Comparison what is your take on direct selling for tractors and implements?

[DFAM]

Chim, thanks for sharing. I used to believe cash payment has a lot to do with being affluent. Guess I need to change my stubborn notions.

As regards the parts supply, I totally agree with you. A local-based service center is essential to success. Otherwise, these problems are gona happen inevitably due to the parts delivery. Besides you are quite right with the products made in China. There are quite many different levels of manufacturers in China. Some of them are heavily sales oriented, small private companies especially .Their biggest advantage is the lower price and they cannot bear or are reluctant to invest in the product quality owing to little margin. Luckily some companies have realized the importance of retaining the regular customers.

It will work as long as people feel they are getting quality equipment at a good price - AND - there is a good support for the products. Cash payment will eliminate some customers, while others will appreciate the savings. Paying cash has less to do with being rich and more to do with being responsible. If you can afford to buy something and make payments on it, you can afford to wait and save and buy it for (less) cash. With cash in hand you can buy for less than the best 0% financing deal.

Two examples of why it would take a while to win people over that we encountered at work, and I believe we are not alone:


1. Two out-of-country pieces of equipment our company has bought in recent years are a Montana tractor (S Korea) and a PANDA duct leakage tester (United Kingdom). Both have needed parts, and both were a very long wait. When problems arose with the PANDA communication was a real problem. The people spoke English, but the time difference made it hard to connect except via e-mail.

2. We had to replace several owner-provided 16" weldneck pipe flanges that cracked when placed in service. A recent shipment of 1/2" clevises from a vendor is being returned because they have little paper tags that state "Not To Be Used For Lifting". A quality clevis only costs $3 more. In both cases the materials were stamped "Made in China".

 

[DFAM]

Your points are quite right with some people. Well for some other people, I guess they don’t bother to negotiate the price with the shrewd dealers, while the direct purchase might save that for them.

Btw, do you think the online repair instruction is gona help? Will a bigger price differential trigger you to trade off the labor warranty? Thanks

Without dealer support I'd predict epic fail...not everyone is Mr Fixit like like the posters here.

 

[DFAM]

Definitely, guess a local warehouse and a local guy might help a lot.

Direct from China might be a problem...

 

[DFAM]

Thanks for the comments. It seems lots of end-users even some dealers share your ideas. Importing formality could be daunting for some people.

Localization might be the only solution for OEMS whoever want to gain a considerable market share in the international market.

I agree 100%...

Also, as the OP is trying to sell from China, parts may well be impossible to obtain. And, shipping a import duties may well drive that "low cost" way up.

Frankly, I wouldn't buy anything from China...not as a direct importer. The quality isn't there and too much "fly by night" or even out and out scams going on with Chinese manufacture.

 

[RoyJackson]

As regards the parts supply, I totally agree with you. A local-based service center is essential to success. Otherwise, these problems are gona happen inevitably due to the parts delivery. Besides you are quite right with the products made in China. There are quite many different levels of manufacturers in China. Some of them are heavily sales oriented, small private companies especially .Their biggest advantage is the lower price and they cannot bear or are reluctant to invest in the product quality owing to little margin. Luckily some companies have realized the importance of retaining the regular customers.

The bolded text is very telling of what the risk is.
"Little margin" may well result in an orphan tractor if the manufacturer decides not to built or support any product. Even a relatively cheap tractor would still have import duties and shipping costs...so, that initial low price may not be so low. And, without a substantial North American based parts supply, an owner would be paying those import duties and shipping costs.
As far as an online manual...is that worth no labor warranty? Not in my book...not even close.

I suggest your suppliers consider the required infrastucture/dealer network before considering export to the US or other North American company. Or, become suppliers to the major brands that do have network in place so, in time, they can learn the business.

Your comment:

they cannot bear or are reluctant to invest in the product quality owing to little margin

doesn't bode well for a machine costing several thousand dollars...no matter how inexpensive it may be...if it's setting in a field, broken down and rusting out, it's an expensive purchase.

 

[DFAM]

compared to mahindra, korean tractor.

I don't play if there's no skin in the game.
In the described business model, I have everything to lose for some notional discount, compared to ... what?

 

[DFAM]

Quite reasonable. I am thinking setting up a service subsidiary in the U.S and start the sales with some states, Middle West for example. First we got to survive.

Besides an online repair instructions and online purchase system might be needed. If small problem happened, like a lighter is broken, you got to change by yourself. But if the engine or tractor is not working. We are gona hire some guys to repair it. How do think this model?

The bolded text is very telling of what the risk is.
"Little margin" may well result in an orphan tractor if the manufacturer decides not to built or support any product. Even a relatively cheap tractor would still have import duties and shipping costs...so, that initial low price may not be so low. And, without a substantial North American based parts supply, an owner would be paying those import duties and shipping costs.
As far as an online manual...is that worth no labor warranty? Not in my book...not even close.

I suggest your suppliers consider the required infrastucture/dealer network before considering export to the US or other North American company. Or, become suppliers to the major brands that do have network in place so, in time, they can learn the business.

Your comment:

doesn't bode well for a machine costing several thousand dollars...no matter how inexpensive it may be...if it's setting in a field, broken down and rusting out, it's an expensive purchase.

 

[RoyJackson]

Quite reasonable. I am thinking setting up a service subsidiary in the U.S and start the sales with some states, Middle West for example. First we got to survive.

Besides an online repair instructions and online purchase system might be needed. If small problem happened, like a lighter is broken, you got to change by yourself. But if the engine or tractor is not working. We are gona hire some guys to repair it. How do think this model?

That will depend on your target market. Some folks have no problem working on their own equipment...I think they're in a minority, but that's just an opinion.
However, it still goes back to the manufacturer and my comments in the previous post. If it's not a profitable enterprise..pretty quickly, I think (because it seems like you're trying to set up a low buck business), the whole thing will collapse.

Another thing to consider is China's artificial devaluing of the yuan. That is upsetting a lot of people, and not just in the US. Sooner or later (sooner, I hope) I expect stronger punitive actions.

I suggest you consider trying to sell your product through other retail outlets, such as Home Depot, Lowes or Northern Tool. If your product is acceptable and does sell, then going on your own may be a viable business.

 

[crazyal]

If the price is right there will always be a buyer. What will make or break you is those first few customers. If everything works out well for them and they let people know then it'll go far towards continued new sales. Also it would be wise to sponsor a forum like this and maintain a constant presence. If there's any problems make sure you are upfront about them and what you're doing to resolve the problem as well as what you're doing to make sure it's not going to happen again. If possible I would even offer a few tractors to members on the forum to try for a year free (or at a really reduced rate) as long as they post at least once a week about how well it's going (pros and cons).

 

[DFAM]

The whole thing is still a concept; I am trying to make a blueprint and definitely will take your comment into account.

Regarding the RMB’s devaluing or appreciating, I have a different perception. The rapid development of China is largely owing to demographic dividend and blue collar’s huge sacrifice. Besides, according to the American government, China has not been manipulating the RMB Rate.

That will depend on your target market. Some folks have no problem working on their own equipment...I think they're in a minority, but that's just an opinion.
However, it still goes back to the manufacturer and my comments in the previous post. If it's not a profitable enterprise..pretty quickly, I think (because it seems like you're trying to set up a low buck business), the whole thing will collapse.

Another thing to consider is China's artificial devaluing of the yuan. That is upsetting a lot of people, and not just in the US. Sooner or later (sooner, I hope) I expect stronger punitive actions.

I suggest you consider trying to sell your product through other retail outlets, such as Home Depot, Lowes or Northern Tool. If your product is acceptable and does sell, then going on your own may be a viable business.