London – October 19, 2005, Abir Oreibi, Director of International Business Development for Alibaba, recently presented information to a symposium of sourcing professionals hosted by the Local Chamber of Commerce. She offered current ideas and innovations in sourcing trends and tools, with particular note to online the unique challenges of online sourcing.

First, Oreibi pointed out that increased global competition is driving many firms to establish relationships with suppliers in low-wage and low-production-cost countries such as China, India, Malaysia, Eastern Europe, Latin America and Africa. Firms in the UK, for instance, imported more than 16.5 billion Pound Sterling from China and Hong Kong in 2004. Likewise, imports of goods from India into the UK soared to 2.3 billion that same year, with a 20 percent increase the following year.

Things are changing in the sourcing cycle of discovery, negotiation and transaction with the advent of the Internet in general and online trading communities in particular, Oreibi said. Discovery, most experts agree, is the most time-consuming and costly phase of the sourcing cycle.

Many large and small-to-medium sized retailers now purchase directly from low-cost overseas factories instead of going through sourcing agents, wholesalers and distributors. Doing this, Oreibi asserted, offers the sourcing professional four key benefits:

Increased margins and profits
Reduced costs (with reduced middlemen)
Better knowledge base of products, technologies and markets
Direct involvement in production processes

In the changing environments of sourcing, Oreibi said some traditional sources remain viable while others are emerging into stronger positions. Major sourcing tools currently include:

Online trading communities, such as Alibaba.com
Trade shows
Trade publications
Trade associations
Government trade organizations
Chambers of commerce
Trade missions/delegations
Agents/trading companies
Consultancies

Because of a seemingly Internet-driven world, unique benefits of online trading communities include reduced time in the discovery process, a business-to-business focus without consumer-oriented distractions, aggregated content (tens of thousands of suppliers in one place) and 24-7 access, without geographic restriction.

But online sourcing is not without unique challenges, she said. Oreibi encouraged sourcing professionals in attendance to work to establish trust with suppliers, both online and off. She said to pay close attention to details online, such as the company’s individual website, product specifications and qualifications (like ISO, for example). Some marketplaces, such as Alibaba, offer initial screening of suppliers by providing third-party authentication and verification, user feedback systems to qualify suppliers, she said. Still, in the end, Oreibi emphasized that there is no substitute for traditional, old-fashioned due diligence.