 to the "XYZ" search engine on top of the cost for the parts for this service. Lets say the parts come in and are good, the money is released to the vendor and the parts are at the customer being used and we added an extra hundred or two hundred dollars to our cost of product. Not to bad on good transactions. However, if the product comes in and the product is counterfeit, the customer still has to pay for the Escrow service, not the vendor. From our conversations with other companies, we hear that as much as 70% of the Escrow's that are going on in our industry are rejected parts. So in turn that means that if the "XYZ" search engine really had a plan to eliminate the counterfeiting problem, they would loose out on up to 70% of their income on their Escrow Service. Now at first glance you can be persuaded to use these services because it protects you immediately however, when you start to realize that the "XYZ" search engine provides up to 4000 Escrow transactions a year, you start looking at the bigger picture. Let's see, 4000 transactions a year at $100.00 each is 4 million a year in sales. If you took 70% of that out of the equation, the "XYZ" search engine only makes 1.2 million in sales.

The next time your thinking of "taking a chance" on product coming out of a country like "Anihc", think twice on the Escrow Service you are about to fund, they really don't have your best interests in mind for the long term. Everyone forgets that the end user doesn't get the parts they needed, they loose money, you loose money and more than that, you loose a customer. Good luck to everyone this year, we wish everyone the best in 2008.



For comments on this article, please email us at: industrynews@iecxchange.com

Back to Industry News Blog Archives