Second Sourcing

Second Sourcing refers to a business practice wherein a supplier shares information about his product with his competitors in order to increase the supply of the product in the market. It is believed that this helps the original developer to increase acceptability of the product among a wide customer base, thus helping his business.

Second sourcing also works in favour of competitors who get access to know-how about a new product at zero cost as well as consumers who benefit from increased supply due to competition between many suppliers. It might, however, work against the interests of the original supplier as increased competition leads to a fall in profits.