I have managed through my contacts in another country to bring in factory original parts for a popular product that is readily available in North America. So I do not sell the original product (a pump) but I can get the rebuild kits for it for substantially less than the going rate over here, by going around the North American distribution system. So I am buying the kits indirectly through a distributor in Japan, and shipping them here in containers. They are factory parts, but because the authorized North American distributor has set the price so high, I can undercut him and business is very good.
But I sell more and more of these things, and eventually the distributor is going to notice me. I think that the worst can happen is they will track down my source and stop them selling to me. But I worry a bit that there is a law I am breaking somehow. Am I missing something?
My guess is that Japan-guy is likely violating the terms of his agreement which likely does not give him rights to sell to North American customers.
PS: Not a trade lawyer
In reply to John Welsh :
I am pretty sure you are right. And so long as I am legal I don't care really. Just want to be sure no poop will splash on me when it hits the fan, which it inevitably will. In the meantime I want to keep exploiting my loophole if possible.
D2W
HalfDork
10/31/19 5:05 p.m.
PS: Not a trade lawyer
You are buying rebuild kits.
You did not make any agreements to not sell parts.
You buy parts. You sell parts.
You are doing nothing wrong.
The person you are buying the parts from may or may not have an agreement.
They may have an agreement that says they cannot sell whole parts to anyone else, but nothing about rebuild kits.
They may have an agreement that they can't sell any parts to anyone else.
Either way that is not your problem. That is theirs to deal with.
pheller
UltimaDork
10/31/19 6:37 p.m.
Sometimes there are no agreements. Sometimes it's just a matter of a unique product that until recently, the overseas manufacturer or distributor did not advertise on a global scale.
I found this with some unique parts that were being used by European motorcycle rebuilders. Think cafe races, street trackers, that kind of thing. I found one of the more interesting details on these builds were these really sleek turn signals. Not retro, not too modern, just nice signals. The Euro shop was selling them for 70 Euro a set, which at the time (2010ish) was like $100 for two.
I was able to find the source (Japanese) and with an order large enough, could get the signals for like...$30 a set.
It wasn't that the source was secret or had some sort of restriction, it just was that with thousands of signal options out there, it was a matter of finding the needle in the haystack and reselling it.
Are they legal to bring in the way you are bringing them in? If so, not your problem.
(not a lawyer but think about stuff like this constantly)
At worst it's a (ever so slightly) shady business practice, but if the US/North Americas distributor doesn't have exclusivity in writing then there is really nothing you are doing wrong. I have seen similar relationships with some Euro parts suppliers where there are "Official Distributors" that just get deeper discounting with volume but no other protections, and there are some smaller suppliers that just sell at or just over cost to just move volumes. Doesn't seem to make sense but with no/little overhead it's workable.
North American distribution is tightly controlled by the pump importer. The pumps are very expensive as are the rebuild kits, but only over here. In Asia its just another pump, and the parts sales are much more competitive there so it was pretty easy to find a cheap source, who loves me of course. I don't think I am breaking any laws but I wanted to toss it out to see if I my greed is obscuring my good sense.
Look up the doctrine of first sale. You have no agreement with the distributor or manufacturer, they can't control what you do with them. You buy it, it's yours to use, sell, throw away, whatever. As far as I know the worst thing they can do to you is cut off the supply of more. If you did have an agreement with them then there would be remedies spelled out in the contract and they would have a breach of contract case. without that agreement - they got nothing! I am not a lawyer and this advice is worth what you paid for it though.
In reply to dculberson :
Sounds lawyerly though! I will save your advice and trot it out in court when the need arises.
What kind of pumps are these if you don't mind me asking?
This happened many years ago ....
My friend bought parts from the dealership in Europe for resale in the USA ,
They of course had the car company logo on them since they were original ,
The USA branch of the car company went after him for using the company logo ,
So he got the grinder out and off came the logo....
Also who owns the tooling to make these parts ?
If it's the pump company they can tell the maker to quit wearing out the tooling making you parts.
Hope this gives you some other ideas , I would just keep doing what you are doing , but say "parts for ZZZ pumps" and not ZZZ pump parts.....
