Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey, everyone. Peter Crosby here from the Digital Shelf Institute. For brands looking for growth, an obvious opportunity is expanding to new markets. But each market comes with its challenges, costs, and requirements for process and organizational transformation.
This is definitely true of the countries that make up the EMEA market. Jérôme de Guigné, founder and CEO of e-commerce agency, e-Comas, joined Lauren Livak and me to share his deep experience working with brands large and small to establish profitable and sustainable e-commerce strategies in EMEA.
Peter Crosby:
Jérôme, thank you so much for being on the podcast today. We are really excited to bring some global perspective to our audience and hearing your thoughts on the EMEA region. Even more exciting, we actually have met in-person in France at our inaugural Digital Shelf Institute Executive Forum in Paris. And it was a delight. I'm so excited that you could come on and join us here.
Jérôme de Guigné:
Yes. It's indeed a great pleasure. First, because we love to talk about expanding in Europe. We love to meet with people from the Digital Shelf Institute. We've been in the European side of it. Specifically, the French one. And it's been great so far.
Jérôme de Guigné:
It's great to share with the audience, and with the different people joining, experience of how to expand in Europe and generally all over the world. That's what we do with brands today. And that's what gets us waking up in the morning and doing stuff and enjoying our lives.
Peter Crosby:
Well, we're so excited to have your energy and expertise to be part of the DSI. It's really valuable. A lot of it because you work with many brands who are trying to build a strategy for the EMEA region, which I know is not an easy task. Because every country and sometimes regions within countries are challenging. What would be the first thing you would say to a brand that's looking to move into EMEA or get deeper in the EMEA region?
Jérôme de Guigné:
The first thing we tend to work on is to understand the size of the pie. Or the size of the market. To understand, "What are you trying to reach or to manage or to get in terms of sales?" Understanding that size. Most specifically, also, the size between the different countries. Usually, the biggest size is in Germany.
Jérôme de Guigné:
If we're talking Amazon specifically, Amazon in Germany is the biggest. The UK is second. Then, France. And then, the other countries. But understanding the whole size and what you could expect from that. And so, how much you should invest in is probably the first thing. Because clearly, the potential of the European market altogether is probably similar to the US, in terms of number of consumers and so on.
Jérôme de Guigné:
However, it's more complicated. Because it's as if, in the US, you had to convince people in Texas, then convince someone in Florida and so on, which is the case in Europe. It's really understanding, "What could you get from that?" That helps you make a business plan and see how much you should invest and what you need to prepare. But that's usually this work, which has not always been done, which we try to do with all the brands. So that they have a good understanding of what they could get at the end of the process.
Lauren Livak:
Would you say that brands sometimes try to lift and shift the same strategy in North America and bring it to EMEA? Knowing that is not the right approach, what are some of the watch-outs you would say that they need to think about? Other than the size of the prize. That they would need to focus on or assess before they really dive in?
Jérôme de Guigné:
The first step is really understanding the market. The second and third step is really looking into logistics and, let's say, legal tax and so on. That typically is where it's really different. To be fair, if you go into the US, the tax system, the way it works between different states is also foreign to us Europeans, for example. Logistics is ... You can't just do, "Okay. I'll go. Whatever."
Jérôme de Guigné:
No. It's like, "How do you do the imports? What are the taxes and so on?" And then, once you're selling, what are the different systems? This is typically hurdle number two and number three, which you need to go over. And if you come up with your, "This works in the US or in Japan," or wherever, it's not true. Because typically, governments and administrations are not very business-friendly, let's say.
Jérôme de Guigné:
They all make their own rules and so on. That's really the type of thing. Then, in general, to your point, the mistake everyone will tend to make is to believe that the customers are a bit the same, which is true. Because everyone will want to brush their teeth, to wash their hands, and so on. But in the same way, even in Europe, you don't talk the same way to a German customer, to a Spanish customer.
Jérôme de Guigné:
It's understanding that you probably need to revise a bit the way you've been selling. What was the success recipe in the States, for example? Probably, it will have to be nudged or changed a bit. What is super great in the US, probably is not at all interesting in Europe. Or it doesn't resonate for us.
Lauren Livak:
Would you say that ... For North America, for example, usually there's a North America strategy. In EMEA, because there's so many countries, obviously you can't have that. Is there any that you could bucket together?
Lauren Livak:
Usually, I hear UK, France, Germany are separate strategies, because they're different populations. Is there any way to group some of the countries together when a company is going into a new space and trying to figure out where to focus?
Jérôme de Guigné:
Well, if we want to simplify Europe, you would say there is the North European block and the South European block. Typically, North Europe would be more or less UK, Germany, and all of that. Denmark, Sweden, and so on. Probably. It depends if Poland is Eastern Europe or Northern Europe, but let's say that's more Northern Europe. And then, Southern Europe would be France, Italy, and Spain. Maybe Turkey, if you include that in the same zone, in terms of Amazon environments.
Jérôme de Guigné:
Now, it's true. People could make it super overcomplicated to say, "Each market is so different. You really need to change everything." No. It's not true. Let's be realistic. It's clear that you need to be aware, open-minded to the fact that, "Maybe customers will react differently." And then, if your conversion rate in the country is not very good, it's probably because your content or the way you're explaining your product could speak less to people.
Jérôme de Guigné:
But in general, that's why I said before customers are the same and not the same. Still, a lot of things are common, but you need to be more open-minded. In the different steps I gave, the first is understanding the size of the market, the logistics, and taxes. The fourth one is really to get your products in the markets, get it in front of customers, and then see how they react.
Jérôme de Guigné:
And so, to your point about the different countries or the strategies. I would say you would have a European strategy, which is saying, "I understand that the size of the market is probably biggest in Germany. And then, probably in the UK." There is a reality, because of Brexit, that UK is a bit outside of Europe, in a sense. From a logistics point of view, let's say.
Jérôme de Guigné:
The question will be, "Okay. I start in Germany. Then, if I expand, probably, I want to expand into France." Because it's closer. You can use warehouses from Amazon, and it's easier to switch and so on. Or you could say, "I start with the UK, because it's easier. Because of the English language." And then, I expand to the others. It's not that you would say, "My brands or my products are completely different from one country to another." No. They would probably be the same products and the same brand language or the same approach, but it's just fine tuning.
Jérôme de Guigné:
And then, in terms of, when we talk about strategy of expansion. It's really to decide which portfolio of products you will keep for Europe, in general. And then, in which order do you do the countries? Do you want to really go fast and everywhere and start slow from everywhere? Which I don't really like. Or do you start and try to be strong in one, and then expand in the others? Which I much prefer.
Lauren Livak:
Starting in one and then expanding into others ... Who are the key players? If I think of North America, Amazon, Walmart, Target. Those are the big ones you think of. If you could name the top three, could you do that in the EMEA region? Or would it be specific to each of those countries?
Jérôme de Guigné:
I would say Amazon, Amazon, and Amazon. To be fair, if you're coming from the US, I would focus on Amazon first. Specifically, in Germany and the UK, they are overwhelmingly big. And if you are big in Germany on Amazon, you are big in Germany, in a sense. And then, expanding to another will be much smaller. It's much better to go into one. To avoid price comparisons and so on between different websites and focus on being successful in Germany. The UK is a bit the same.
Jérôme de Guigné:
Now, in other countries, Amazon was late to the game, let's say. There are stronger actors. In France, there's strong actors. One is called Cdiscount. Another one is called Fnac, for example. There's other smaller ones. But typically, in France, if you want to be successful in the market, you probably want to be in those different marketplaces.
Jérôme de Guigné:
In Holland, for example, there's one which is called bol.com. In Poland, you've got Allegro. In Spain and Italy, the markets are small. The e-commerce markets are smaller, but there's only Amazon. In this case, it's really market dependent. That's why I said Amazon, Amazon and Amazon. It's much easier to master Amazon in all those five, six, seven, now eight countries in Europe.
Jérôme de Guigné:
Already, you're in a very good position to look at the second step of expanding. But to be fair, most of our brands really focus on Amazon. Then, once we are strong, we say, "Once we've hit a bit of a ceiling, then we advertise a bit more." Then, we went to other marketplaces.
Peter Crosby:
And so, this is thinking about it from a pure play e-commerce perspective. Not an omnichannel, like Leclerc or Carrefour in France. When do those players come into play? Would that be part of your market expansion? Or is that not something that you focus on?
Jérôme de Guigné:
We're very e-commerce biased, but my background, I came from distribution. So I've done a lot of that. It's true that when we are working with a brand, specifically coming from the States, it's about the cheapest way to do it. The way where you don't have the barrier of the buyer is e-commerce, because you are sure to put your products in front of the eyes of a customer. If you go to Leclerc, if you go to MediaMarkt in Germany, if you go to Boots in the UK, you need to go through the buyer.
Jérôme de Guigné:
If the buyer doesn't like you or the terms you're giving to him, you will never appear on the shelves. On Amazon, you will appear on the shelves. On the digital shelves. Now, it's your job to make sure ... The barrier is a bit further down the line, let's say. You need to master the Amazon art to be able to show your products to the end consumers. That's where the barrier is, in a sense.
Jérôme de Guigné:
For me, it depends how fast you want to grow, what's your means, and how you want to do it. In a few words, I usually recommend, "Start with Amazon." Get an idea of what is your conversion rate. What are customers reacting to your brand without going through a buyer? Once you've done that with Amazon, in Germany or wherever, then you can start.
Jérôme de Guigné:
You've built something, the prices are set up, and there's a clean market. Then, you can start to expand your distribution. Otherwise ... Because MAP pricing doesn't exist in Europe. It's illegal to talk about MAP pricing. Pricing is difficult in Europe. Therefore, if you start with distribution and putting your price everywhere, the chance is your prices will go down and you can't do anything about it.
Jérôme de Guigné:
It's much better to build it on one place, have a strong foundation, and then start to expand and to show your numbers. You can go see the buyers and the buyers say, "Your brand, nobody knows it." It's like, "Actually, they do. Look. Of 100 people, 20 people are buying it. Do you want to be part of it or not?" Which is a total change of the gameplay.
Peter Crosby:
Jérôme, do you have an example? Without naming names, I'm guessing. Some customer examples when you've seen people do it really right. The key people, process, tech shifts they make to really succeed at it with your help. And then, what are some of the biggest mistakes that you are able hopefully to save your clients from?
Jérôme de Guigné:
One example I'm thinking of is a water products company from the States coming into Europe. There are a lot of competitors. They have a strong solution and a strong brand presence in the US. They decided to take over Europe. And then, they went country by country, like I said. Very interestingly, they have both parts where they are building their presence on Amazon and building their brand with a Shopify website. To be able to grow both and starting to have the community management. Starting to go up in the funnel.
Jérôme de Guigné:
You start very easily. They started with distributors. Selling their products very low funnel. Really trying to get people just to buy. And then, step-by-step, they've started to grow up the funnel. They did this in the UK. They did the same in Europe. Starting to go and handle themselves the distribution. Pivoting from having this success on Amazon to starting to connect with offline shops and say, "Look at what's happening. We have X amount of customers, and they have repeat orders." Because you have to buy cartridges and stuff.
Jérôme de Guigné:
This works well. Because you say, "You can see what's happening. The number of reviews, the thousands of reviews I've got on Amazon." They start pivoting and putting it on stores. Typically, in this area, which are really consumer products ... If you're fighting with other brands, which are in every shop everywhere, at some point, if you really want to fight with them, you will want to have to go offline also. It's really starting from having this offer, controlling prices very well, cleaning a bit the market with the distribution. And then, having a good idea of the size of the price.
Jérôme de Guigné:
And then, starting to own the distribution. And then, put it in the right places, so that the customer journey goes on and offline all the time. That's where you want to be. At the end, they will purchase maybe offline, maybe online. You don't really care, but you want them to see the brand in many places. I think they are doing a great job. We've been working with them for several years and it's all in the happening.
Jérôme de Guigné:
It's challenging. Because if you are a big brand name in the US, but no one knows you in Europe, you start from scratch. You could be a great name. One example is, I bought one of their products very recently. All the packaging was about the US. It had a map of the US, it was talking in gallons, and so on. I brought it from France. As a French customer, I was not impressed by the customer experience saying, "Okay. I'm French in France. Maybe I'll understand the English, but it's a map of the US of where the water is hard or soft. I'm not impressed."
Jérôme de Guigné:
It's to show you that it has a lot of implications. This process of going into Europe and building a real brand goes into, "Okay. Then, maybe at some point, I need to have a different warehouse when I produce." Probably, the production center will have to move maybe from somewhere in the world to somewhere closer to Europe. To make sure you have a packaging which speaks to the customers.
Jérôme de Guigné:
You have to go step-by-step. You can't spend money on everything at the beginning. You need to build it. Build sales, make revenue, and then invest. And that's exactly what they've done. You can see not everything is perfect, like I said, but you can see the path is in this same direction. Step-by-step, they will be really able to challenge the larger brands. All thanks to e-commerce at the beginning.
Lauren Livak:
I love that point about the US content on the product packaging, because it's not like you're just taking a product from North America and selling in EMEA. You are learning a new customer, a new way of thinking. Gallons versus ... The way that they're communicating the information.
Lauren Livak:
I think that's a mindset shift. And that's something that you had shared previously, Jérôme, around, "You need to shift how you're thinking about selling." It's a totally new business plan. I think in an organization that can be challenging, because if you've sold only in North America, and now you're pivoting, that takes a people, process, technology shift.
Lauren Livak:
Have you seen organizations that, for example, have done it well? Like the water company you were talking about. What have they done internally within their organizations to help them be successful for that?
Jérôme de Guigné:
I think it's a great point. It goes back to your question earlier about, "What are the main mistakes you could do coming from the US? Or coming from one place and going to a different culture?" And I think one of them is ... Actually, the larger the company is the more complicated it is for them, because you have more people.
Jérôme de Guigné:
Typically, the marketing people say, "Yes. We need to localize our content. We need to do the advertising." That's all clear. But then comes in the logistics guy or the supply chain guy and says, "No way. We have one warehouse. We are not changing that. I don't want to hear anything." The different people need to align and to say, "This has to happen. At least, step-by-step, to reach the European customer."
Jérôme de Guigné:
And then, if the supply chain guy doesn't care about what's happening with the end consumers? Then, you're in trouble. For me, I think what they've done well in this sense is to connect with distributors at the beginning and with a local agency. That's us. Well done, them and us. The idea is we'll say, "You need to find the people." If you want to go big, you need to find serious people who know their business, who can really help you. Because like I said, the tax aspect is really complicated.
Jérôme de Guigné:
And then, end consumers and understanding the different people, it can really tough. I think they really leverage the fact of having local contact. They also have the brands. Or it's a larger company with connections in Europe also. They tried really to leverage that and to see ... The marketing team was mostly in the US, but clearly, they understood the marketing team in the US will have a hard time doing community management or anything in Europe.
Jérôme de Guigné:
It was really finding people who could be their voice and their face on the market. I think that's a struggle. Finding the line of how much you want to get involved, how much you want to do, and how much you want to do with someone local. It's difficult because the local partner will never be really the brand. They can be, to a certain extent, but it's also finding who should create content. I'm always a bit challenging, brands which are saying, "Can you create the content for us?"
Jérôme de Guigné:
Maybe you should be creating the content? Because that's super important. And then, we localize it and use it. This is all the fine lines where they have to be founded. To be fair, the smaller companies have it easier, because they have a much smaller team. And then, the boss is sometimes the owner. He's likely to say, "Supply chain? No. Of course, we change it. Sorry. We can't listen to you."
Jérôme de Guigné:
If you're a bigger company, everyone has a role, and it takes more time to convince people to change. We help enormous multi-billion companies, and that's even harder for them. E-commerce is, in a sense, a great opportunity for smaller brands. And an opportunity, but also a challenge, for the medium to large brands.
Peter Crosby:
Jérôme, you've mentioned a couple of times of community and community building and connection. Can you dive into that a little bit of what that means in your parlance? How companies need to think about that function in EMEA?
Jérôme de Guigné:
That's a great question. You've got two situations, basically. When you enter a market ... Let's say you're an American company. Either you're Apple or you're Mr. Nobody. In the sense that, either people know your brand partially a bit or they don't know you. Most of the time, probably they will not know you. If they know you, then life is easier. You just build on that. It's much easier.
Jérôme de Guigné:
If you are not known well-known, which is a lot of the brands which come to us, then you have to understand that ... If we take this idea of the funnel also. We will start very low in the funnel. We will play with a limited number of people. The challenge will be ... PPC is great. The advertising pay-per-click is great and everything is great. But at some point, you will probably hit a limit to the size of the audience you're speaking to.
Jérôme de Guigné:
The second step, in a sense, of your process is once your established conversion rate is working well on the smaller audience, things are looking great. You say, "Okay. How do I expand?" Our experience is that, at some point, there's a glass ceiling, in a sense. The glass ceiling thing is you have to grow your audience. And that's where you have to use social media tools and social community management tools, in a sense.
Jérôme de Guigné:
Like social media. It's using DSP advertising, for example, where you're reaching to other audiences. But also, looking into Facebook, Google, Instagram now. TikTok and things like that, where you want to build a bit of a community and people can see you in different ways. As I said before, if you were expanding outside of Amazon and going offline, this is also how people see your brand.
Jérôme de Guigné:
The idea is to have people on their customer journey see your brands in multiple areas. If you are in working only on PPC and linked to a small number of keywords, this will be very difficult to reach out. We've started to offer this service ... We did not at the beginning. Because we saw that it was needed for brands to go to the next level and to start to speak to a wider audience.
Jérôme de Guigné:
The first step is quite fast, if your product works well. You get very quickly to a certain level, but then you get stuck. The second step gets a bit more complicated. The wider the audience, then your conversion rate goes down. Because you have more people to convince. They're probably less closer to what you are offering. It's really building this audience and this brand awareness, which is the long-term game to make sure you're established and long-lasting in the market.
Lauren Livak:
Let's say a brand is listening to this and they're like, "Check, check, check. I've gone through all these things. I know the size of the market. I know all the logistics. I'm ready to go." What would be your suggestion about what they do next to dive in, once they've thought through some of those things you mentioned?
Jérôme de Guigné:
For me, the process is always ... If they have a good understanding of the size of the market, then that's the first check. The second thing is, do they have the right logistics partner, which can give them all the ins and outs? Do they have either a local or a connection which can explain to them the tax implications of, "If I'm selling B2C, if I'm selling B2B, what's different with taxes with VAT in Europe?" The value-added tax.
Jérôme de Guigné:
All of those things. Have they checked? And then, it's about, "Locally, do I have a partner to localize my content? To translate it?" Then, it's, "Have I decided about which products I want to start with? Which countries? The pricing policy?" If they start to say, "I don't know," then they need to find maybe local partners. Either an agency. There are loads of agencies, e-Comas is one, but there are others.
Jérôme de Guigné:
We're based in Luxembourg, because we're very pan-European and because we believe it's very important. You have very good agencies based in Germany, based in UK. You can talk to different people. Get a feeling. For me, it's really to understand that regulation in Europe is very strong. To give you an example, they have a new environmental regulation in France and Germany, where you have to declare the plastic you're importing.
Jérôme de Guigné:
You have to create an account on the official administration. You need to get an account number, and you need to put it on your Amazon account if you're selling on Amazon. And if you don't put that, Amazon will block your account. Why? Because the regulation is so strong in Europe. The states in France or in Germany can say to Amazon, "You are in charge of blocking them," to check that they have that.
Jérôme de Guigné:
If not, you'll get fined. Fines in Europe can be very strong. Or they will block you to work. Amazon has been put a lot of pressure for them to block accounts if they don't comply. Also, VAT, you have to have a VAT number. Amazon will block you if you don't have it. They have also money laundering, but that's worldwide. They're very strong in that. And that's because the regulation in Europe specifically is so strong.
Jérôme de Guigné:
Typically, I would say, on that end ... If you have never done business in Europe or it's your first time, don't go into Europe. Spend the extra money to have someone to support you on that. Maybe you can learn and do it at some point. That's not a problem. But at the beginning, it's very dangerous to go on your own.
Peter Crosby:
Well, Jérôme, I think at this point in time, and at all points in time, brands are always looking for, "Where is the growth coming from?" And then, balancing that with cost to achieve a profitable growth strategy and beat competitors. Do you feel like, at this point in time, EMEA represents an opportunity like that?
Peter Crosby:
Or do you see your clients maybe coming in unsure about that? Or in a crouch? I know the answer is always, "It depends." When you think of the water company, what is that path to up and running, moving these days? In this situation that we're in?
Jérôme de Guigné:
It's very rare that there's not potential, that there's not an opportunity. And if you look at the whole world, if you're based in the US, the low-hanging fruit is probably Canada. Maybe Mexico. But then, if you want to expand, the first large market, the closest is Europe. Most probably, I would say ... This is me giving a number. 90% of the time, it will be extra business.
Jérôme de Guigné:
Now, the question is, "How much and how fast?" And that's the question which depends. Indeed. It depends on the competitive environment, it depends on your own brand, and it depends on your means also. How much money do you have to push that? And that's where typically people who help you out will try to give you an idea of how long it takes. Now, sometimes it's a surprise. It goes incredibly fast. Sometimes it takes much longer.
Jérôme de Guigné:
That's why typically, with Amazon, you want to test the water a bit. Probably, have a first thing, looking at what's happening. And then, go bigger after. That's why I'm in favor of starting in one country, for example, and seeing what's happening. And then, expanding. Specifically, in Europe. In short, most probably there is a potential for your products in Europe. Except if it's food products or very specific products. Most of the products will have a good potential in Europe.
Jérôme de Guigné:
Now, it depends. There is an investment part. Especially, at the beginning. Only talking about translations, translating with a native speaker in each language costs a lot of money. We do that, for example. Some people say, "I'll have a look and we'll do a discount." No. Because the people cannot spend less time. You don't save time because you have 500 products. No. You don't. You spend maybe even more time.
Jérôme de Guigné:
This is, for example, an investment where if you don't have that much money or it's really tough, it's better to stay in the US or invest more in Canada. You have to have time and a bit of money to support that. Maybe to be patient until you earn money. Because that could take time. You were asking about time. Typically, we tend to say that within six months, we can tell you if it's going to take ages. Or if there is a good chance of going faster.
Jérôme de Guigné:
The first six months are critical. If you're doing things right, we can tell you that. We get a very good idea. If the conversion rate is super low, we see that it will be a big struggle. If you see that really it's going step-by-step ... It's really the trend which tells you. Between three to six months, you will really get a good idea.
Jérôme de Guigné:
For me, it's ... Maybe if you talk to people and you get a good feeling about, "This is the right type of market." You believe. Go to one country. Test the water. Three to six months and typically sell. For example, we've opened seller accounts for brands typically to test that out. Because we thought, "You want to test it in a very simple way? Test it for three months." And then, open your own account. This is the kind of thing where having help locally really makes a difference.
Peter Crosby:
Sure. That makes perfect sense. Well, Jérôme, I think in these times, everyone is looking at where the opportunities for growth coming from. As I said earlier, cost versus revenue, profitability, et cetera.
Peter Crosby:
And so, we really appreciate you joining us and giving us a perspective on the EMEA market as an opportunity and some of the challenges to go in there, so our listeners can start thinking about it with their eyes wide open. Thank you. We're really grateful for the partnership.
Jérôme de Guigné:
Thank you for having me.
Peter Crosby:
Thanks again to Jérôme for sharing his EMEA and e-commerce wisdom with us. Remember to become a member for free at digitalinstitute.org to get all the latest from the DSI. Thanks as always for being part of our community.
