Why are some XH connectors so cheap?

Talking about the reasons for the uneven prices of XH connectors, you must first understand the production costs and sales models of XH connectors, because these two points almost determine how much of the price difference of the XH connectors you buy is added by the middleman.

About Production Cost:
The production cost of Xh connector mainly includes raw material cost, processing cost and labor cost.

XH Connectors are mass-produced through micro-manufacturing processes, and the larger the production scale, the lower the unit price. So, if you need to buy Xh connectors in bulk, you can first understand the supplier’s factory size, because this will determine the price you can get.

Of course, in this era of information transparency, many traders will pretend to be manufacturers by stealing factory videos and photos. This is the best way to ensure that you get the price first hand, and at the same time, you can see the production method and raw materials of the factory, and judge the product quality by the above factors. If you are interested in ”how to judge Xh connector raw materials”, you can read the next article.

XH Connector Sales Model:
I will describe the whole sales chain through the pictures below. Of course, this is not only the sales mode of XH connectors, but it is applicable to the whole electronic component industry.

• Factory design and production

• Authorized distributors：

Also known as agents, authorized by the original factory. The products come directly from the factory, and the price has a significant advantage.

• Independent distributors:

Mainly purchased from agents or other independent distributors, without authorization from the original factory. The price advantage is small, and they generally do not have strong supply chain management capabilities.

• Catalog distributors:

Using product catalogs as the carrier of information dissemination, and release to target market members through various channels such as the Internet, mail and face-to-face distribution, offering a small number of products and high prices.

• Electric business platform:

A network platform distributor that collects customer needs and matches supply through the Internet, mainly to meet the material needs of the majority of small and micro long-tail customers, not to mention the price.

• End customers

The above is a brief description of different tiers of suppliers, and you can see their respective advantages. If you want to lower procurement costs with consistent product quality, it is directly related to which tier of suppliers you can find.

Seeing this, I believe you must have a question, why don’t end customers purchase Xh connectors directly from the manufacturer?

There are really too many factors involved. To make a long story short, I will pick out three key points to explain:

• 1. Manufacturer➡end customer information asymmetry
  Upstream suppliers are highly concentrated, and downstream electronics manufacturers are highly fragmented. The asymmetry between upstream and downstream of the industrial chain determines that upstream suppliers can only focus on serving a small number of global customers.

• 2. Different division of labor in the industry chain
  Manufacturers focus on product technology development and design to be the first to launch products with better performance and lower cost, so they don’t spend too much time and energy on marketing and promotion. And the manufacturer is mainly engaged in wholesale, if your demand is small, then even if you find a factory, you can’t get a low price.

Distributors focus on marketing and customer development. Gain a large market share and form a certain scale advantage by gathering the procurement needs of many end customers, so as to obtain better price support from manufacturers

• 3. Inventory management and delivery barriers

Since the electronic components industry is a global industry, end customers often need to purchase across borders and deliver the products to the place designated by their customers within the agreed time. The logistics management system of the transaction is relatively complicated.
Manufacturers with production capacity do not necessarily have the ability to export across borders.
Manufacturers with the strength to export may not be found by end customers,
So the sales pattern described in the diagram above becomes a cycle.

Seeing this, I believe you already know the reasons for the different prices of XH connectors, and you must have found suppliers at different levels!

If you want to purchase Xh connectors or other electronic connectors, you can also refer to the content of this article, I believe this will help you when selecting suppliers!

Finally

I’m JOJO, Marketing Director of Guozhi Electronics. Has helped thousands of customers save procurement costs.Familiar with the company’s advantages and customer pain points.Use our market resources to help you solve problems, the most important thing is to save you time and cost.

If you need to purchase other electronic components, customized products and other services, please contact us.