Alibaba

There is enormous latent supply of equipment and machinery in China across a wide range of industries. The amount of arbitrage happening in the China-to-US machinery and equipment space seems almost too significant to not be disintermediated. Why has no one been able to tap into it, especially the marketplace giants, Amazon and Alibaba?

High-Touch or Low-Touch?

One reason is the unique high-touch service needs of equipment and machinery industries. High-touch means that customer service issues are often more complex, but the business involves high value customers. In contrast, most consumer goods follow a low-touch customer model.

From operating call centers trained in technical advice and troubleshooting, to providing adequate after-sales maintenance and repair, the need for high-touch customer service from end to end is unavoidable in the world of big-ticket machinery and equipment purchases. Few Chinese manufacturers can afford to operate a dedicated US-based team to fulfill this for US customers.

If traditional cross-border intermediaries such as trading companies and OEM buyers can fill this need and profit handsomely, why couldn’t a horizontal marketplace platform step in and steal their thunder (along with billions of dollars of profit)?

As Alibaba and Amazon's marketplace platforms have been built out around consumer goods, these incumbent players follow highly entrenched low-touch service models. This because the relatively low value of consumer purchases prevent a high-touch model from ever being profitable. However, conversely, a low-touch model greatly limits these platforms’ ability to accommodate Chinese direct-selling of industrial equipment and machinery the same way they have – to an extent – for Chinese consumer goods.

One Man's "Innovator's Dilemma" is Another's...

It would go against Alibaba or Amazon’s core business models if they were to establish a dedicated after-sales service team to answer customers’ various technical industry-specific questions, much less provide on-site maintenance services. But that is exactly what is needed by Chinese industrial sellers in order to sell to the US.

A platform that provides high-touch English-language service is the very key that will unlock an enormous volume of latent supply. It is a key that may not seem intuitive at first due to the consumer models proven out by the giants, Amazon and Alibaba. But it’s one whose numbers make complete sense if you take a look at the US market from a buyer perspective, in conjunction with understanding the challenges and incentives from a Chinese seller perspective.

Toolots, Inc. on track to successfully add 100 U.S. manufacturers to its network by year's end

CERRITOS, Calif. - January 12, 2017 - Toolots, Inc., a California-based provider of factory-direct industrial machinery, equipment, and technology, announced early this month their projection to add 100 new United States-based companies to their network to sell and export their products to Asia in 2017, with additional domestic distribution. Within the two weeks following Toolots’ announcement, the company has successfully signed up three new U.S. based companies, and currently are finalizing discussions to add another three companies within the next week. Toolots Founder and Chief Executive Officer Jason Fu said by adding 100 U.S. based companies to their network in 2017, Toolots would be one step closer to achieving their goal to foster better relations between the U.S. and China, bridging the gap between manufacturers on both sides of the Pacific.

Toolots' Headquarters in California.

Thus far in 2017, the manufacturing industry has seen an overall rising trend following reports of the industry expanding at its fastest rate since 2009 in December 2016; major automotive manufacturing companies like Fiat and Apple planning to build facilities in the U.S.; and U.S. Steel reopening a facility closed after previous industry decline. More recently, Jack Ma, founder and chairman of the international trade enterprise Alibaba Group, met with President-Elect Donald Trump to discuss plans to focus on U.S. job creation, market expansion, and strengthening U.S. and Chinese relations by signing one million U.S. based smaller businesses to sell on their site.

This concept is not unfamiliar to Toolots, as Fu expressed similar sentiments in May 2016 to Industrial Distribution.com and again a few months later during a July 2016 interview with Cutting Tool Engineering Magazine. Fu explained that Toolots Inc. and Toolots.com are two vital tools that can be used to foster international trade relations and global benefits for both the U.S. and China specifically within the manufacturing industry. Since its establishment in 2011, Fu’s vision has always been to use Toolots to "help streamline industrial commerce between the United States and China and build lasting relationships that lead to economic growth" for all involved.

Fu stated, "I have always wanted to use this company to increase domestic opportunity here in the U.S., to sustain and create new American jobs, and expand domestic manufacturing resources and profits in manufacturing. We do this through exporting products to manufacturing companies in China and East Asia who demand U.S. manufactured products and goods."

About Toolots

Toolots, headquartered in Cerritos, California, offers an online marketplace and international distribution channel for factory-direct industrial tools, machinery, and technology. The user-friendly platform provides fast, easy access to high-quality, affordable equipment to manufacturers. Toolots’ comprehensive services streamline the purchase, delivery, installation and warranty of industrial technology, machinery and components, and uphold the quality of important goods through a vetted network of vendors and service technicians. The company’s dedication to fostering international trade relations passes on cost savings to the consumer, contributes to reduced downtime, improves productivity and expands a manufacturer’s reach. Toolots has strategically located warehouses, showrooms, and offices across the United States and China. For more information about Toolots, visit their website at www.toolots.com.