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Balancing saving and security with discounted prices and risk in a saturated market

There is currently a high availability of material in the market due to a significant drop in consumption. This has led to a build-up of inventory throughout the supply chain: from end-customer warehouses to component manufacturers and distributors.

Official distributors have accumulated large amounts of stock and are struggling with orders that have been delayed or cancelled by customers, so they are also struggling to manage these orders with component manufacturers in the hope that the market will slowly recover.

Meanwhile, you find yourself navigating an electronic components market characterised by stockholding and an increasing variety of very low priced offers. While this situation offers savings, it also raises concerns:

  1. As the official market becomes saturated with stock, official distributors cut prices to reduce excess stock and stimulate demand. This price pressure results in ‘discounting’.
  2. At the same time, prices on the open market are even lower, as those who have accumulated large stocks of materials now try to monetize them quickly by ‘selling off’ components.
  3. However, the open or grey market carries a high risk of counterfeiting. Components sold through these unofficial channels may be fake, defective or not up to quality standards. The lack of strict controls leads to a lack of guarantees, increasing the risk of quality problems and malfunctions.
  4. So, when it comes to planning your orders, can you be sure that the distributor you have selected is able to guarantee you the best terms, even for the final deliveries, and even in the event that the market picks up again? Or is there a strong possibility that you may find yourself in a situation where they deliver the final quantities of your ordered goods to whoever is ready to pay the most – as happened frequently post-Covid. And if the distributor, in this case an independent, orders and then keeps all the material for your full order inhouse, how will the guarantee work, given that they will be required to keep the material in their warehouse for a long time?

The dangers of fraudulent websites

Recently, a number of fraudulent websites have emerged that offer electronic components at bargain prices, but never deliver the goods ordered. These sites, often visible at the top of Google search results thanks to premium advertising campaigns, require payment in advance and then fail to ship the products. ERAI, a leading global provider of electronic supply chain information services, has identified several of these fraudulent sites, including

  • www.accurate-chips.com
  • www.best-component.com
  • www.bom-components.com

For a complete list, please visit ERAI’s dedicated page at this link.

Risk indicators:

  • Request for advance payment.
  • False claims of being an authorized distributor.
  • Similar language between different sites.
  • Offering obsolete or hard-to-find components at very low prices.

Danger of pseudonyms:

The operators of these fraudulent sites also often use pseudonyms to disguise their identities and facilitate fraud. Examples of pseudonyms include Addy from sales@stock-chip.com and Dave Wang from dave@components-center.com.

A full list can be found on ERAI’s dedicated page at this link.

In order to protect your company from these risks, it is important to take preventive measures and to work with suppliers you can trust.

Opportunities and risks of bargain offers

Obvious opportunities:

  • Cost savings: Reduced prices can offer significant savings on electronic components.
  • Immediate availability: Some offers allow you to obtain hard-to-find parts quickly.

The risks involved:

  • Counterfeiting: Non-original or B-class components can compromise the quality and safety of your final product.
  • Lack of warranty and support: Unofficial suppliers often struggle to provide after-sales technical support, leaving customers without assistance when problems arise.
  • Economic fraud: Fraudulent websites may ask for payment and then disappear with the money without ever delivering the products.

What to do?

At Electronic Partner, with over 22 years’ experience in the industry, we understand the challenges that the electronic components market can present.

Independent distributors can offer a degree of reliability in meeting orders on time, even in a volatile market. This is possible because they often secure material in advance by purchasing and stocking large quantities of components.

It is important to understand, though, that to ensure quality and compliance at final delivery, stock held long term must be re-tested before every delivery.

Electronic Partner implements rigorous screening and testing procedures to ensure component authenticity. Alterations to components, even original ones, can only be detected by experienced and impartial professionals. For this reason, we only use external test houses that, on the basis of the cases of non-conformity that they have collected, suggest the most appropriate types of tests to be carried out.


 

Don’t let low-cost offers jeopardize your production and reputation. Our experience tells us that prevention is always better than cure. We are here to help you with support and assistance, based on our long history of success and trust in the industry.

🚀 Contact us today to find out how we can help you protect your supply chain and ensure the quality of your products. Our experience is at your service to make a difference.

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