From Local to Global: The Journey of Expanding Your Brand Internationally

Want to know how to scale an ecommerce brand into a global market? Dive into our latest podcast episode where we reveal how hybrid fulfillment is the key to global scaling!

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About the Guest: Josiah Garetson is a member of the EcommOps team, with expertise in international fulfillment and B2C sales strategies. His background in global business development and cross-border ecommerce provides critical knowledge in navigating the complexities of international shipping and sales tax regulations.

 

In this episode of The EcommOps Podcast, Simon de Raadt, Dayu Yang, and Josiah Garetson tackle the intricate process of scaling ecommerce brands globally. If you’ve been considering expanding your brand internationally, but are uncertain where to start, then this episode is exactly what you’ve been looking for. The discussion kicks off with understanding the reasons behind why international expansion is an opportunity and a necessity for ecommerce brands that want to seriously grow, especially for brands that have sales driven by organic demand and social media influence.

 

Throughout the episode, hosts Dayu and Simon share their insider knowledge, like leveraging international fulfillment centers in China to optimize shipping costs and delivery times. They emphasize the importance of testing new markets before committing to extensive localization, and cover critical logistic aspects such as handling taxes, duties, and why following regulatory compliance is an absolute must. The panelists break down these complex issues to show that with the right strategy and tools, going global is far more achievable than many brand owners think.

Key Takeaways:

  • Understanding the Need for Global Expansion: Ecommerce brands with social media-driven audiences naturally attract international followers. Leverage this demand to expand your market reach.
  • Efficient Cross-Border Shipping: Utilizing fulfillment centers in China can drastically reduce shipping costs and times compared to shipping from the U.S. to global markets.
  • Navigating Tax Regulations: Learn the distinctions between duties and taxes, and how to streamline these processes when shipping cross-border, especially for business-to-consumer (B2C) transactions.
  • Optimizing for Local Markets: Start by testing international markets before making heavy investments in localization to ensure there is sufficient demand.
  • Regulatory Considerations: Address labeling, packaging requirements, and intellectual property issues to avoid legal complications as you scale.

Resources:

  • EcommOps: Learn more about leveraging their fulfillment services for global expansion.
  • IOSS (Import One Stop Shop) Number: A simplified VAT declaration process for ecommerce sellers shipping to the E.U.

Encouraging listeners to open their minds to the potential of international markets, this episode of The EcommOps Podcast is a must-listen for any ecommerce brand looking to expand its horizons. Be sure to tune in and stay informed about navigating the complexities of scaling a brand to an international level.

Stay tuned for future episodes, where we will continue to bring you the inside scoop from the experts to help your direct-to-consumer (D2C) brand thrive in the ever-evolving landscape.

Conversation Transcript

00:00 – Simon de Raadt: Let’s say you’re a strong brand in one country, and you have considered scaling to other countries, but you simply don’t have the experience on how to do that. In that case, this episode is for you. Scaling global is something not to be afraid of. It is possible, it does require some research, and we want to give you this episode to actually get started with your global journey. This is Dayu and Simon here on The EcommOps Podcast, and we’re going to tell you more about going global with your brand.

 

Okay, I’m very excited about this episode. Besides Dayu, we have our team member Josiah on the call as well. Both of you guys are from the U.S. So, maybe to kick things off about, let’s say, a U.S. brand that wants to go international, why should they consider this? And how complex is it, really?

 

00:50 – Dayu Yang: So, two reasons. One, it makes obvious sense, and I’m sure Josiah is going to talk about some of the numbers, why it does so. And then two, our EcommOps clients, the majority of them, and especially the larger brands, all utilize international fulfillment from China in some way to supplement their local strategy. So, it makes a lot of sense, and most of our clients do it. And in fact, something between 40% to 60% of our daily volume is actually to international markets outside of the U.S.

 

01:24 – Josiah Garetson: Yeah, I mean, I agree with Dayu for sure. I mean, I think it’s probably the number one opportunity for us DTC brands, let’s say. Yeah, I think on one hand, it’s like a question of, like, all of your websites are natively. I mean, the web is natively international already, depending where your traffic is coming from. Maybe you have a social media presence. Maybe you’re on TikTok or something like that. The algorithm is publishing and pushing your content.

 

And a lot of the new DTC brands are obviously like, like content driven, social driven, audience driven. Just organically, you’re seeing that demand from outside the U.S.. If you’re on Twitter, you’ll have followers from all over the world, and then you won’t even realize it until maybe you go in and you look at some of the analytics. Unlike traditional retail, where it’s very fixed to a specific time and place or geography for ecommerce now, and especially because a lot of the traffic for ecommerce comes from global platforms.

 

Naturally, I think your audience is global, and therefore, the question is really like, why are you not doing this? Why are you not converting those followers, those brands? I would say that’s like…

 

02:39 – Dayu Yang: Yeah, let me speak to that, actually. So when you think about what a DTC ecommerce brand is and there has to be a focus on the word brand, right? So it’s not just about running paid ads and that’s all of your sales, right? That is a way to sell a product. But if that is literally the only way you can sell a product, then you’re not a real brand. I mean, I’ll just be straight on that. And we have some podcast episodes on what I think a real brand actually is a real, long-term sustainable brand.

 

If you are a real brand, then you’re going to have demand from most likely all around the world. Unless I guess your whole brand is selling, I don’t know, American flags maybe then you get less demand, right? If it’s a super hyper local brand, then it’s a little bit different, right? But the vast majority of brands out there, and when you think about a brand, I want you to think about like the brands that you shop from, right? Like Nike or, you know, Apple or, you know, just whatever you buy from a day-to-day basis, right? Like there is no geographical restrictions to that, as a matter of fact.

 

Like, you know, I’m sure you’d be frustrated if you really want to buy a brand and they literally cannot ship to you, right? So for brands these days, and Josiah was mentioning things like social media and, you know, kind of how much awareness you have out there, it’s not about just your social media strategy. It’s not about like, you know, like how much ads you spend on like sponsored posts, whatever, right?

 

It’s about that awareness many times around the world about your brand because your brand is a good brand, you sell good products and just naturally you’re going to have people around the world want to buy that product. And that is what we see actually in our largest clients who actually run real brands, whether they like it or not, they’re going to have demand from other countries, even if they primarily run Facebook ads. You can’t also control that. Literally, no one else outside the U.S. sees your Facebook ads either, right?

 

So as your brand grows, it’s a good problem to have. You’re going to have additional demand from international markets and you should strive for that as well. And then how do you serve them? If you’re running a U.S. center, for example, if you’re only running local fulfillment, it’s going to be incredibly expensive to ship anywhere else except for U.S. markets. And literally because of logistical constraints, you just can’t actually serve the demand that you have elsewhere, and you might have a ton of demand internationally. However, you may not have a massive amount of demand within each individual market.

 

Not enough that it makes sense for you to start an Australian fulfillment center or like multiple fulfillment centers. Right. And that’s fine. Right. But what is the way to actually access that demand and be able to ship to your customers, and then therefore show to your customers outside of your local market?

 

05:37 – Simon de Raadt: Okay, so the tools are there for you to go global. There’s no limitation on tools. So, what will be then? You mean your store, you can target global. Your social, you can target global. Your ads, you can target global. But what are then good first steps for a brand owner to go global? What would you suggest?

 

05:57 – Dayu Yang: I’ll answer that first. I think it’s a very easy answer. I think at least as long as your product is made in China, and most of your products probably are, ship it to a China fulfillment center like EcommOps. Open up your ads to those countries, to the countries that you can ship efficiently to and then start selling. So from my point of view, it’s literally as easy as that because we’ve seen so many clients do exactly that to unlock their international demand.

 

But, you know, that’s my point of view. But there’s obviously other considerations as well. And Josiah, you might be able to speak about some of the nuances of that.

 

06:36 – Josiah Garetson: Yeah, I think it depends. Dayu is talking a little bit about, first of all, it’s the demand. It’s great if you have a pull. So, you have customers in other countries, and that’s a pull you’re not having to actively push. So, it’s organic versus paid. Organic is like pull. Paid is more of a push strategy. And then as far as easy. I agree for the most part, right. I think the way to think about it is like necessary versus sufficient, right? Or optimal.

 

Okay. Like, let’s say I want to. I see that. I’m looking at my Google Analytics. I see that I have a couple hundred people from Germany who are visiting my website, right? I think to myself, well, I don’t have a German website. Like, how are these people finding me? How are they buying for me? But actually, like 50 million people in Germany can speak English, right? I mean, they browse, they read English news.

 

A lot of European countries, we see this, like, you know, Singapore is an English-speaking country. Like Norway, 5 million people. This is like a medium-sized U.S. state. Everyone in Norway speaks English, right? I mean, it’s like the second language, and so, like, from that perspective, I agree. Okay, so you have demand. What is like the absolute minimum necessary okay, you have to have demand, right? Someone has to find you somehow, right?

 

That’s landing to your website. There’s other platforms in the past, literally text message people run text-message commerce sometimes, like parallel imports. Number two, you have to be able to accept payments. And so the majority of the world, certainly in Europe, elsewhere, they take Visa and Mastercard. So, maybe you’re like, oh, I need to have a specific German payment option. A buy-now-pay-later. That’s specifically for the. Well, it may be down the line, but to reach the 50 million Germans, the half of Germany that are English-speaking, that have Visa cards, you’re really only trying to sell to just, like, your current product, you’re not trying to sell to every single person in the U.S.

 

You already have audiences, so find your audience. You’re selling beach towels in Florida. You’re not really worried about, like, oh, my gosh, I can’t reach these. You’re selling cosmetic products. You’re targeting half the market. And so, yeah, demand, are you able to accept payments like number two, and number three, are you able to ship? And so, for sure, I think probably the shipping, shipping cross-border is where a lot of people have questions, right? Because you are crossing an international border with that package versus, like, okay, if I’m shipping something from Florida to New York, right, like, it’s one country, you know? So, I would say I agree. And then there’s, like, sort of, like, additional things, like maybe you think about.

 

But in terms of the bare-minimum necessity. It’s literally like, I’ve had customers for brands that I’ve started where, you know, someone from Japan, like, randomly ordered on my Shopify store. Well, I just go to the post office and I print it off, and I pay a little bit more for Japanese postage, and they can ship it to Japan. Right. I’m not actively, like, targeting. Targeting the Japanese market, but I’m able to accept the payment. Right.

 

I don’t know how they landed on my website, but I’m able to accept the payment and I’m able to. The U.S. Postal Service (USPS) ships to Japan. Technically, it’s gonna take a long time. It’s gonna cost a little bit more money, and so this is the point of, like, optimization, right? Like, how do we, like, lower those barriers? Knowing that the barriers, and I think probably, like, what Dayu’s saying, it seems intimidating. I think we’re getting into a lot of the…

 

Okay, what is duty? What is tax? What is cross-border? B2C? All of these terms, right? International trade terms, import, export, but actually, I think that it’s like a knowledge question, what people understand a little bit better. I mean, I used to be extremely intimidated. Basically, I was like, wow, how could you ship cross border? How could you ship internationally? How could you reach customers? The more I researched it, I was like, actually, it’s not that complicated.

 

10:33 – Dayu Yang: Yeah, I think you made a very good point around the long term optimization play versus just getting started and just testing the market now, previously, you can’t just test. I mean, I guess you can’t, like, you’ll pay an arm and a leg or your customers will pay like a ton of money to ship to an international market. So, technically you can, but, like, not really effectively. Right. But it’s not about that. So.

 

And I will be honest, if you really want to succeed in an international market, especially non-English-speaking, then you do eventually want to localize. You do want to eventually have, let’s say, a German-language website, which, by the way, is not that difficult if you get to it, right, and you do want to eventually have to accept something like Klarna, which is very, very popular in Germany. However, you’re not trying to, like, you don’t need to capture all the 50 million, like, English speakers in Germany or the entire Germany market, like, right away, right? You’re not trying to double your sales just in Germany. You could potentially double your sales through all of these international markets put together.

 

Right? So just a slice of a market like Germany. And Germany is actually one of the tougher markets because, you know, it’s still not fully English native and there are some payment processes, but like, the U.K., Australia, Singapore, I mean, these are countries that can speak English. They’re used to using credit cards. And honestly, you could probably use, like, pretty much the same marketing campaign, the same social media campaign with them as well. So, at the first step is before you even think about optimizing your global strategy and, like, add, like, you know, three, four times to your sales, like three, three years down the line.

 

Get started first. Like, just get started and being able to test in an efficient way. And by the way, that’s going to be like, probably shipping from China to global markets. We’ll talk more details about that later and I can have a real life example. So, ecommerce and myself were actually partnering with a Thai influencer who was creating a creator-led brand that was originally meant to target the Thai market.

 

But hey, we could ship internationally, so might as well actually just target, like, Thai speaking populations around the world as well. And we actually, or she actually put out a very simple social media post. We had 15 samples to give away to international customers, and it was a strategy to kind of gauge international demand as well. She put a simple post and tons of comments came in asking for the product in Thai, by the way. There was Japan, there was Korea, there was the U.A.E., there was multiple countries in the EU, some countries that like, we couldn’t actually ship to, by the way. But still, it was just from one social media post. Without even actually formally opening up these markets, there was already so much innate demand from Thai speakers in these markets. So, that’s just one, one tangible example of how, first, if you have a good brand, you likely will have the ability to drive demand in different markets. And then second is there is a lot of value just to test it out, right? You know, just to get started and figure out the optimization problem later on.

 

13:48 – Simon de Raadt: I really like what you say is actually, it’s going global, actually all the tools are already out there. And then the next step would be actually to scale locally. And then once you actually identify that there’s a demand, then you’re going to look for the solutions to actually align with what the local consumers are looking for. So, actually, it sounds very easy. Basically, the tools are there to sell globally, you can ship internationally. But how does that actually then work? What would that supply chain look like? And where are people getting stuck then?

 

14:19 – Dayu Yang: So, Simon, it’s, well, it’s honestly really straightforward, because if your factory is based in China, and you have a fulfillment warehouse in China, like ecommerce, for example, really all you really need to do is ship that product to your warehouse and open up the channels on your platform, and we’ll be able to ship directly to actually technically, more than 100 countries. However, we do suggest that you focus on 30 or so of the top countries that have the most efficient and fastest shipping lines.

 

And, you know, shipping globally is actually extremely efficient, especially if you’re compared to, for example, shipping from the U.S. to a international market to the U.K., for example, you’re seeing speeds as fast as four to six days as compared to the U.S. to the U.K., it might be more one to three weeks. And shipping from China to the U.K., for example, compared to the U.S. is a fraction of the cost, 30% to 50% of the total cost. And that’s not actually including the cost of you warehousing in the U.S. in the first place.

 

And that pattern holds itself true across most of the major ecommerce markets as well. So, it’s cost effective, it gets there fast enough, right? It’s either somewhere like four to six days or sometimes a little bit slower, maybe seven to ten days or so, depending on the market. However, one thing to keep in mind is that outside of the U.S., there is definitely less of a pressure for extremely fast shipping speeds.

 

Amazon Prime today has not really taken over most of the world. It’s really just mostly taking over the U.S. So, yes, in the U.S., faster shipping speeds are going to be somewhat more of a concern. But we’re talking about global now. Someone in Australia is going to be okay with, you know, ten-day shipping because everyone in Australia knows that most brands out there aren’t going to have a local Australian warehouse, so they need to get it somehow, right?

 

And most countries around the world, like, they’re just not top markets for DTC ecommerce. So most DTC ecommerce brands, even larger ones, do not have local warehousing. So, they’re not going to be able to ship efficiently. So, no one expects something like two-day shipping. And they’re totally fine with seven to ten-day shipping at reasonable cost, especially if you proactively set the expectations as well.

 

And I’ll wrap that point up as well. We see massive companies doing the same thing. Shein, for example. Shein, the biggest fast fashion company out there in the world right now. They ship to over 100 countries. They’re killing it in most of those countries, and everyone knows they’re shipping from China. Actually, the only reason why they’re so big today is because they’re shipping from China. How else do you expand to 100 different markets at once?

 

This is not just theory and this is not just our clients, but the biggest brands, the biggest companies in the world are using this exact strategy to access global markets.

 

17:18 – Josiah Garetson: Yeah, I think the Shein example is good. You can see that even Americans now are more comfortable, or they’ve been conditioned, or that the market’s changing, especially younger, like Gen Z are willing to buy something and they’ll wait for it and that’s fine, right? Yeah, there is an expectation in the United States for sure. Like, I live near New York. We just assume that, like, all of the world’s goods should be, like, at our doorstep in 20 minutes or like same-day delivery. You know, that’s just like a baseline expectation. You know, even when I used to live in Singapore, and this is an interesting case because Singapore is a small country and there’s 5 million people. It’s actually just a city.

 

You don’t have 100 million plus market. So a lot of Singaporeans, they buy things. It’s interesting because it’s crossroads; east and west. They buy a lot of furniture, daily necessities. They’ll buy it from China, they’ll get it shipped in from China, from Taobao or Chinese platforms. Then also there’s a lot of Singapore posts. They set up a service where you could basically shop online in the United States and in Europe or the U.K. and ship it to a local warehouse, and then they would bring it cross-border to you. That would take a week or two weeks.

 

So, it’s extremely common, I think, outside the United States where you say, okay, well in the United States I have to get it to them for sure. If you’re on Amazon, you want to be on Prime. They’re going to treat you higher in the algorithm or whatever, but outside the United States, I think there’s an awareness, and I think people are okay, you know, yeah, waiting essentially, you know, but it’s not as long as you think. That’s I think what Dayu is saying. Right. It’s, it’s, it’s not weeks and weeks and weeks through the post office anymore.

 

Right. Depending on the service and ones you use.

 

19:07 – Dayu Yang: Oh, and by the way, I will say that this is, look, if you’re selling some generic product that someone can get on Amazon anyways, well, first of all, don’t do that, right? Then, someone is going to, like, someone is going to want toilet paper in two days or less than two days probably, right? So, don’t sell toilet paper. This is not what we’re talking about here. Right? But if you have a unique brand that people want, actually, this is not even just small ecomm brands, right? I think the last two computers I got were shipped from China to the U.S. So, I got a Lenovo laptop.

 

It was shipped from China. I got a MacBook Air recently. It was shipped from China. Like, the tracking literally says from China. It was because these were custom builds. Right? And because of that, maybe I’m a little bit like too specific in my builds, but I want a specific configuration that I can’t just pick up on my local Best Buy or local Amazon. And I’m willing to wait one to two weeks from it. And they’re very obvious about it. Right?

 

This is obviously just talking about the U.S. across the globe. It’s really just flipped, right? Because a lot of times, look, they’re not expecting Lenovo to be shipping locally within Germany. Like, I don’t really think that that’s the expectation at all. Right? And we’ve really seen it over and over again with especially some of our larger client brands. People are just going to want that specific brand, right? They might be able to find a similar product on Amazon, a similar product shipping locally, but no, they want that brand, and therefore they’re able to wait a little bit longer.

 

20:37 – Simon de Raadt: So, besides the shipping, then what is there? Because one of the things that we hear a lot is taxes. So, how to deal with taxes?

 

20:45 – Dayu Yang: So, first of all, there’s a lot of benefits, uh, when you consider normal import taxes, and we’ll talk about that later. But, if you’re starting out, I…my simple answer is don’t worry about it too much. Um, like the whole point of uh, getting started on international is just to test the markets first. Don’t worry too much about all the legal requirements of every single local market. Uh, simply put, and I think this is probably over simplification.

 

Simplification. So, I’ll let Josiah add a little bit more. When you’re just getting started, it doesn’t really matter. Or, it doesn’t really matter that much.

 

21:24 – Josiah Garetson: Yeah. I mean, so for sure, if you’re talking about like validating demand, I would agree. You know, we can get into Simon a little bit. Let me know. We can get into obviously more detail. And it’s a country-by-country basis, right? When you’re going international in this way, which is we’re talking cross-border B2C, shipping from one country to another country, right? If you look at like how traditional retail, like let’s say in the United States, you’re a brand, you’re a retailer, what you’re doing is you’re importing products and then once you’re importing, you’re importing thousands, maybe tens of thousands, an entire container, chip container full of whatever the products are, right? And that’s tens, hundreds of thousands of dollars. Now, that’s a much different equation than shipping one package at a time, right? I think that’s what Dayu’s saying is for sure. Every country has different regulations, but we’re talking about most countries.

 

And I’ll take the United States, for example. The U.S. is probably the most free trade liberal in terms of importing for individual products almost in the entire world. So, when you import something, you have to pay two things: duty and tax. Actually, duty is a type of tax. So, really just two types of tax you have to pay. In the American context, let’s say you’re importing again like shoes or something, and then you look up, you’re like what is this product?

 

And what is the tax I pay at the border? The border tax you pay on import is called duty. Right. And now, you know, Trump has obviously like added additional, the Trump tariffs, right, is like an additional amount. But let’s say that’s 15% to 20%. That’s, you know, the cost of the shoes is $10. You’re selling the shoes for dollar 100. The cost is dollar ten, but it’s 20%. You’re paying $2. That’s called your landed cost. You’re paying $12 when you import to the United States.

 

The second piece of the equation is not just the duty, it’s the tax. We know a lot of American DTC sellers. Let’s say you sell on Amazon, the platform is going to collect all sales tax. In the United States, we have sales tax. A lot of other countries, we have what’s called VAT, value added tax. Sounds scary. Not that complicated. It’s almost the same as sales tax in the United States. What do you have to do to be sales tax compliant?

 

Well, if you have some kind of business or you’re above a certain threshold, like, I live in New York, I’m selling a product and someone buys from my website and I ship it to New York. What I have to do is I have to collect New York sales tax, right? If I go into a store, you know, the seller on the PoS system, they ring me up, okay, here’s two beers. It’s $10 and that’s 8% they’re collecting. Eighty cents. And then quarterly or monthly, whatever they’re paying to the tax authority, right? In this case, New York, New York City, New York State. In the U.S., the tax is at a state level and it’s at a local level.

 

It’s not actually, we don’t even have, we don’t have a federal level VAT, a value add tax. So those are the two things. There’s the duty and the tax. Now, that’s in a traditional model B2B, you’re importing a bunch of containers full of shoes. You’re putting into stores, you’re paying the duty, which is the type of tax when it’s crossing the border, and then you’re also having to pay a tax at the point of sale.

 

Right. So you’re selling $100 shoes and it’s 8%. That’s $8. You charge the customer, actually. And then, on the backend, there’s obviously lots of automated systems to do this. But you’re writing a check essentially, to the New York state government, the New York City government. So, that’s traditional retail. Now in B2C, that’s business to consumer. In the ecommerce world, you’re also having to do this.

 

Unlike B2B, in the small package or in the world of ecommerce, you have what’s called de minimis. And de minimis is in the United States. Each country sets a different de minimis threshold. But, in the United States, anything below $800 comes into the country without paying duty. Also, you’re probably not paying sales tax because you don’t have a nexus, you’re not required to pay sales tax. So, in the U.S. example, let’s say I’m a European brand or I’m a Chinese brand. I’m Shein, and a customer in the United States, buys from my website, buys from my app.

 

The customer in this example is the importer. It’s not a company that’s going to import it. And so that, in the U.S. example, you actually don’t have to pay duty in tax. If you’re a European and you have an American customer that’s buying from you, you don’t have to worry about it at all. It’s quite simple. So, I think this is to Dayu’s point, where it’s obviously case-by-case basis, certainly to test. But in a large market, maybe the second largest ecommerce market in the world, in the United States, if you are internationalizing as a European brand and selling into the United States, the answer is, well, don’t worry about it at all.

 

26:14 – Dayu Yang: Yeah, so actually, all of that is obviously quite complicated, important to understand once you’re starting to optimize for your stable state. However, a lot of that complication is actually one of the reasons for how valuable being able to ship directly from China is to global markets, let’s say, outside your local market. So, let’s just assume you’re based in the U.S. and you’re accessing non-U.S. markets. So there’s two concepts here. First is import duty.

 

Import duty in most markets out there, um, because you’re not. So, if you’re shipping directly on an order-by-order basis to your customers, you’re not actually going through the bulk import process, which is what the current regulations for the majority of countries, uh, that duty is actually based on. Right? You’re not importing in bulk, you’re shipping direct parcels to customers. And in terms of the concept of the sales tax, in a lot of countries, um, the EU is a little bit different than their VAT. So, let’s not talk about the EU for now. But a lot of other countries, their equivalent of the sales tax is quite similar to how the U.S. deals with it.

 

You’re basically on the hook if you have a physical or legal presence in the region or the country of the locale, or you reach a certain threshold of sales within that country and it’s typically not, not very low. It’s $50,000, $75,000, $80,000 per year depending on the country itself. Right? So, not, it’s at some point you do want to think about it, but again, that’s more the optimization. Right? But if you’re testing out a new market, you’re going to have a good problem if you suddenly sell $80,000 worth of goods in a completely new market. Right?

 

And the reason why shipping directly from China really helps to address that as well, is when you ship, let’s just say you want to open up the Australian market. You don’t have an Australian business entity, you don’t have an Australian physical presence, a 3PL, for example. You literally are just physically located in the U.S., and you’re shipping from China. So, essentially, that does not trigger any kind of physical presence or legal presence within Australia.

 

So, you’re not actually required to pay and collect their version of the sales tax unless you reach a threshold. So, this is where the power of direct from China fulfillment really comes in. As a matter of fact, if you are actually going the more traditional route of actually starting up a business operations within Australia in order to even start selling there, that actually immediately, and depending on the country as well, that immediately actually puts you on the hook for any kind of local sales taxes or equivalent in that market. And, obviously, you also then have to worry about the import portion into Australia.

 

Now, I’m going to be totally honest right here that this is a little bit of a loophole. Right, but it is a loophole. It’s not like there’s anything illegal about this. It is simply because current regulations are very much assuming more of that traditional retail model. And it hasn’t really considered this ability to just buy directly from a brand in another country that then just ships an individual order to you. Now, maybe down the line in 5-10 years, maybe there is going to be some additional considerations around this concern. However, it’s definitely not on anyone’s radar for now.

 

And even if it is going to take years until there’s something to be done about it, and at least in the time being, there is a huge value in being able to at least test on a reasonable order volume basis shipping directly from China to global markets to get away legally from some of these tax obligations at the start.

 

30:03 – Simon de Raadt: Yeah, I think that makes sense. I think the whole comparison B2B and B2C, it’s huge difference on how to approach this. You mentioned the U.S., I myself am from Europe. In the end, the minimums in Europe is zero. So, not the dollar 800, but zero. But it is the concept of business to consumer. So there’s actually a business sending it to the consumer, so the consumer can receive it without any issue.

 

It’s either the sender, the shipper, or the seller that is that business. So, under one of these three, you register the parcel to enter the EU so it can arrive to the consumer. And there is no threshold. There’s no de minima in that sense. There is always a business involved,  and I think that’s something that having this zero line just confused the market. But, actually, the execution is the same. There needs to be an owner of the goods selling it to the consumer so that the consumer is protected, and that it’s traceable of actually towards the European governments. And I think that’s something that is not a bad thing. It’s just for you to get educated on why are these rules there, and why are they different for different markets, and how to navigate that.

 

And there are tons of experts out there as well. We’re happy to also jump on a call to help you specifically with your needs for you to go global. It is less complex than it actually is. The question is more do you have enough margin to actually utilize the local regulations to your benefit of the brand? You are elevated to being a brand status. As a brand status, there’s also a certain degree of compliancy in place for you actually to become more valuable.

 

And that’s something that is always the discussion where you have to navigate that. And I think it’s not a bad thing for you to be educated. And that’s also why we run this podcast.

 

31:58 – Dayu Yang: Yeah, so a quick note on the EU is  ZG. The value-added-tax in the EU is something that legally you can’t get away from any seller. Whether you’re based in the EU or you’re from outside the EU, you have to figure out some way to actually either collect that sales VAT, or, technically, the traditional model was actually have the courier like DHL for example, collect from your customer. There’s no way around it.

 

However, traditionally, what used to be a big problem was a very big, let’s say a U.S.-based brand would have no choice but to utilize a courier service that actually forced collect that VAT from their end customer. DHL is going to hold your package in customs, call your Dutch customer and make them pay the VAT, which is something that has just always been the case traditionally, but it just creates a very bad customer experience.

 

Right. Whereas nowadays from, if you’re shipping directly from China and actually technically it’s supported from elsewhere, but a lot of global services, they don’t support this method. But there’s actually a way to fast track that parcel through customs and that’s through the concept of what’s called an IOSS number now. So, that’s a whole other topic that we can’t go into detail right now. But the point is, shipping from China, there’s actually a very mature and stable method for you as a brand to actually collect VAT at the right amount from your customers.

 

Attach your brand’s IOSS number to that parcel and it clears customs without any issues for the end customer. The implication is that obviously you have to collect that VAT from the customer point of sales. However, and this is something that a lot of non-EU sellers seem to be concerned about because it’s additional cost. What if it affects your conversions? Look, every customer in the EU knows about VAT. They’re used to paying VAT, they’re used to paying that anyway. So, it’s not going to impact your conversions that much, assuming that you actually have a good brand. Right?

 

And as a matter of fact, this is going to just make it much more efficient. And I do also want to segue as well into there typically is a common concern around just the paperwork involved. Like, you know, the setup involved in actually opening up into a new market, whether it’s like for taxes, registration or like regulatory concerns. Right? And that is true if you’re going to actually import into that country, and you started physical operations. That’s 100% true.

 

And I have a little anecdote about that as well later. However, if you’re shipping from China using these methods that we recommend, at least at that testing stage, you can essentially bypass most of these regulations. You can fast track through in terms of customs and then you can figure it out when it becomes a good problem to address. Again, once you’re hitting enough scale, when this actually does really matter, then it’s worth it to figure out the paperwork. But not before I was talking about taxes.

 

But I also want to talk a little bit more about individual regulations within each country, labeling requirements, and things like that because I’m sure that’s something that’s probably top of mind for especially larger U.S. brands wondering what they need to do entering different markets.

 

35:31 – Simon de Raadt: Okay, so we’ve covered to sell internationally. We see that the shipping is not an issue. We’ve spoke about the import tax, the duties, the sales tax. What else is there to consider?

 

35:43 – Dayu Yang: So, outside of taxes itself, one top of mind concern that I usually hear from our clients is anything you need to do with the packaging, the labeling. All right, so there is the obvious question of if you’re selling to a non-English market, should you have non-English packaging? And yes, eventually. So, this is my point earlier around, if you really want to crush it in a market, eventually you do need to localize.

 

You do want a local website. You do want to make sure that you have like custom German packaging and things like that. Because outside of the language itself, like culturally, there’s a little bit difference as well. Right? However, in order to get started, technically, you don’t actually need all of that. And this is because, let’s say you’re a U.S. brand, and you provide the potential option for a non-U.S. customer to purchase from your U.S. brand. And that’s key, right?

 

You’re not a German brand, but you just happen to have a German customer who happens to want to buy from your U.S. store. And what’s going to arrive, let’s say, is a U.S.-branded packaging with all English. Right? Now, you do want to make sure that you have the right labels for selling somewhere. You know what I mean? So, you have to make sure that it’s legal to sell in the U.S. You have to have the right barcodes.

 

If it’s something sensitive, you should have the right certifications, like FDA certifications, whatever it might be, make sure it’s legal to sell anywhere, especially in your home market. But if you have that settled, really there’s no strict regulations around. Like why can’t a non-U.S. customer just happen to buy from your store and maybe pay for a little bit more shipping or pay for customs. Right?

 

That is literally not a strict, I mean, there’s no laws against that pretty much around the world. And again, the key is not having an actual physical presence, not formally having a German-based business selling that product. And you can get away with a lot as long as your product meets the requirements somewhere without having to either go through that paperwork, which actually could take a lot of time to get that approval, or, you know, potentially like, you know, actually risk any kind of legal wrongdoing by doing so. Right? But again, I do emphasize that this is really how you start out and get some volume. When you really consider a certain market to be a top market, you do want to go through the regulatory process, probably having a, you know, secondary or additional packaging for that specific market.

 

But on the flip side, if you test something, let’s say, in the German market, and it just doesn’t work, maybe it doesn’t work, then what is the point of doing all that preparation in the first place where probably the right choice is to cut it, cut that investment and focus on elsewhere.

 

38:26 – Josiah Garetson: Yeah, I agree with it depends on the market. Obviously it’s not legal advice, but for sure you have to have whatever is the minimum legal requirement. And actually, let’s say you’re sourcing products in China depending on what it is. Because if one of the things you’re going to do is, okay, I’m going to sell into Europe, there’s a lot of Chinese suppliers and factories that have the correct paperwork and the correct manufacturing standards, let’s say, and the factories are registered with the U.S. FDA or to be able to create products that have the EU CE mark. So, that would be the first one is find the suppliers that are already manufacturing, you know, your type of product or whatever that destination market is, presumably that minimum legal requirement will be met and then you have something like, oh, should I have German-language packaging?

 

39:20 – Dayu Yang: Right.

 

39:20 – Josiah Garetson: That’s a kind of extension of what we talked earlier of like, you know, should I have like, also like a German language, like Instagram page or like a drop-down in the corner of my website with, you know, I can check out in German, let’s say. Right. Or do I have German influencers? Right. That’s kind of like not necessary for sure to test, but then optimize if that’s a market you’re going towards.

 

I will say the other one probably if we’re talking about specifically brands, is to check that you have the trademarks, or if it’s a patent and there’s lots of services now that will allow you to trademark everywhere in the world, right? In some markets someone might be actually, this is a good practice. I think just in general for all aspiring brand entrepreneurs is way before you ever even think like, I’m going to sell anywhere other places in the world.

 

Check to see if you can get the trademark or the brand. Intellectual property protection globally. It’s a little bit of an investment upfront. But like, I know, for example, a lot of countries, unlike the United States, in the United States actually, if you just start using a brand, you can establish trademark. People who sell on Amazon are very aware of Amazon brand registry. You actually have to have a trademark or a logo to get brand registry in the United States.

 

But globally, if you’re becoming quite popular in the United States, someone in another country could just register your brand. And now you’re not allowed to sell your own brand, your own product, whether it’s in China, or whether it’s in Europe, or whether it’s somewhere in the Middle East. So, even if you wanted to down the line do like, hey, I’m going to try to sell cross-border direct-to-consumer, or let’s say you have a distributor. It’s like, I think this is great. I want to import 1000 or 5000 pieces of your product from your brand.

 

I would say that’s one we didn’t touch on earlier. But this is as simple as a Google search really, to see  are you able to, and there’s lots of services that can do it. Again, it’s one of those things that people don’t think about maybe until it’s too late, and it’s not that hard.

 

41:33 – Simon de Raadt: I think that when it comes to this, I spoke to a seller that actually couldn’t register their brand because somebody else already registered, although they started selling at exactly the same time. Sometimes, it’s because the manufacturer is offering you a product already, maybe with a brand name on it, or you come up with a name that’s similar to it, and there might be someone else that has that same thought and start selling that same product with the same name in the same market. So, it is something that you have to be aware of when it comes to the packaging. There are actually three good examples that we have advised our clients.

 

One is to actually put multilingual languages on the packaging itself. So, if you are planning to scale to multiple countries, let’s say France, Germany, U.K., then have these three languages on there. The other one is actually just putting a QR code on the products so that for German instructions, scan this, which is also okay. Or the third one is actually you send an email with the instructions in the local language, which is an extra service, but it’s actually very valuable for the consumer to receive that extra information in the preferred language. It’s a service ad, I would say. I think that makes sense.

 

42:46 – Dayu Yang: So, all those solutions are, I think, not only viable, but completely acceptable these days. Consumers, they do think globally, like they want to have access to brands that are not in their local market. This is especially true for non-U.S. countries or non-Canadian countries. It’s somewhat a little bit harder for a non-English brand to tackle the U.S. market, for example. However, it’s really the opposite for other markets.

They do want to access it, too. And actually, it’s just U.S. brands. You have a lot of consumers who like to buy Korean brands or Japanese brands for, you know, various types of products, and they’re going to want it no matter what, right? Sometimes. So, they’re going to be totally okay with even just ordering from a fully Korean-like shop that has all Korean. And, you know, they try to figure out how to use it, for example. That’s obviously not the best customer experience, but, you know, we, you can do relatively straightforward things to improve that customer experience, especially. And this is also where having a consolidated single warehouse for global sales, probably in China, makes a lot of sense because you have potentially the ability to have the exact same product.

 

And, you know, we sometimes, for example, depending on the country or the store that is sent in, it might be a localized funnel, for example. And then we can actually input a localized instruction booklet or thank-you card, for example. Or, you know, if you need, you can have either your factory or a warehouse like ours. Like, if there is a strategy of sticking a local sticker for ingredients or instructions, we can also do that for you as well, all pulling from the exact product inventory, as opposed to having a completely separate SKU for each different language that you’re selling in, which increases the complexity as well.

 

Now, again, all this is something that you really want to address when you hit scale. If you’re selling seven figures in one single market, you got to figure out how to actually localize for that market. But that’s a very, very good problem to have. Don’t let any of this really hold you back from actually just taking the step and actually just testing it out, right? Except, you know, the baseline stuff. Make sure that your product is safe to sell somewhere, right? Make sure there’s like, it’s like, you know, approved to sell at least somewhere, especially in the U.S.

 

And also, like, just, I alluded to, like, as soon as you see some promise or maybe you already feel really good about your brand, you know, make sure that you have the right copyright protections, trademark protections, I mean, especially in your own market. But, you know, if you have high confidence that it’s going to scale in some other market, that’s probably one of your first steps to make sure you have your legal protection as well.

 

45:40 – Josiah Garetson: I mean, I think the one that I can think about this is like IKEA. You could just lean into it. Half the stuff, I’m sure it was bought from IKEA, and I bought from IKEA. Half the products, I don’t know, what is the name? What is the spelling, I can’t pronounce it. It’s very obviously Swedish. They just make one version of, like the, you know, I can’t, I don’t even know what the…how to pronounce the name, but of whatever coffee table, right? And they sell, you know, they sell it into 50 countries, right? It’s the exact same thing from the factory. They ship it to 50 different countries.

 

It’s got the Swedish name on the side with all kinds of, you know, like dashes on top of the vowels and everything like this. And then, you know, it costs them maybe, maybe a penny more to, like, have the insert and then you open the instructions and the instructions is like, like 50 pages because they have every single language printed in their instructions. As an American, I’m buying this. It’s kind of quirky. I understand that’s a Swedish brand.

 

I’m not buying it in spite of the fact it’s not American in some ways, that limitation or the fact that it is Swedish. That’s why it has some kind of brand resonance in the market versus a generic American brand doesn’t. Just know who you are and lean into it, and that’s as good of advice as you can have in general if you’re trying to build a brand. Right?

 

47:02 – Dayu Yang: Yeah. And actually that’s a, you know, let me actually add another example of that as well. I’m working with this Thai influencer to create a creator-led product that’s really targeted towards the Thai market, Thai domestic and also Thai global as well. And we’re at a stage of figuring out, like, a website, right? So, she’s actually a live streamer. So, she actually makes all her sales through, like, just content itself, like social media content. So.

 

And, you know, in short, like, in South Asia, like, having a website is not even a basic requirement, actually. However, like, we want to create one anyways to be able to accept credit cards, to have some kind of branding as well. And initially, like, I was like, okay, well, now we gotta create, like an English website, a Thai website, maybe some mixture. And she was like, oh, no, just create an English website. Like, we don’t need Thai. I mean, you know, no one’s going to read all the details on the website anyways. But if we have an English website, then it makes my brand feel more premium that it is actually an international brand as opposed to a Thai domestic brand, even if a lot of her customers can’t even read all the text.

 

And, you know, this is where, like, and this is literally for a Thai brand, right? And there is that perception that if you are an international brand, not a local brand, then it is. And it depends on the market, right? There is a perception that it’s higher quality, that there are more safety protocols, that it is able to be sold to global markets. So, it must be safer than some of the local stuff that’s way cheaper that you could just buy from a store, for example.

 

This is where, as you think about expanding into globally, yes, the long run, you do want to think about some more localization. But, you being a U.S.-based brand, or let’s say you’re a German-based brand, selling to other, like, non-German markets, and that’s just part of your brand itself, right? Like IKEA. Like, no one tries to pretend IKEA is anything except for, you know, Scandinavian design, right? Like that. That’s just what they are, right?

 

Korean cosmetics, like, no one’s gonna buy it if it’s not Korean cosmetics. You know what I mean? Like, that’s just part of their brand. So lean into it. Don’t worry so much about localization. And honestly, like, even the long run, maybe, like, depending on your brand itself, maybe there’s some parts of it you never even need to localize, right? I mean, you know, back to the example of Korean cosmetics, right? A Korean cosmetic brand. Even if they kill it, there’s no reason why for the U.S. market, they somehow launch a U.S. cosmetic brand, right? You know, that’s just completely, like, different than their brand element, and think about how that is going to be part of your actual brand story and lean into it, at least for the initial stages of your international expansion.

 

49:42 – Simon de Raadt: That wraps it up for this episode. I think we’ve covered everything from actually going global by just trying and start doing it, and then going into local markets by just executing on where actual demand is and then optimizing. Just optimizing step-by-step. And make sure you have the wide scope of brands. Registration, trademarks, taxes, payments. It is a journey. It’s not that complex, actually, to get started and then just utilize the resources out there for you to scale to a local level, wherever the demand also is. Thank you for listening to The EcommOps Podcast. This episode was Dayu, Josiah and Simon in an episode about how to bring your brand go global.

 

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