The concept for Novanty originated from our supply chain consulting service called Part Distribution LLC. Our scope was to reduce our customers inventory costs, mostly by finding lower cost suppliers. Even if they were already buying form China, we were still many times able to reduce their cost significantly.
However, due to high minimum orders from these Chinese suppliers, high freight costs and increasing Tariff’s, it was getting harder and harder on our customers cash flow to make these bulk purchases. Most Chinese suppliers don’t offer credit terms, so our customers had to come up with a lot of capital up front. For our scaling customers, this was proving to be difficult. Our customers were asking for credit terms, and they were not getting it from Chinese suppliers.
Our “Aha!” moment came when we realized that we were solving the wrong problem. Favorable credit terms were far more valuable to our customer than lowering their cost. We then started asking Chinese suppliers if they would be interested in paying the interest if we were to offer financing to their customers. The response was overwhelming with nearly all of them agreeing easily. They realized that being able to offer their customers credit terms would give them a huge advantage over the competition. It was clearly a win-win for everyone.