Claus Lauter [00:00:00]:
Welcome to episode 301 of the ecommerce Coffee Break podcast. Today we discuss how to successfully expand your ecommerce brand into Europe. Joining me on the show Today is Björn van Brakel, vice president at SalesSupply.com. So let's dive right into it.
Voice over [00:00:19]:
This is the e commerce Coffee Break, a top rated Shopify growth podcast dedicated to shopify merchants and business owners looking to grow their own online stores. Learn how to survive in the fast changing e commerce world with your host, Claus Lauter, and get marketing advice you can't find on Google. Welcome. Welcome to the show.
Claus Lauter [00:00:44]:
Hello.
Claus Lauter [00:00:45]:
Welcome to another episode of the e commerce Coffee Break podcast. Today we want to find out how you can successfully expand your e commerce business into Europe. Now, a while ago, we spoke about the other way around, and Europe is a little bit more difficult than expanding into the US. So I want to talk about this and dive a little bit deeper into this topic. With me on the show Today is Björn van Brakel. He is the vice president of salessupply.inc. He has been part of salesupply operations since 2016 and heads up the US branch located in Miami. Salesupply helps e commerce business scale both domestically and internationally.
Claus Lauter [00:01:16]:
They have enabled many us based e commerce businesses to successfully expand and scale overseas, including body engineers, commodity fragments, Tory Burch, and many, many others. So let's dive right into it and welcome Björn to the show. Hi, Björn. How are you today?
Björn van Brakel [00:01:29]:
Good, thank you, Claus. Thank you for having me.
Claus Lauter [00:01:32]:
Björn, what do you see are some of the biggest challenges that us based e commerce companies typically face when they are looking to expand into Europe.
Björn van Brakel [00:01:41]:
What we see is that a lot of us companies who want to start in Europe, the market has a lot of similarities compared to the US, but there are also a lot of differences. So one of the challenges a lot of us brands are facing is how to deal with different languages. That's a really important challenge when it comes to how to reach your customers. For example, the customer service in Europe, are you going to offer one language? Are you only going to offer English? Or are you also going to have customer service in, let's say, German, Spanish, Italian and all the other languages? That's one big challenge that a lot of us brands are dealing with when they want to start selling in Europe. Another important challenge and another important strategy they have to consider to take is the differences in culture. So what is the buying behavior from a customer in Italy compared to a customer in Netherlands? Are you going to target all the customers in Europe? Because the european market has a huge potential. It has over 700 million potential customers. But there are also a lot of differences also.
Björn van Brakel [00:02:52]:
For example, in Italy, italian customers are used to using cash on delivery as a checkout. In Netherlands, a lot of dutch customers are using ideal as a payment method for their checkout. So how are you dealing with those challenges? Are you going to offer all the different payment methods or are you also going to just focus on one market? These are important things to take into consideration.
Claus Lauter [00:03:19]:
We already can see that there's a lot of different areas that we can look into. And we have not even spoken or not even looked into legal and regulatory differences there. What are the first kind of critical first steps that an e commerce business should look into when they look over the pond into Europe?
Björn van Brakel [00:03:36]:
I will say one of the things we always tell the clients to start with are actually two things. Look at the differences in rules and the regulations. Examples from our clients, one of our clients, Segway. We see the electric scooters here a lot in Florida. But I know that in certain areas in Europe the product is not allowed to drive on the streets. So that's a big difference. Of course. Also, when you look at the battery of the product in the US, it's different than in Europe.
Björn van Brakel [00:04:04]:
But we also have examples of clients which we had. They were selling a superglue product, very successful and easy for us to ship here in the US. But the rules and the regulations in Europe were completely different. So they had to change almost all the ingredients of their product in order to be able to sell this in Europe. So there are a lot of differences. Also, when you look at the european market, it's a market that is highly developed and very competitive. So that's also something which we always tell our clients, don't expect short term success in such a mature and big market. Those are things that are important to take into consideration.
Claus Lauter [00:04:45]:
You mentioned theres more than 700 billion customers or potential customers in Europe compared to, I dont know, 300 billion in the US. Obviously a huge market. From your point of view. Whats the strategy to open the market? Would you go for one country or five or all of them? Whats the idea?
Björn van Brakel [00:05:03]:
Yes, thats one of the reasons why we offer local fulfillment to our customers. You want to compete like a local. So a good strategy is to send product to. We always recommend to start in Netherlands because of two reasons. Has to do with the VAT deferment. So it has a positive impact on your cash flow to have stock in Netherlands. So you can also. It comes of course, with a big investment starting to sell in Europe, so you can allocate the cash flow to, for example, marketing and other parts of, and infrastructure in Netherlands.
Björn van Brakel [00:05:40]:
Netherlands has a big port, the port of Rotterdam, one of the biggest ports in Europe. So it's easy access for ocean freight, the same as the airport, Amsterdam, Schiphol, so for air freight and as well as the country itself. Our warehouses are really close to the german border, so it's only about 20 minutes away from Germany, so we can easily inject our parcels for our customers, for example, with DHL, Germany. And then when you look at transit times from Netherlands to Germany, it's a standard one to two days. So there's also a big cost saving. So in the beginning, it makes sense to have one hop to have your stock in Europe, and then from there start growing little by little. That's a good strategy to start with.
Claus Lauter [00:06:30]:
Walk me through the process of going through the different process steps you mentioned. The beginning. You need to have a localized website, for instance. You need to have domestic or local payment gateways and so on and so forth. What kind of process steps do I need to follow before I can really start selling the products?
Björn van Brakel [00:06:49]:
One of the things you need in Europe is an auri number, and you need a VAT number. So those are the two essential minimum requirements to have in order to be able to start selling in Europe. And then from there, since we only take care of the local customer service and the global fulfillment for our clients, there are also, of course, other things to take into consideration, as you just mentioned. Also to make sure that the webshop is localized. Also do enough market research, so really look at the different cultures and buying behaviors from your customers, because it's very different each country. That's an important thing to take into consideration as well. And what I said, try to really compete as a local. So have your stock, at least in Europe, so you can also ship from Europe to your customers.
Björn van Brakel [00:07:39]:
We have examples of customers where they started shipping from the US. If you sell a little bit heavier, bulky products, let's say 40, 50 pounds a shipment from the US to a customer in Germany can easily be over €100. If you ship that same parcel from Netherlands to your customer in Germany, you're talking about roughly €10. So if you want to have a good conversion, it is really important that you also compete like a local. And these are just examples. It's the same for the SLA with the customer service. We offer shared solutions, so you don't pay for dedicated seats to start in the markets in Europe. So you have shared agents.
Björn van Brakel [00:08:22]:
So you can easily have six, seven countries where you have shared agents. It's really important also to have a local phone number on your website. Customers, they can reach out because we all have native customer service agents all located in those countries, almost in all countries in Europe. It's really important for you, when you start selling in Europe to take those things into consideration.
Claus Lauter [00:08:46]:
I want to dive a little bit deeper into that. Now, you said you're providing the customer service agents. Obviously they need to know about the products. They need to have some kind of background about your company and so on and so forth. How does the training look like? How long does that take?
Björn van Brakel [00:08:59]:
Yes, during the training there is a product training. There is also a training regarding the policies of the client. So it's multiple training sessions with the client. So we really become an expert on their product. And after that, once we start going live, you see that the majority of the questions, our agents are able to handle those.
Claus Lauter [00:09:20]:
Now with Europe, you have all these different languages. How difficult is it to find agents that speak, I don't know, slovenian or greek?
Björn van Brakel [00:09:29]:
Yeah, I mean, it can be a challenge for us. It's relatively easy since we also have offices in all those countries in Europe. So we have the agents located in our offices in all those countries. And that's also where we add value for our clients. If clients have questions about specific markets, let's say the market in Poland, we have an office in Poland. So we have a lot of knowledge and experience about that specific market. So we have our colleagues in that market who can then give tips and tricks and advice to our clients on how to become more successful in those markets.
Claus Lauter [00:10:07]:
Hey Claus, here, just a quick one. If you like the content of this episode, subscribe to the weekly newsletter at newsletter Dot e commercecoffeebreak.com I score and create 50 news sources so you don't have to, saving your hours of research. Grow your revenue with ecommerce news, marketing strategies, tools, podcast interviews and more, all in a quick three minute read. So head over to newsletter Dot e commercecoffeebreak.com to subscribe as at 100% free. Also you will find the link in the show notes. And now back to the show. You said you're working on the fulfillment, you're working in the e commerce and the company itself is in the United States now. Time zones is a bit of can be an issue there.
Claus Lauter [00:10:42]:
How does that work? How can I manage my fulfillment team, my support team in Europe, while I'm based in, let's say, New York.
Björn van Brakel [00:10:50]:
Yes, that's a good question, Claus. We have offices worldwide also. Our headquarters are based out of Netherlands. That's where we started 15 years ago. I'm responsible for the US, but when we look at us companies who are selling into Europe and we use our solutions, we really take over their day to day operations. So you have an account manager who takes over the day to day questions and when it comes to the fulfillment. So there might be a challenge when it comes to time difference, but we tackle most of the operational questions ourselves in Europe. Because you're completely right.
Björn van Brakel [00:11:29]:
That's also one of the reasons why we offer our shared customer service solutions. Because when you're based out of the US, there is a six or nine hour time difference on average with Europe. So it's very hard to manage those things yourself. But that's really where we take over the operation and help our clients to be successful in those markets.
Claus Lauter [00:11:50]:
Are there any specific industries or niche that you see right now that are really doing very well in Europe compared to, I don't know, other things that do not so well when it comes to, yes, suppliers, when it comes to.
Björn van Brakel [00:12:01]:
The beauty and the fashion industry, as well as the electronics, those are really successful. We serve many different industries in Europe. What we also see is the marketplaces. We do see. More and more of our clients are also using multiple marketplaces in Europe. It's not only Amazon in Europe. In Europe there are a lot of local heroes. So, for example, in Netherlands, one of the most popular platforms is bold.com.
Björn van Brakel [00:12:32]:
And for each country there are different marketplaces that are definitely interesting and important to take into consideration. And when you're a us brand, you want to start selling in Europe. Yes, Amazon is also operating out of Europe. So you can definitely use Amazon. But also keep in mind that there are a lot of different local heroes, we call them. And those platforms are also very interesting to take into consideration when you start selling in Europe.
Claus Lauter [00:12:59]:
Can you give me an example of a brand, a company that you worked with that expanded into Europe and what kind of success?
Björn van Brakel [00:13:06]:
They saw one of our clients, commodity fragrance. They sell perfume. So that's a difficult product to ship overseas, also due to the hazardous goods and ingredients of the product. Once they actually started using our location from the Netherlands, their order volumes went up and we helped them already for many, many years. And we actually do see that for them, it was a good platform to use us to grow the market in Europe. So throughout the years, we only see the orders growing since we offer a good, stable solution in Europe. And that actually helped them a lot, because if they actually had to ship this product from the US to their customers in Europe, when it comes to shipping fees and transit times, you win on both sides where you ship locally. What's also important for us, since we help hundreds and hundreds of companies cross border, is that we offer low entry solutions because we want them to grow in those markets so we don't charge certain minimum monthly fees.
Björn van Brakel [00:14:13]:
That's the same for our customer service model. It's a shared model, so you can test markets with us. If you want to see how the german market is for you, we can just set up a shared solution for the customer service in Germany, and that's the same for the fulfillment. We can operate from one location, and once the brands and the company start growing with us, we can easily add locations. So we can also say we ship stock to our location in Italy, in Spain, in France, in Germany, other countries as well.
Claus Lauter [00:14:47]:
Now let's assume I'm a small medium enterprise DTC, being on Shopify, I want to venture into the european market. What's the timeline? What's the onboarding process, how does that look like?
Björn van Brakel [00:14:58]:
Yes, for us it's typically only a couple of weeks. Since the Shopify integration is a plug and play. The biggest challenge is for them to actually, in terms of the timeline, is to get the product to us in our warehouse, since they of course have to order them more product, most likely from the manufacturer. And typically I would say it takes around a month to get the Aore VAT number, you can expedite it a little bit, but if you want to be on the safe side, it will be around a month. And within that month we can set up the fulfillment and we can also set up the customer service for our clients.
Claus Lauter [00:15:36]:
If I grow in Europe and I need more people to help me on the fulfillment, but also in the customer service because of the customer service. Quite important that you provide a good customer service. How quickly can I grow there?
Björn van Brakel [00:15:47]:
Yes, for us, once we have you on board, we can easily add countries since we also do internal trainings ourselves. So you are basically within two weeks you will be live in new markets as well in Europe. So it's very quick, very fast. That's the same for the fulfillment. Once we have the integration in place, you can also start sending product to us, to our different warehouse locations, since it's for us, just a mapping, so we can just fulfill those orders from those specific warehouse locations.
Claus Lauter [00:16:21]:
What kind of homework do I have to do? As a merchant, before I can get.
Björn van Brakel [00:16:24]:
Started, it's important for us, of course, to provide us with all the data. So there is a little bit of work for you to do for the setup. When you look at the customer service part, we will send you a questionnaire in order to get all the information regarding your product. So you will give us the product training and the product data, as well as your policies and the way how you operate and how you would like us to take care of your customer service inquiries. And on the fulfillment side, we need to make sure that we have all your SKU information. You will give us a one time partner access, for example, to your shopify, and from there we will take over and we will build integration. But that's important. And on the fulfillment side as well, it's also important for us.
Björn van Brakel [00:17:13]:
That's something which we discussed during the onboarding. How do you deal with, for example, customer returns? Since we also offer returns in almost all countries in Europe, when a customer wants to return something in Germany, you basically tell us all the steps we need to take to inspect the product, and then in order maybe to put it back in stock or to ship it back to our location in Netherlands. But we can consolidate all those returns in all those countries, and then we ship all those consolidated parcels back to Netherlands, if that's where they would like to start for the fulfillment. And then from there we can put it back in stock. But that at least offers you a solution for your customers that also helps you significantly when it comes to the conversion, when you have local solutions to handle the returns. And that's something which we also do. So that is something which we will also discuss during the onboarding. Some clients have more technical products, so they also would like us to do some more steps.
Björn van Brakel [00:18:18]:
For example, check the product, connect it to certain software for other clients, as simple as, for example, apparel. We just check if there's a product tag, et cetera, if there's no damage, and then we can put it back in stock or consolidate it, whatever the client wants. We're very flexible when it comes to that.
Claus Lauter [00:18:37]:
Yeah, great that you touched on returns. It was actually a question that I wanted to ask because obviously a business is only as good as your returns policy is, and fulfillment always goes in both directions. Now, who's your perfect customer?
Björn van Brakel [00:18:50]:
That's a good question. When you look at it from a fulfillment point of view, I would say it's a customer that ships that has d two c volume within Europe. We also help, of course, with the b two b. So we do both. We ship to retailers, we ship to marketplace as well. And there should definitely be some d, two c for you within Europe. Products that are easy to handle in the warehouses and that also a product that the carrier likes to handle as well. So that's in terms of skus, I would say a lower sku count sometimes.
Björn van Brakel [00:19:24]:
You see when customers sell thousands of different skus and they only have a handful of orders, that's operational, a little bit more complex to deal with. So a lower SKU. And when it comes to the product itself, of course, we spoke about the rules and regulations in Europe. So also always please take into consideration if your product is a certain hazardous good, if we can easily ship it to all the countries or if there are also restrictions for us. An ideal customer, of course, is a customer where we can send their product throughout Europe without any restrictions. That's a good customer for us.
Claus Lauter [00:20:04]:
As complex as a topic, it is, I think you need to have an expert to get all the questions answered that are coming up through the process. Is that something you help with in sort of consulting, coaching people through the whole process?
Björn van Brakel [00:20:16]:
Absolutely. Absolutely. Because we do this on a daily basis. We talk to companies every day to help them cross border, to help them starting in those markets. So what we offer is we offer a free intake call to see what the needs are for a company. And there is no one best way. It really depends per company in terms of volumes, in terms of the markets they want to target, in terms of the product they have. So we really go into detail with this prospect during this call to see what their needs are and how we can help them.
Claus Lauter [00:20:51]:
Tell me a little bit about your pricing structure.
Björn van Brakel [00:20:53]:
How does that work in terms of our customer service? We have a shared model, so you basically we call them events that can be a phone call, that can be an email, a chat, social media. And we only charge our clients for the events we actually make in those specific countries. So that helps them to only pay for what they use. And that's the same for the fulfillment. We have a small pick and pack fee per order, and of course there is a small storage fee depending on how much product the customer is going to send to us. But those are the two factors in terms of the pricing. And that helps also, that helps the brand grow in those markets, because we see that a lot of us brands, when they start in Europe, the first few months, the volumes are relatively low. And that has to do with that.
Björn van Brakel [00:21:44]:
There are so many factors for them to take into consideration, to look into, to start up. And then, of course, you want to have a partner that doesn't charge you thousands of dollars if the orders are not there. So that's why we offer these solutions, this pricing structure, to really help them grow and when they become more successful, we also see that, of course I.
Claus Lauter [00:22:05]:
Want to go a little bit wider because you get the finger on the pulls of e commerce. What kind of emerging trends do you right now coming up in the online.
Björn van Brakel [00:22:11]:
Retail landscape, what we see a lot is the difference in terms of the different channels. As I mentioned before, the marketplaces in the US, we still see, of course, that Amazon is a big player, but we also see in Europe that there are a lot of other developments. We have partners who can also help with setting up on the marketplaces, and we do see that we have a lot of clients which we help together. We help them with their fulfillment, and they're able to get them on board on tens of different marketplaces at the same time in Europe. So those partnerships, that is definitely something from the last year or two years where we see that there is more demand. So offer more like all in one solutions, because, yes, you want to sell on a marketplace in Europe, but then you also need to have a fulfillment partner who can accommodate that, who can help you with that. So we do see that those partnerships are becoming more important for us as well, to offer those solutions for the clients.
Claus Lauter [00:23:12]:
Yeah, I would agree. I think most merchants nowadays are selling omnichannel or multi channel, and are available on all platforms, including their own platform, like a Shopify store or whatever. They have to be in front of their customers. Before our coffee break comes to an end today. Bjorn, is there anything that you want to share with our listeners that we haven't covered yet?
Björn van Brakel [00:23:33]:
What's most important for them to know is do your market research. Take it step by step. Don't expect the short term success in a market that's highly developed and competitive. But Europe has so much potential. It's also good for you in terms of the risk spreading to start the market in Europe, because it's a very mature market in general. So I will say definitely look into it. We're here to help. We're here to jump on a call with you to give you certain advice, to see what the options are in Europe.
Björn van Brakel [00:24:08]:
So we're more than happy to help.
Claus Lauter [00:24:09]:
Okay, where can people find out more about you?
Björn van Brakel [00:24:12]:
I'll make sure that there is a link in the podcast, and then they can schedule a 15 or 30 minutes call with me. So make sure to leave a link in the bio.
Claus Lauter [00:24:23]:
Absolutely there will be a link directly going to you guys. Cool Bjorn, thanks so much for giving us an overview on how to expand your business into Europe. I think a lot of brands in the US are interested in that and having a partner on their site that helps us, that is always a good idea. Thanks so much for your time today.
Björn van Brakel [00:24:38]:
Thank you Claus.
Claus Lauter [00:24:40]:
Hey Claus here. Thanks for joining me on another episode of the ecommerce Coffee Break podcast. Before you go I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will make it also easier for others to discover the podcast simply like comment and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. Thanks again and I'll catch you in the next episode. Have a good one.