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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.

Advice for U.S. Customers

Industrial equipment is a large investment, and many people may think buying products from overseas is riskier than buying domestic products, especially when it comes to purchasing high-value items. However, purchasing equipment from overseas is the best option for many people on a budget, and if you take certain precautions, you can reduce or even completely eliminate risk. Many products in the U.S. are imported from other countries and sold in the U.S. under American brands, so it makes sense why you can save money by going straight to the source to purchase your goods. Outlined below are a few tips to help you buy reliable and affordable equipment from overseas.

Find equipment that is sourced from countries that mass-produce the product you're looking for to get the best value.

This is a simple supply and demand scenario. When supply is high, pricing is adjusted to meet the demand of its consumers. In addition, the countries that mass-produce products are able to get materials at a lower cost thus making products cheaper for consumers.

Research different models and brands of equipment. 

Be highly detail oriented in your research. Ask yourself questions regarding functionality and structure of the equipment. Below are a few questions you should ask yourself while you're researching products: What are the dimensions of the entire machine? What are the dimensions of certain parts of the machine? Do these parts meet U.S. standards? Are the dimensions listed using the metric or imperial system? Is it battery-powered? If so, what types of batteries does it use? Does it need to be plugged in? Will that plug need a converter?

Read reviews about the product and company. 

Outside the circle of your friends and family, the next group of people that can help you with your large purchasing decisions are those who have already gone through the same buying process as you. They are the ones who have already asked the same questions as you and even went a step farther by trying the product. See what they like and dislike and determine if that product is the right one for you. Make sure to review a variety of review websites so that you have a more well-rounded understanding of the product and the product's company. If the product you're interested in doesn't have a review, read reviews about the company itself from third-party review sites and determine if it is a trustworthy option.

View the warranty and return policy. 

Make sure to read the fine print before you make your purchase. If by chance you receive a defective product, or if there is a chance you won't need the product by the time you receive it, you will want to purchase your product from a company with a warranty and return policy that suits your needs.

Purchase from a reputable marketplace rather than straight from the manufacturer. 

When purchasing straight from the manufacturer, you may encounter barriers, including a language difference and a lack of customer service, warranty and return policy. Although not all marketplaces solve these problems, purchasing from a reputable marketplace will give you more security because marketplaces usually filter out products and companies that don't meet their standards. Toolots is a great choice for purchasing industrial equipment at manufacturer prices with the customer service of a distributor.

If you choose to purchase straight from the manufacturer, check your state or local treasury to see if you need to pay any state or local taxes on the equipment that you are planning on importing. 

Every state will have different tax laws and regulations on importing products, so make sure you speak with someone if you don't know the laws in your area.

If you're unfamiliar with the seller, complete your payment with a reputable third-party service. 

Some of the more popular payment services include Paypal, Quickbooks, and OFX.

Overall, investing in industrial equipment is a time-consuming process and even more so when you are trying to find a reliable product at an affordable price. Purchasing overseas can help you with both, but don't forget to do your research.

When purchasing machinery from Chinese manufacturers, it goes without saying that prices are generally unmatched. However, as with sourcing anything from Chinese manufacturers, it is usually assumed that there are certain challenges when working with a Chinese supplier. These challenges are often compounded even further when it comes to B2B products with technical specifications and standards. However, it doesn’t have to be this way.

Toolots’ platform addresses several key pain points faced by both the buyer and the manufacturer. By tackling these challenges, we alleviate much of the risk US machinery buyers normally take on when they purchase from a Chinese manufacturer. It also makes it possible for more manufacturers to expand to the US market, when previously they may not have been able to afford the investment needed to provide adequate after-sales service in the US by American standards.

How does Toolots address these pain points? In this post, we’ll focus on one issue: replacement parts.

Many types of equipment and machinery, such as plastic injection molding machines, will need parts replacement at some point in their life cycle. How do buyers place requests for spare parts for machinery that was made in China? That depends on how the buyer originally purchased their product:

Option 1: Pay a premium to a US distributor

One of the reasons the majority of Chinese machinery manufacturers choose to OEM for US brands instead of attempting their own international sales channels is because these US distributors are able to maintain a supply of spare parts in the US. As such, they are able to meet US customers’ after-sales needs for a smooth and timely process obtaining the parts they need to keep their machines running. Of course, buying Chinese-made machinery from a US brand comes with a premium as compared to purchasing directly from a Chinese vendor.

Option 2: Purchase directly from China

For the Chinese machinery manufacturers who do become vendors themselves on Alibaba and similar sites, many often do offer free spare parts, but the buyer usually has to cover the freight cost, import duties, etc. Moreover, these parts take a long time to ship overseas, meaning operational downtime for the buyer. This means that obtaining the parts from the original supplier is often so costly and time-consuming that the buyer might as well take on the burden of sourcing spare parts locally, assuming the part they’re looking for is generic and compatible.

Option 3: Purchase on Toolots

With Toolots, buyers don’t have to choose between paying a premium to work with a US distributor and facing the challenges of working directly with a Chinese manufacturer.

Our engineers replace a broken part on a chocolate conche.

When it comes to spare parts, we ensure that manufacturers honor all warranties and requests for spare parts for their US customers. Because they sell on our platform and we handle the customer service domestically, they are held accountable for meeting US customers’ after-sales service expectations. Moreover, for most of our categories, we require commonly-requested or machine-specific spare parts to be stocked in our US warehouses for timely fulfillment of parts requests.

Check out our story about how we overnighted parts and sent out engineers to fix a chocolate machine on-site when the owner ran into issues.

We’re excited to be growing here at Toolots, and that means we have new positions open!

• Staff Accountant
• Digital Marketing Manager
• Junior Copywriter
• We also have a variety of summer internships available, including IT, public relations, and engineering

If you are interested in any of these positions, please send us an email at hr@toolots.com.

We’ve also been taking advantage of these growing opportunities to reach out and network with our community and spread the word about Toolots. As you may know, we are all about doing our part in helping students and other young people succeed in their career development. We’re also passionate about our industry, and we love sharing our knowledge with aspiring students and young professionals. From our involvement in local high schools to our support for Women in Engineering, we truly hope that we make a positive impact on developing interest in our industry.

As a partner of the Chinese University Alumni Association Alliance of Southern California (CUAAASC), we were incredibly excited to get connected with student and new graduate job-seekers. Today, more than two dozen talented job candidates came to the Toolots Headquarters in Cerritos to learn more about Toolots and its business model and technology, as well as the industrial equipment industry more broadly.

Not only did these candidates express interest in our job openings, they were also eager to learn from the event’s knowledgeable hosts. Toolots CEO Jason Fu gave a warm welcome to the new grads, commending them on their career development endeavors and their interest in a forward-thinking company like Toolots. He then opened the floor for Emily Wang, the CEO of T18 Capital and an early stage investor in Toolots.

Wang explained to the audience why, with her deep experience in finance and investing, she chose to place her bets on Toolots in its seed round. “Not only did I see immediately how this platform would disrupt the cross-border model right when the time was ripe, I also saw Jason’s leadership and interaction with those around him to be particularly compelling as companies from a startup business perspective,” she said.

In the ensuing panel discussion, Toolots CSO Zeming Gao echoed Wang’s sentiments, explaining that his decision to work for Toolots based on equity only was due to his belief in the disruptive nature of the high-touch customer service model. He explained that Amazon can never truly succeed in industrial equipment, because its consumer goods-based model has been too successful. They don’t see the amount of untapped opportunity in Chinese sellers of industrial equipment that could be disintermediated if there were a platform willing to alleviate some of the barriers, and the last thing they would suspect to be profitable would be to go against their low-touch service model.

Next in the panel discussion was CTO Vincent Lee, who explained that his decision to work for Toolots was because he truly believed he would be building something of value for an enormous number of sellers. Instead of simply working for an e-commerce platform, he feels that he is building something to generate immense cost-saving efficiencies for the industry and thereby unlock value for both sellers and buyers.

Following the panel, several Toolots managers gave our guests a tour of the warehouse and office spaces, explaining our departments and their functions. The event concluded with a meet and greet, where job candidates had the opportunity to speak face-to-face with our managers about potential opportunities with Toolots as well as engage in broader topics such as career paths, trends in technology, and various aspects of Toolots’ business model.

Our journey with our valued customers doesn't end at checkout. Once you purchase a product with us, our after-sales services are immediately available, helping you with questions you have about setup, troubleshooting and more. All of our products have a one-year warranty, so customers can buy with confidence.

Traditionally, U.S. businesses have had to take on a certain level of risk when buying equipment and machinery from overseas. This is due in part to the difficulty in providing reliable warranty services in another country without a dedicated team. Toolots has changed all of that. For sellers lacking the ability to provide timely after-sales services overseas, Toolots has local service engineers on the ground who are trained to ensure a smooth buying process from start to finish for these products.

Many of our overseas sellers are experienced selling to other countries but were once wary of tapping into the U.S. market due to the high standard for customer service here. One of our sellers in China, King Machinery, had previously sold their chocolate manufacturing and processing equipment to customers all over Europe, Russia, Latin America, and Asia, but it wasn't until they joined Toolots that they were able to enter the U.S. market.

WIO Smart Foods Inc. (WIO), a company that sells healthy indulgent food options, bought a KING 132 refiner conche for chocolate grinding and refinement on Toolots.com. They received a machine whose power panel was set up for another country and was not functioning properly as a result. That's where we came in.

WIO is a fully operating business that makes a high volume of food every day. Initially, WIO outsourced their chocolate manufacturing, but they wanted to boost productivity and save money by bringing the chocolate manufacturing in-house. Their business is heavily reliant on chocolate, and because they received a machine they couldn't use, they were worried they wouldn't be able to deliver their products to their customers on time.

Our service engineers inspect the chocolate conching machine.

So, WIO reached out to us, and we worked together to come up with a solution that best suited their needs. If King Machinery had been operating without Toolots, the only option for satisfying the warranty would have been to ask WIO to send the machine back for a refund. With Toolots, WIO was able to take advantage of the other option of on-site service and thereby continue operations.

To resolve the issue, our dedicated service engineers drove 13 hours from Orange County, CA to WIO’s facility in Salt Lake City, Utah. They discovered they would need to reconfigure the wiring to work in the U.S. Instead of having to wait for an international shipment of replacement parts, Toolots expedited the appropriate parts from its warehouse in California as soon as the problem was diagnosed. Our team was then able to quickly resolve the three-phase system issue as well as a leakage issue caused by the misconfiguration.

Equipment and machinery made overseas is often more affordable for U.S. businesses, but the reliability is often viewed as riskier than purchasing domestically. We're here to change that. We want to make sure that international purchasing our site is just as reliable, so we help our vendors satisfy their warranties globally. From allowing businesses to bring key operations in-house that they couldn't afford otherwise, to disrupting barriers of entry for emerging businesses by bringing costs down, Toolots is truly a partner of small business in the U.S.