#472 – Go Global Without the Headache: Compliance, Cash Flow & Cross-Border Wins
What if expanding your e-commerce business globally was simpler than you ever imagined? Join us as we welcome Demet Kale from Vatai, who is here to dismantle the daunting myths surrounding international expansion and VAT compliance. Together, we demystify the processes that often hold sellers back from seizing the lucrative opportunities European markets have to offer. Demet offers her expert insights into how a unified compliance solution can pave a smoother path amidst the growing competition, especially with manufacturers stepping directly into the scene.
Curious about leveraging Amazon’s vast European network for your business? We discuss the hurdles and victories of selling through Amazon in Europe, emphasizing the power of Amazon’s logistics and support systems. Tackling issues like multi-currency cash flow and the importance of VAT registration, we highlight how a strategic partnership can make navigating these waters much easier. Our dialogue underscores the necessity of knowledgeable partners in achieving seamless customs clearance and overcoming bureaucratic obstacles.
Beyond the realm of Amazon, we expand our horizons to explore global e-commerce strategies, including the OSS scheme for platforms like Shopify. Discover how this system simplifies VAT reporting for sellers with a German VAT number and enables them to cater to local VAT rates across EU countries. We also venture into alternative marketplaces like Allegro, CDiscount, and Bol.com, while addressing essential compliance topics such as EORI numbers and Extended Producer Responsibility in Europe. Whether you’re a U.S. seller eyeing the European market or vice versa, this episode is packed with strategies to help you build a sustainable global brand.
In episode 472 of the AM/PM Podcast, Kevin and Demet discuss:
- 00:00 – Expanding E-Commerce Globally With VAT
- 01:48 – Global E-Commerce Compliance Services
- 12:19 – International Expansion and Cash Flow
- 16:40 – Expanding Amazon Sales Internationally
- 20:08 – Navigating VAT and E-Commerce Expansion
- 26:10 – Amazon Eases VAT Compliance for Sellers
- 28:02 – E-Commerce Expansion Beyond Amazon
- 32:07 – Exploring International Marketplaces and Logistics
- 38:43 – Label Tool and EU Representation Requirements
- 42:30 – Global E-Commerce Expansion Strategies
- 43:16 – Common Mistakes in International Expansion
- 51:12 – Guiding International Expansion With Demet
Transcript
Kevin King:
Welcome to episode 472 of the AM/PM podcast. Well, if you’ve ever been looking to expand outside the United States or maybe you’re in Europe and you want to expand to the United States if you’re looking to get outside of the country that you live in and sell whether it’s on Amazon or one of the other platforms today’s episode is for you. I’ve got Demet Kale from Vatai on the show today and we’re talking about VAT and imports and all the processes and it’s not quite as complicated as you might think. We’re going to go deep and explain it all. I think you’ll really enjoy this episode of the AM/PM podcast. Welcome back to another episode of the AM/PM podcast. This week I’ve got Demet Kale from VATAi. I hope I said that right.
Demet:
Yes, VATAi, yeah, no problem.
Kevin King:
It’s got that AI at the end, so it’s like everything has AI at the end of it, even though you’re not really an AI company, but it’s still there. How are you doing today?
Demet:
I’m very good. Thank you so much and I’m very happy meeting you and being here and, yeah, look forward for our journey here at the podcast.
Kevin King:
Yeah, exactly so. A lot of people watching this. They might have never heard of your company. What exactly do you guys do?
Demet:
So what we exactly do? We call ourselves the one-stop shop for e-commerce compliance, so we basically cover everything what an e-commerce seller would need in order to expand globally, not only the European countries or UK. It’s like we have a really global setting and we have everything they would need in order to sell in Germany or France or the UK. So what we do is VAT registrations, we do product compliance, we do trademarks, we do company registrations, which is like setting up a physical company in certain countries. So the good thing is just, you have everything in once, and this is what makes us a bit different, because usually many of the compliance companies they provide VAT and then you have to go and find another one to complement and then all of a sudden, you sit there and have like four account managers in different companies who you have to reach out for any of the compliance cases, right? So the good thing is, having everything in once makes it easier for the seller one point of contact, and that’s what they need, because they have so much other things in their minds to take care of. Firstly, you know growing their business and doing the sales, which is mandatory, and in that case we make it much more comfortable for them. They don’t need to, you know, think of the compliance part, because we take care of it. So this is basically long story short, but we’re going to get in detail, of course, about the different topics for the sellers.
Kevin King:
So talk to me about one thing I’ve been doing. I’ve been in this business a long time 10 plus years on Amazon alone and 20 plus 25 years in e-commerce. What I see a lot is you have companies like yourself and there’s a few others out there that are always like, hey, you need to expand, you need to expand, you need to expand. But so many people are so gun shy to do it. Whether they’re a US seller, they’re afraid to expand to Europe. Or if they’re a European seller like I’m just, I’m happy I’m selling here in Germany, I’m just going to stay in Germany. I don’t want to go to the US it it’s too competitive or they get confused with VAT and we’ll talk about the difference between VAT and sales tax here in a minute to explain that to people. But I saw a stat somewhere recently like only 2% or 1% or 2% of sellers in the US are selling in Europe. Of Amazon, sellers are selling in Europe. I guess A is why do you think that is? And B is why did they need to not be so scared to do it?
Demet:
Yeah, that’s the biggest problem. So I recently moved to the US from Europe, by the way, so I have a pretty good understanding. So I’m in Seattle at the moment. I lived in Florida before, but it’s really great here and I’m really enjoying it because I’m working from the office again, which is totally different after working remotely, but it’s really fun. So I have both sides, because I have sellers who are in the European countries. I have sellers here in the US the European countries, I have sellers here in the US. The problem is you have the real good sellers who make like millions, okay, in the US, and they’re like oh, you know what, I make a lot of money. Why would I have the admin work or all the hustles and get to know all the rules and regulations, sort of? And then you have the midsize and the smaller ones. So most of them US perspective is I don’t know it, okay, how should I just do it? I don’t know the regulations and usually if you go like online and check out, you know groups or people talking to each other. It’s like a horror story for them, okay, and they’re just scared because the money they make here is totally enough.
Demet:
However, if we look at it as a global perspective, we see that many manufactured companies in Asia are starting to come over and sell. They have seller accounts. They sell on Amazon. So I think it’s growing. You know the competition is growing and I think it’s not only what you make as a money in the US. You have to be sustainable at the end of the day, because all of the US sellers of course there are manufacturers here as well, but most of them they buy from Asia and they sell it here.
So what happens when this manufacturer in Asia says, oh, you know what I’m going to sell now, this product in the US. So then you have a competition because this is the manufacturer you’re already buying from and and he’s just moving and starting selling in the US. So what’s happened in the future? So there is more competition. So I think now is the right time to see what opportunities are in Europe, are in UK or any other country. So I think that’s the point they have to really think of. It’s not only about the money, it’s the sustainability of their brand in the future. Okay, because the competition is really big. So I think that’s the point and that’s what we are trying to aim at the moment. We wanted to enlighten all the sellers about this aspect and that’s very, very important.
Kevin King:
But not all products translate right. I mean, in Germany, for example, walking sticks are a huge thing. You know to go hiking little sticks, but you come to the. US and only people that use those might be, you know, the older people or someone with a handicap and in Germany. So how do you guys help your clients like that there’s actually a product market fit. Or you know you go into Japan. Stuff has to be tiny and small to get, you know, fit into the kitchens and all that kind of stuff. Do y’all help with that aspect of things as well and guide people, or do you just like help them just with the legal side of everything?
Demet:
No, we do help them. We have I didn’t mention that, but we have a very global presence, so we can say that we are the number one compliance company in Asia and everything started off from there. We have 200,000 businesses we’re helping at the moment and that was like the kickoff by saying, okay, why don’t we just do it? Wise words and you know, help the sellers in US and in all over Europe and other countries as well. And so we started and since then we have a pretty big team and we have also the knowledge on guiding them on what needs to be on a label. Okay, what language has to be? Because most of the bigger problems with sellers is oh, what am I going to do with my labels? Oh, in Germany, it has to be in German. Yes, it has to be in German. So what I particularly do when I have those sellers, I always like okay, so you’re new, let’s go this way.
Demet:
Why don’t you expand first into UK? Because you’re not going to change any language. Okay, everything’s going to stay the same. You will start off with a lower budget, with your expansion journey, and then you will be much more confident and you’re going to hit the second road, which would be the second biggest market. It’s Germany in Europe, and then France and then Spain, whatever. So that’s a good way to start, because you don’t do much. Everything is as is. You just have to make sure that your product is compliant. Okay, in terms of UK authorized representation, you would need someone who is acting on your behalf in certain criteria. It’s also depending on your product category, of course. Not everyone needs a UK authorized representation. It’s just for particular CE markings on products like toys, for example, et cetera. There are several categories.
Demet:
So with this expansion, you have the first glimpse. You know, oh, wow, now I’m in Europe, but I didn’t do much to just translate all my labels. And then, when everything goes well, then they start planning to okay, let’s do Germany and what we do and what separates us from. I say that with a lot of confidence because I don’t like the title of sales executive or sales manager. Okay, because we don’t want the customer to feel like, oh, okay, the sales is done and now I’m on my own. So we’re having account managers who are starting the journey with the customer and they guide them through everything. So this means we also tell them what the next steps are.
Demet:
Okay, now we started with UK. So how is it going, how’s your sales and what do you think about Germany now? Are you ready? Do you need any other assistance? Because we do have a lot of partners we work with and we can guide them through the process very easily. So this is how it looks I mean short story for a journey to expand into UK, and the regulations of course, they change in each country, but VAT processes is pretty much straightforward. The documentation is usually very similar, okay, the processes are very similar and the waiting timelines as well.
Kevin King:
So but if you have the right partner, it’s really easier. Well, I think a lot of people don’t do it too, because it’s a whole another financing thing. So a lot of people that may be in one country, they’re barely maintaining cash flow for what they’re doing and then when they expand, it’s like I got to manage a whole another set of cash flow, oftentimes in a whole another currency. So I think that’s something that scares or makes people pause to actually expand as well. That scares or makes people pause to actually expand as well. But most of the I mean you look at the movie business and you know a lot of movies unless it’s a comedy or something very niche, they do better outside the United States than they do inside the United States. It’s the same with products.
Demet:
I didn’t know that.
Kevin King:
Yeah, that’s funny A lot of you know, a Mission Impossible is going to make more money internationally than it will in the United States, and a lot of times, if you have the right product, um, you can do the same thing. But you also have to be able to cash flow that. So, assuming they can cash flow that, I’m assuming you guys do you work with any partners that help cash flow that, or is that something completely separate that y’all don’t really mess with?
Demet:
yeah, no, we don’t go. Yeah, not of the cash flow or what bank they have to use, et cetera. But usually let me talk about an Amazon seller perspective. Okay, starting off, let’s say you’re selling on your own website Okay, and you’re pretty good in the US and you sell to Canada and everything is fine. We always recommend and I’m sure they have also Amazon here as well, it’s always good to expand with Amazon to Europe. Okay, for the start. It’s really much more convenient than trying to handle. Let’s say, you’re selling on your own website and you want to get registered for VAT and everything. You need a 3PL partner. You have to find the right one. You don’t know the country, so there are a lot of aspects. So if you really want to go and expand, I would always highly recommend going through Amazon Because you have you already know the systems and how it works?
Kevin King:
Yes, it’s easier.
Demet:
And, yeah, you have the account managers. They guide you and they help you on how to set up. We have a pretty good knowledge on Amazon side as well because we have, you know, partner meetings with Amazon. They enlighten us. We were also an SPN service provider of of Amazon and we have a very close relation since we’re like the building across at the moment, so we’re pretty close to Amazon. So we also had Amazon sellers. They had really struggled in getting touch with someone at Amazon and we were able to connect them to the right people. That’s also very important, because usually the thing is with sellers oh, it takes ages to get an answer from Amazon. Yes, that’s true, maybe a week later. You have to just ping them all the time. So we help with that too, due to our very close connections with Amazon.
Demet:
So back to the questions about why with Amazon? Because it’s just easier. They have the warehousing, they have the FBA program. The only thing you have to do is having a custom clearance agent at the end of the destination, which Amazon also started one. They have a partner they can recommend working with, so it’s a very good partner in Europe. So everything lands in the main storage of Amazon in Europe and then it’s going to be distributed to FBA, which country you’re going to start off. So the process is much easier. The only thing you have to think about is getting your product from US to the Amazon warehouse. Or if you import from China or anywhere in Asia, you just make sure that you get the goods from there, instead of the US, to the European storage of Amazon. So it’s basically not too much admin work and it’s a good start.
Kevin King:
Amazon also has some incentives right. They will help do some extra promotions and a lot of times when you expand right, if you get like you said, y’all can put them in touch with a person that can actually move the needle and help them get some special promotions and special deals and stuff like that to kind of get them going. Because Amazon wants you to actually go into other marketplaces because they know everybody’s in the US but they’re still have they still have gaps in some of these other places. So places like, like you know, I remember when I was selling in the UK I had to set up a UK bank account and UK entity to actually sell in the UK. In some countries you have to do that, some you can do remotely. And I remember something like Japan. You had to have an agent that took full responsibility for importing into Japan. If something goes wrong, it’s on them. The government wants someone to go and punish.
Demet:
basically Do you do that kind of stuff as well on behalf of the clients. This is more of customs right.
Kevin King:
It’s more of a customs agency.
Demet:
To be honest, I never had any requests like that, but we pride ourselves in if we don’t have the service on our website, if there is a demand, we find a way. So we are always open to any request and usually I go ahead and ask the team and I get a really positive feedback because we make it happen. Due to the fact that we are a big team and we have offices in each European country where we’re providing the service, we have also the connections. So I never say no, I always say let me ask. So that’s how we do the work here, and yeah, so let’s explain what VAT is.
Kevin King:
For a lot of people listening they may not quite understand. They know sales tax in the United States, where sales tax is added to the price. So if you see a price of something it’s $20. Well, depending on which state you’re in, you’re actually going to pay $20.80 or $20.70 or whatever it’s. A percentage added on versus VAT is baked in. So if it’s 20 euros, it’s 20 euros and then you back out the VAT. But then when you import, there’s certain rules in Europe where you actually have to pay basically some VAT when you import and then you can claim some of that back. Can you walk me through how that process works? Explain that in layman’s terms for a brand new person, how that process works.
Demet:
So yeah, I mean, for a person who comes to the US for vacation, it’s first is very shocking to like oh my god, that’s so nice. Oh, $5. That’s cool, let me get all of it. And then you end up with double the price at the cashier. Double the price at the cashier. So that’s just special for the US. So in Europe and all other countries as well, it’s just value added tax you have. When you see the price in the grocery store, it’s just the price. And then you will see the breakdown on your receipt. Ok, you see the VAT which is already included in that amount, and then you see the breakdown and that’s it. Ok, so that’s the. That’s pretty much the difference, and this is also. This is the way you would sell on Amazon as well, ok, so what was the other question you said?
Kevin King:
about? I think what’s it? ERI or something or whatever. It is where you have to. Actually, when you import into let’s say I’m selling my product into Germany I have to at the time of import. Not only am I paying any duties or customs or whatever, but I also have to pay a percentage of the, the VAT tax at that time. Can you explain that?
Demet:
Yes. So yeah, when you import to, let’s say, you have a German VAT and you got registered, you’re ready to go, you have set up your Amazon account in Germany, everything is great, and then you’re at the point you will import your goods from, let’s say, us to Germany, you would have an ERI number. Okay, the ERI number is just a number, which is all your VAT number in Germany and then four zeros at the end. Okay, that’s your ERI number. You have to get registered for that. It’s a pretty straightforward process and it’s just to. It’s not VAT purposes, it’s more importation purposes. Without the number, you can’t even import, and so when the goods arrive, how about the tax ID in the US?
Kevin King:
You have to have an EIN or something. Yes, it’s kind of similar to that.
Demet:
Yeah, exactly Similar. So when the goods arrive, you have a custom clearance agency who’s going to take care of that, and then you have to pay the import VAT, which is, for Germany, 19%. You have to pay it physically, there is no way around, but you can reclaim it back and you pay it based on the wholesale cost, the manufactured cost, yes the manufactured cost plus the logistic cost, calculated down to each item manufactured cost. So manufactured cost plus logistic cost is your total price to put in for each item and then multiply by the amount of goods you’re importing to that country. Okay and yeah. So you pay the VAT, the import VAT, and then with this ERI number and your VAT, which you already have in Germany, you can reclaim that back, even if you haven’t started sales. You can reclaim it back by declaring zero VAT in sales, because you didn’t have any sales for that month, but you would just deduct that amount which is going to occur as a plus balance for you. You can either get that back paid to your bank account which you’re going to provide to the tax authorities when you do your registration, or you can just keep it there and when you start selling they will just automatically deduct that from your payable VAT.
Kevin King:
A lot of people they import into for the EU. They import into somewhere like Poland or something and then ship across. That’s for VAT reasons, right, that’s because it’s cheaper to store.
Demet:
Yeah, I heard that.
Kevin King:
For tax reasons around that yeah.
Demet:
I heard that I think logistics and then warehousing, or you know, only the import warehousing costs are lower. Yes, you can do that. So I will just connect that with how Amazon sellers usually expend is. I’m sure you heard about the Pan-EU program of Amazon, of Amazon. So the Pan EU program is you have to get registered in two European countries at least, which would be, let’s say, they have a lot of importation and they want to save on cost. They would be importing to Germany, to Poland in that case, okay, and then to Germany and transfer it to the Germany. So this would be two countries. And when you participate in that program, amazon has a lot of benefits, which one is the shipping costs from their FBA to the end customer and so on, very lower costs, like I think half of the costs are like reduced for them. So this is a good way. With that, you have the possibility to store in these two countries with Amazon and you can sell your products in any European country without having a VAT registration. For Italy, Spain, you can just sell from Germany or Poland directly to the end customer.
Kevin King:
So that’s another whole story 26 European countries or something like that. Yeah, I know it’s like five or six that are. There’s more now because you have Netherlands and you have. But whatever, the seven, eight, whatever that actually have a physical Amazon. But some of those Amazon ship into some of the other smaller countries that don’t have an Amazon. So where is VATS the cheapest and where is it the most expensive in Europe? You said 19% for Germany. Where is it the cheapest and where is it the most expensive?
Demet:
Yeah, I mean Germany is 19%. That’s the lowest. I think Poland is high. You have 23% in Poland, okay, and France was 20%, so it’s around between 19 and 23,. You know, but Germany, as I said, germany is a good country to expand. It’s a good market because it is the biggest market for Amazon and also in Europe, not only for Amazon marketplace, also for other marketplaces. Germany is the first country to go and start.
Kevin King:
So a few years ago I believe correct me if I’m wrong sellers had to actually track their VAT for everywhere it went and actually file reports. And now isn’t Amazon doing a lot of that? Now they’re actually filing and paying the VAT. So three or four or five years ago you would have to actually have someone your company would have to figure out France, have to figure out Spain, have to figure out Portugal, have to figure out everything. And then me as a seller, I would remit that. But now, just like in the US, where Amazon is now collecting the sales tax and paying it, amazon in Europe is collecting the VAT and paying it. So that makes it a little bit easier to expand now because you don’t have to quite do as much, spend as much money on all this paperwork. Is that?
Demet:
correct? Yes, that’s correct. So here’s the thing even if amazon does that for you, you have to have a vat registration and you have to do your filings with zero okay because, um, it’s just like your sales tax I have to file.
Kevin King:
I’m in the state of Texas so I have to file every quarter and I show zero, even though I had a bunch of sales come in because, Amazon is paying for it.
Demet:
Yeah, the reason why this changed, because, of course, there are good intentions and not so good intentions. You never know people, right? Some of them paid their VAT on time, some of them skipped it, and then they skipped it, skipped it and all of a sudden they disappeared. So what is the European Union going to do about that? Them skipped it and then they skipped it, skipped it and all of a sudden they disappeared. So what is going to do? What is the European Union going to do about that? Then they said you, amazon, this is all on you, those are your sellers, and now you’re going to just pay and we have a peace of mind and they make sure that they’re going to declare a zero and done deal. This is, I think, to prevent all of that, and it’s easier to track, for you know all the European countries as of before.
Demet:
Let’s talk about non-Amazon sellers. Let’s talk about Shopify sellers. Okay, so if they would be selling in different countries, different countries, they could participate in the OSS scheme. It’s a one-stop shop. How they can set it up? Let’s say they have a VAT in Germany, because that’s a requirement. You have to have a European VAT number in order to sell in other European countries. So with the OSS you are filing every quarter and you declare the filing for all the transactions you made from Germany to any other country you have been selling in in the European Union. And everything is combined in one report, in a quarterly one, and this is submitted to the German tax authorities. And the German tax authorities make sure to pay the VAT to the respective countries Italy, Spain, France, Netherlands Because with this scheme you can charge the end customer with their home country VAT rate. That’s a great thing. That’s a great thing. And you just have one storage in Europe and you just sell to any other countries with peace of mind. One report to one country and they make sure to pay the other countries.
Kevin King:
How does it work. If I order something on Amazon let’s back to the Amazon for a second. If I order something on Amazon Germany, which is 19% VAT, but I have Amazon Germany ship it to Austria, which is, I don’t know, maybe 20% or 21% VAT, yeah, does Amazon adjust the price and collect that 2% difference to the Austrian person or am I responsible for that?
Demet:
Yeah. So here’s the thing, the customer when you set your account on Amazon and you’re PANEU, right, you have two VATs and you work PANEU open the countries you would like to sell in.
Kevin King:
So when I’m from Austria, it shows a slightly different price.
Demet:
Yes, it shows the currency or it’s not the currency, but the price is going to be different set. So it’s the setup of Amazon account and you decide where you would like to sell them.
Kevin King:
Okay, so what are some in Europe besides Amazon makes sense, like you said, that should be your first place because you already kind of know how Amazon works. Yeah, but if I want to look beyond that, in some of these areas there’s really big marketplaces that are bigger than Amazon. What are a few of the others you know? Like in Australia, for example, eBay is, I think, still bigger than Amazon, for example, and you said you have presence in China. I don’t know if you’re helping people go into China or not, but there’s a lot of. There’s no Amazon in China. There’s a lot of bigger stuff in China. What are some of the bigger ones around? You go to Japan. There’s another one besides Amazon that’s really big. What are some other big marketplaces out there that a lot of people aren’t paying attention to? Maybe it’s Mercado Libre in Latin America or something. What are some that people, sellers you know they’re like okay, I’ve got this, I’m gonna do amazon, but I’m also looking to get off amazon, where it’s maybe a little bit different type of competition. What should they be looking at?
Demet:
yeah, I mean, um, so there is, yeah. For example, in Poland you have allegro. Allegro is the biggest and amazon can’t beat them over there. They’re so loyal. It started earlier than Amazon. So I’ve been in contact with the people from Allegro. It’s like a really long time I think it’s like 25 years or 30 years since they have been starting. So it’s a big market so they can sell over there Again if they want any connection and someone’s you know watching this and they’re like, oh, wow, I want to go there. Um, yeah, just contact me and I’ll find the right contact for you with this marketplace. That’s. We’re able to do that because we work closely with all these marketplaces. For example, you have in, have in France, sea Discount bigger, okay, so. And then you have in the Netherlands. You have ball.com, also a nice marketplace which covers Netherlands, and then Belgium mostly. You have Zalando have you heard of that? It’s Germany, yeah. And then you have Otto. Otto is that’s like a little story. I was born and raised in Germany, okay, and my grandmother back in the day they had the catalog of Otto. So I’m speaking about 40 years ago, okay, very long time. So this catalog was basically an amazon in paper version, okay like the sears catalog in the united states yes, I mean, it was really fun shopping like the same.
Demet:
But you just change the pages and since then and they’re quite older than that. So that’s another big market in Germany. But to explore these marketplaces you need to. What I always recommend is, as I said, start off with Amazon, experience that and then look for the other marketplaces and meanwhile you can find good 3PL solutions because you need that. But Amazon is also now in the logistics of preparing your orders for eBay, for example. Or if you say, hey, I want to partner up, please, I want to store here for this marketplace, amazon does that too. That’s, that’s a new thing and they’re promoting that really a lot. So if you start with amazon and you go with amazon, you could basically, uh, cover a lot of marketplaces and you could just grow your ?business and brand
Kevin King:
I’ve heard something. When you expand something EPR or something, what’s EPR?
Demet:
Extended product responsibility. So this is basically a recycle process, okay, waste management, sort of so when you sell to Germany, you sell like glasses, okay, and you have the pouch of the glasses, everything is fine. And then you have the is also recycled and the fees are paid for. This is for packaging, you have that for batteries, you have that for electronic devices. So and this is a mandatory thing you have to do that. Even Amazon does not let you start selling, even if you have your VAT number. If you don’t have the packaging registration, you can’t start selling. So the first thing you have to do is get registered for packaging in Germany or the other European countries.
Kevin King:
Does that mean sending samples of my packaging, or is that just a form I fill out online, or what does that entail?
Demet:
Yes, amazon, when you list your products, you will. Amazon asks you for the weight of your packaging. Okay, you put that in it’s in the database. And then when we do the filing for the packaging because we have to pay, obviously, a fee to the authorities for the recycle process we get the reports and we know exactly how much waste you produced okay, how much paper and how much plastic and then we do the calculation and, according to this filing, the fees are going to be paid to the authorities. And the same basic is for batteries, except lithium and electronic products. It depends on your category.
Kevin King:
This is something that when someone’s expanding, they got to put this into their cost because they’re going to have a. Is it typically like 1% or 2% of the item’s cost? I know it can vary depending on a lot of things, but what’s just a ballpark number that if my landing cost for my walking sticks in Germany is $5, okay, I’m going to have to pay a 19% VAT on that $5. I’m going to have to pay another almost dollar when I import it, plus whatever duties or tariffs there may be on top of that. And then I got to go get registered for my packaging and I got to pay. I just brought in a thousand walking sticks and it’s you’ve done the calculation it’s this much. This much kilos of paper and this much kilos of plastic. So I got to pay another fee to recycle, for the recycling of that. What could that fee be? Is it like one or two percent, or is it what?
Demet:
no, that’s. That’s no, it’s because, since plastic and paper is not weighing that much, so usually it’s not really something you would even put in your calculations, because of course, if you are like really big and you have like really big packaging, that’s a different story. But usually the fees are changing between, let’s say, it’s, 100 kilograms I go with kilograms because it is in Europe yeah, so it’s 100 kilograms of paper and 10 kilograms of plastic. It’s between 20 to 30 euros, okay.
Kevin King:
Okay, so that’s not bad. No, that’s just like nothing, because the way, it’s just a paperwork hassle thing you got to register and go with.
Demet:
Exactly, yeah, but you don’t deal with it, we do it. You don’t have to even pay the authorities. We do everything because we will be the fiscal representative for that specific service.
Kevin King:
And what about compliance? I mean you help with, like you see, sometimes when I buy something it’s got the manuals in five different languages or the packagings in five different languages. Like if you sell into Canada, for example, and you’re going into Quebec, you have to have French and English on it. Do you all help with that kind of stuff too, and get the underwriting? If it’s electronics, get the CE or point them to the right direction? Or what’s your involvement on compliance type of stuff?
Demet:
Yeah, we have a label tool where the customer can um add the logos he needs um for his product, because every seller they know what kind of uh marks they have, ce or any other. You know, they know that. So they can basically create this label with our tool, which also includes the EU authorized representation. I mentioned that before. So this is also a mandatory requirement in the European unions that you have an authorized representation in any European country. In case the end customer tries to contact you and they can’t, okay, which is not always the case, but worst case, let’s say, and it’s basically a protection mechanism from the European Union to have someone for non-EU sellers okay to act for them in case there is a disconnection. So yeah, we help with that, but we do not help with the translation of the labels, which nowadays it’s not a big problem because you have really good translation tools and I think it’s just, you know, translating and then putting it in a design, and I think many of the sellers I ask that too how they manage that. This is the way they manage. They have their own printing company and then they just translate and put the right labels or marks on it and in that case they can always come back to us if they have specific questions about testings and, as I said, sometimes they need specific testings we can help them with the testings as well. It depends on the request of the seller. I don’t have a particular example at the moment but, yeah, it depends on the request.
Kevin King:
What about when it comes to like IP protection, like trademarks or patents or copyrights or stuff? Do you guys assist in anything of making sure that I’m not in violation if someone has my mark and I’m importing and someone already has it there, or if I need to get protection. Do you guys help in those ways too?
Demet:
Yes, we do that too, and this is something we had a partner submit with, submit with amazon. That was like a couple of months earlier in Seattle, and now there is a. There is a whole team who is engaging with a lot of sellers who are just selling some products. They’re not a brand because they want them. They encourage them to be a brand on Amazon, because how are you going to just protect your products? Okay, this is very, very important and what we always do. Our team always asks the sellers do you have a trademark in the US? Tell us what countries are included? Usually, they just cover US, and then we make them aware that they have to. The first thing they have to have is, before they list their products, to have a trademark Because, as I said at the beginning, there’s so much global sellers around. Okay, you can just start and you’re happy. Hey, oh, nice, I’m making a lot of sales. And then, all of a sudden, amazon just shuts down your seller account because someone just opened up a case and say, hey, this belongs to me. So we do the research, we register them for a trademark and we make sure they’re compliant in that way too. So we enlighten the sellers before they even take the step to expand into any other country. That’s a very important aspect nowadays.
Kevin King:
So are you guys primarily focused on Europe or are you also doing like the UAE or some of the smaller Amazon? Look like Australia or Brazil or some of the smaller places? You’re doing, You’re doing anywhere. Amazon is you. Basically, you got their back.
Demet:
Yes, we do yes Anywhere where Amazon is Brazil, we don’t do Brazil, we do Mexico, and we do, yes, united Arab Emirates. We do Saudi Arabia, Japan, Australia. I mean there’s always, since we’re growing, there’s, you know, every time another country coming adding on top, and so we have a really wide scope to provide services to e-commerce sellers.
Kevin King:
What’s a big mistake you see a lot of people make when it comes to expanding international, a lot of sellers are like, or a misconception, that a lot of them have.
Demet:
Yeah, I mean my sellers. I never had someone who regretted it up until now. I don’t know, maybe like, yeah, there is one particular thing. I had a client the other day. They just opened. They were just oh, okay, let me establish a company in UK because it’s, you know, 80,000 pounds, it’s I don’t need to file for taxes, and so let me set that up. But then it’s really hard. Yes, you are exempt. Yes, maybe you are a little a small seller, it’s fine. But then there is a risk of you have an agent there, but it’s a one man show, right, he has an office and he’s doing the work for you. You know bookkeeping or whatever, but you don’t have control over that person. Okay, so I always tell them look, even if you have a need to pay taxes, you can always, you know, deduct your importations and everything, and your aim is to have a good business, to have good revenue, and you have to work towards that. So when you set up a company in a country, you have more hustle to get out of that country later on if you want to. But if you apply from your home country, which is maybe US or any other country, it’s easier to deregister a VAT than canceling a whole established company in that country. So this is something I had a couple of times and at the end of the day it wasn’t successful. And then they had so much hustle getting in touch with the agent again, you know, making sure that they’re deregistered there. So it was a lot of paperwork and admin afterwards. So I would always recommend just getting to get registered with their company in the US. In UK that’s an easier process. You have a compliance partner, you have a software where you use and you see all the processes for your declarations, because if you work with a one man, you don’t know what he declared. You gave him the reports but you don’t know what happened. At the end of the day you have no control over your declarations. But with a SaaS system you have control because you have an account where you can check everything. So this is what I always recommend sellers Go with the software. It’s much safer.
Kevin King:
So if I’m looking to, I’m sitting here in the US and I’m doing pretty good and I’m like, all right, you know what I’m up for the challenge, I’m going to expand. You’re saying that I should first go, maybe to the UK, because it’s the same language, and then from the UK go to Germany, which basically can help me cover the rest of Europe. Where do I go next after that? After I go to those, if I want to be, I want to be global. I want to be global, I want to be Mr. International, Mr. James Bond. What are the next, like two or three I should go to. Is it Japan? Is it? What are the after Europe?
Demet:
I think it’s always depending on your revenue and your success. And, but what I know, um, we have really, there are really great account managers for um at Amazon. Okay, they usually what is their approach? They approach uh sellers who at least make a million in the US and then they go and say, hey, look, this is like your category and in Germany, France, Italy, Spain or whatever, this is your market share, what do you think about it? Let’s start that. And then they have a consultation call and they tell them what the scenario would be. And I think, after having a good success in Europe, then they can just, you know, conquer, start conquering step by step, you know, moving into Asia and all other countries. But I can’t say, okay, this is not, yeah, just do this. And I think it’s just case by case and product by product. But what I recommend is, being a brand makes you different and makes you stay sustainable, because sometimes their sellers, oh, they sell like all sorts of products, you know, but at the end of the day this is my personal opinion they’re going to disappear, because there is the idea of being a brand. Even if you sell like different products, you make a brand out of it because you have been selling so much and now you’re XY brand and then, when you appear like that, your storefront at Amazon changes. Beautiful, you know, people see something professional. So this is, this is like the future. This is what I see and, um, I think, um many sellers, midsize sellers or you know, who just sell random different products, they should really think of you know, being a brand on Amazon and in general.
Kevin King:
So you just help people get into these and go to, like, say, an American seller go to Europe, or do you help Europeans come to America too?
Demet:
Oh yeah, there is a demand too. Yeah, we do company, you know registration and stuff like that. Uh, in detail, we provide the, the, the company um setup for them okay yeah for 15 states at the moment.
Kevin King:
Yeah, okay, cool. Well, if someone wanted to reach out and explore this more. This sounds good to someone listening. They’re like this sounds pretty cool. I want to know more and see if this might be a good fit for me. How would they go about reaching out to you or the?
Demet:
company which we’re going to have in this video and I will give it to you, so they have a special 10% if they want to go with us. They will have a code for this particular podcast and then I will, of course, share my informations and they can reach out to me. Maybe I will share a QR code or anything else, a link.
Kevin King:
I’ll see a QR code right behind you there on the video.
Demet:
Yes, they can use that too. We’re really good prepared, right, Kevin?
Kevin King:
They can just go to vatai.com.
Demet:
Right VATAi. So yeah, they can go there, but I’m happy to share my link, my email with them and my LinkedIn profile if they want to just contact me. So yeah, they can reach out somehow and use the code and I’m happy to help them to expand, even if they don’t have the idea after this video, they’re going to be maybe. Oh, wow, wow. That sounds really easy and they can help me. Just a consultation, you know, no pressure. I’m happy to enlighten them. Even if they want to just expand six months later or one year, we’re here.
Kevin King:
Yeah well, Demet, I really appreciate you coming on and sharing today. If you’re looking to expand international, these are some people you should check out, and thanks again for uh for coming on.
Demet:
Thank you, so much pleasure and I hope to see you soon in person, somewhere, all right, take care thank you bye.
Kevin King:
See, international expansion is not quite so scary, especially if you have someone that can help guide you through the process, like Demet. So take a look at that. It could really. If you can cash flow it, it can really grow your business and in some cases double or even triple your business if done properly. We’ll be back again next Thursday with another edition of the AM/PM Podcast. Until then, happy selling.
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The post #472 – Go Global Without the Headache: Compliance, Cash Flow & Cross-Border Wins appeared first on AM/PM Podcast.
