Becoming an International Brand
When it comes to growing your business and making your brand a global presence, selling worldwide is a must. Shippo can help you connect with a worldwide carrier network via a dashboard and an API to get rates, print labels, generate customs documents and track packages. However, going global touches every part of your business, from warehouse operations to customer support.
To prepare your ecommerce business to go global, we invite you to watch this presentation by Lucy Marshall, from World First from the Shippo Summit. If you prefer, we’ve also transcribed her presentation below.
Why Should You Go Global?
Internet Retailer is calling for sales to triple in 2017, and ecommerce still makes up only 10% of the overall commerce market, so there's a massive growth opportunity. They also report there's $3.1 billion up for grabs in sales in Amazon's European marketplaces alone, and Amazon has ten marketplaces globally. Using Amazon as an example, their storefronts have customers in 185 countries, so there really is a global landscape for buyers that are buying outside of their home country.
There is less competition. A lot of the sellers that I work with complain of a saturated market in the US, to whom I say, "Well, go to the UK, there's no translation barrier, there's no issue in terms of getting your product over there, it's just logistics right off the bat."
By 2020 eMarketer predicts more than a quarter of the Chinese population will shop online for foreign products. Their population is 1.37 billion people, so you do the math, that's almost a mini-United States that you could be selling to. China did 907 billion in turnover on ecommerce channels last year.
Other benefits of going global include holidays in different countries. It gives you an opportunities outside of Christmas and Thanksgiving to take advantage of sales. For example, Singles Day in China did 17.8 billion in revenue just on that one day. There is a willingness for customers to pay more for authentic US goods just outside of the US.
As a retailer, a simpler approach to testing international potential is by selling on marketplaces like Amazon or eBay. There is a built-in audience, localized platform, payments and customers support. Starting by selling on a markeplace can help you figure out how successful your products will be in the country with less investment than translating and localizing your entire website.
For Retailers: A Case Study
Let’s start with a case study. This is a fantastic example: Death Wish Coffee. This is an ecommerce brand that was selling on their own Shopify storefront. The founder of this was roasting coffee in upstate New York, he was working in a coffee shop, and he was like, "You know what? I bet I could make better coffee than anyone else out there."
They were founded in 2012, and they wanted 90-95% of their business to be done on ecommerce channels. In addition to their own storefront they also sell on Amazon globally. They were featured on Good Morning America in 2013, which ended up being the tipping point for their business that really started driving their domestic sales. They started selling internationally after that because they wanted to be recognized as a global brand. The international markets gave them the opportunity to start selling in a loosely tapped market, so they were able to drive revenue by virtue of having less competition in their same space. Their Superbowl commercial aired in 2015 and sent their sales through the roof.
They did encounter challenges. "I don't know where to start with this. We are a brand in upstate New York, we don't know the first thing about selling globally." They didn't know how to manage different currencies. They needed to figure out how to bring funds back to the US, and they needed to figure out how to protect their pricing against those fluctuating rates. They had to figure lots of things as they went global.
So, Let’s Go Global
Approvals and Restrictions
First, make sure your products approved to sell in overseas marketplaces. There are different restrictions in every marketplace and country that you sell in, so you need to be aware of those to make sure that the product that you're sending is legal in that country. You need to verify not only the product, but also the ingridients.
This is especially true of anything that can be considered hazardous materials. There are certain perfumes that have an ingredient that are very dicey to get into certain countries, so you have to do your due diligence and make sure that you're covered.
Another verification is to make sure your products are okay to ship. I know this is a huge issue with lithium batteries. If a container blows up, you're going to be in big trouble, so just make sure you're able to ship everything before you commit to going global. UPS has a great resource to check restrictions by country.
Consider if you're a reseller of items or a private label brand. If you're reselling Aveeno face wash, that listing probably exists in marketplaces in France or in Germany, Italy, Spain. If you're a private label brand then you need a translator to make your listing, you need a translator to redo your labeling, and you need to make sure that it's localized to the country in which you're selling.
Can your products be price competitive overseas? You want to make sure you're working with a repricer. Prices are constantly fluctuating, the more channels you're on, the more you will need to have someone control that pricing for you. If you have an automated repricer its going to be able to adjust, and that's going to improve your seller ratings and make your product sell through quicker.
Have a strategy in place to protect your margins as the currency rates fluctuate, and make sure that you have a cost effective way of bringing your funds home. The foreign exchange rates are constantly fluctuating, especially in the instance of Brexit we saw the rates go from roughly 1.5 to 1.25 in the span of a day. That massively affected some of our clients, and luckily we were able to help them protect against that for those that had bought out forward contracts or chose to do rate alerts and were just aware of what was happening in the market.
Fulfillment and Returns
How will you do international fulfillment and handle your product returns? You can look into 3PL options overseas. You need to make sure you're going to find someone that will help you handle returns. Ask if they will help with customer service globally. You have the amazing options to fulfill from the United States as well. Companies like RR Donnelly have an incredible business helping customers do just that, fulfill globally from the states. Figure out shipping and logistics, you will have to deal with customs, import brokers, and again there are people that can walk you through this step by step. Make sure to allow time for any kind of issues with shipping or customs. Often no matter how much due diligence you do, your products might get caught up in customs, and it's just important that you don't have a strict deadline for your product to be there and you're giving yourself enough time for those mishaps to happen.
As you're figuring out which products to sell overseas, perform inventory analysis. See what your best selling products are in the US, and then do the market analysis as well. Some things that sell really well in the US might not sell well in Germany, but it might sell well in the UK. Gauge each market and see what the opportunity is for your product catalog there.
Now that you know all that, you are ready to go global. Here are some country specific details to keep in mind:
EU and UK
Going into the UK and EU, you need to set up your VAT number. This stands for a value added tax, it's the exact same thing as a sales tax in the US. It usually takes three to six weeks to get the VAT number, and I recommend working with a tax advisory firm. I don't do my own taxes in the states, I wouldn't be able to figure out how to do it globally. I think it's important to have an expert in that field help you with that initially.
If you're selling into Japan you have to register for a consumption tax number, similar to a VAT or sales tax, you just have to make sure you're figuring that out. Find an importer of record or a 3PL service to receive your product there. Then it's basically the same process as any other country. Do your inventory analysis of what works in that market. Figure out shipping and logistics, don't blow up a container, allow two weeks for any issues. Then set up your seller pages in Japan. Japan's a little bit trickier because I have a lot of customers that can get away with using Google translate for German or French. It's a lot harder in Japanese. Also you will also need an effective customer service strategy in line with that as well.
Recently our newest solution is China, and we're super excited about that. World First has partnered specifically with Amazon China to help foreign sellers. Amazon China doesn't program doesn’t have FBA solution right now, and it requires the seller to ship every order directly to the end customer. The Chinese customers pay RMB and Amazon will disburse the funds in RMB, so you need a Chinese bank account to receive the funds. Amazon will take the first line of customer service, but if the questions are about the product that the customer service is not able to answer, they will forward an email to you. The listing information of every product needs to be in Chinese, and Amazon will help you with the translation for a certain number of products for free. With Amazon willing to assist with customer service and translation, that just leaves the payments issue to solve and here World First can help.
There is a huge selling opportunity in this country especially if you're selling baby products. China just lifted their one child law, so now you've got the opportunity for two babies, and baby products are flying off the shelves on Amazon China. Health and beauty products are huge, light luxury items, this includes Michael Koors watches, Rebecca Minkhoff purses. Something in that price point that's a little bit nicer but not a Louis Vuitton bag. Vitamins do extremely well in that marketplace too.
Getting Cash from Overseas
Finally that brings us to bringing your funds home, which is what World First business is based in. The tools that you can use with this are a forward contract. What a forward contract allows you to do is book out a certain exchange rate for a period of time. Say if you know you're going to be moving half a m illion pounds in sales over six months time, you can book out a rate. That way that allows for you to protect your profit margin and trade down from that rate for the next six months. That way if the rate suddenly tanks, you're protected under that umbrella. If the rate suddenly goes up, there's a potential that you might lose out on that a little bit, but it's a tool you can use to at least predict your selling future for that time.
You can also sign up for rate alerts, which allows you to say, "Hey, the rate just went up like two points, now's a really good time to trade." Firm orders will trigger a payment if a certain rate is achieved, and then market watch as well, it just allows you to be alerted about anything in the currency market that may affect the rates as you move.
The transcript has been modified for clarity.
Speaker Bio: Lucy Marshall is an eCommerce Account Executive with World First based in their US office in Austin, Texas. She specializes in working with marketplace sellers wanting to expand their business to international markets bringing solutions to the table for the challenges when going global. Prior to joining World First Lucy worked in eCommerce for a small private label brand in DC.
This video comes from our inaugural shipping conference: Shippo Summit. Hundreds of customers, partners and industry experts from around the world joined us in San Francisco for a full day program of inspirational talks and dynamic conversations that explored leveraging shipping as a competitive advantage for ecommerce businesses.
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