A new platform connecting brands and manufacturers aims to provide shippers an alternative to China. Based in SD Zipfox is assembling a list of approved producers from which buyers may order products and arrange shipping.
Raine Mahdi, the founder, spent over a decade importing products and decided to establish a platform to address challenges like unreliable suppliers and dealers acting as producers.
A search for suppliers on Alibaba, for example, returns 99 percent of Chinese enterprises, he said.
His team has spent the last 18 months exploring Mexican manufacturers for the platform. Zipfox had 200 factories signed up when it began in February.
Buyers utilise the site to find manufacturers and obtain estimates. On the platform, customers can place orders and pay for goods. Payment goes to Zipfox, which holds it in escrow until the buyer receives the goods.
Shipment bookings can also be made through the platform.
Mexico’s manufacturers, according to Mr Mahdi, have embraced the platform. This eliminates distributors and other intermediaries while also establishing the company’s credentials.
“We invite them to join once they qualify,” he stated. “We intend to incorporate a third-party factory audit.”
The platform is free for buyers. The platform is open to anyone, he stated. Order minimums exist, however some are modest.
The timing of Zipfox is opportune, says Mr Mahdi, since interest in alternatives to Chinese sourcing has grown. Supply chain problems and congestion have heightened concerns about the US-China trade war under Trump. While they have accelerated corporations’ efforts to diversify supply chains, he believes the momentum is long-term.
“Even at its finest, China transit takes five to six times longer,” Mr Mahdi said.
Transport costs are expected to fall from their present high plateau, but stay substantially above pre-pandemic levels. Buying from Mexico could save up to 75% on shipping costs. With up to 25% taxes on some Chinese imports, the costs skyrocket. Importers from China paid roughly $1.6 billion in tariffs last year.
The cheap cost of production has been hampered by higher logistics costs and the impact of delayed imports.
According to Rick Watson, founder and CEO of e-commerce consulting business RMW Commerce Consulting, buying from China has more to it than just low production costs. Many have opened operations in China, he adds.
“Most brands realise why they need to diversify manufacturing,” he says of Zipfox.
He noted that while Mexico has a solid production base for some things, such as consumer electronics, it lacks in others.
A lot of apparel, home goods, furniture and industrial equipment, which are perfect for the growing construction industry. Many people want electronics, but there are few available right now,” Mr Mahdi added.
His priorities in the coming months are to increase the product range of collaborating firms and to deepen product categories. So he’s already looking past Mexico. He plans to expand the factory base into Central and South America this year, then into Africa and Europe.
As a credible marketplace, the platform should eventually incorporate Chinese manufacturers.
