Coming to America - Part I

Coming to America - Part I

Coming to America: US Market Entry Guideline

We’ve helped a number of XUS brands across a spectrum of categories come to the Americas.  The following “manifesto” is LOCC’s best practices for COMING TO AMERICA.
Three sections cover: Business Set up,  Retail Needs and E-Commerce 

Coming to America

US Market Entry Guideline

We’ve helped a number of XUS brands across a spectrum of categories come to the Americas. The following “manifesto” is LOCC’s best practices for COMING TO AMERICA.

Three sections cover:

  • Business Set up – how to establish your Americas business entity and set yourself up for success
  • Retail Needs – despite what you may think, US retail is very different than anywhere else - if for no other reason than scale.
  • E-Commerce – we are evolving into an e-commerce society.

 Successful brands are largely, totally or partially sold online.   We examine how.

 

Introduction

It’s almost cliché: Brand X is super successful in the UK or France or Germany or Australia or Russia.  Wind at their back they determine to take on the Americas.  With great expectation they land a palate of product into a US warehouse and sit back waiting for the magic to happen.  And FAILURE.  Why?  The classic mistake is the notion “If it works well here, it will work just as well there.”

It won’t.  It doesn’t. And that equation is far too naive.  Only 15% of brands successful in Europe ever make it in the US (let alone North America).  

Take Boots #7 Cream.  In its native UK, the brand outsells Revlon and in some cases L’Oreal.  Boots Alliance owns Walgreen’s (with >8,000 US domestic doors).  Great product.  Distribution is locked.  So why hasn’t it topped the charts here?

We’ve seen this time and again.  We created the following US Market Entry Model as a kind of roadmap.

Think of this as a wire-frame for US Market Entry.  Having done this a number of times, LOCC understands what’s required – from basics to advanced, from start-ups to well-funded private or even publicly-held brands.

These are the most basic of steps – even if you have some checked off, chances are there is a gem or two here for you.

Part 1: Business Set Up

Set up a C-Corp. S-Corp or LLC to enable your company to do business in the US/NA

In order to do sell, take out insurance, pay employees & vendors, pay taxes and open a bank account, your brand needs a domestic legal entity as its base.  To this end, some form of corporation or company must serve as a North American base of operations – call it a subsidiary, or similar.

Tips:

  • Usually set up as a Delaware corporation for tax purposes
  • If you plan to sell online, consider establishing your corporation in a state where online sales tax is optional instead of mandatory

Pros:

  • Office can be virtual and your office address can be in any state.  States have different business and tax laws that may make one more attractive than another.

Cons:

  • Taxed by federal Government on sales and employees/payroll.
  • Taxed by state government (except in certain states like Nevada and Florida)

Requires an attorney to set-up – we like Kelly Bagla www.baglalaw.com  Author of Go Legal Yourself – Know the Legal Lifecycle of Your Business.

Want to know more about how to enter the US/North America?  Contact us at Joseph@LOCC.me

Creating your American Web Presence

Nothing says “you’ve arrived” like a domestic website.  You will need it for many reasons – establishing you’re legally ready to do business is one.

Many “site-in-a-box” formats exist:

Ensure your site is easy to use: to edit, change, create & delete skus/offers and most of all, helps build your database.

If there is a site in another country – you CAN build your US site on it (provided the platform is multi-language and multi-currency capable).  If not, then elect to go Americas-only.

Want to know more about how to maximize your site? Contact us at Joseph@LOCC.me

Insurance & Warehousing

By now you are set up to do business in the US, you’ve begun to understand the complex needs about getting into retail, e-tail and DTC.  Now for the simple matter of becoming insured and the search for the right 3PL (Third Party Logistics) partner.

Insurance:  Every retailer will ask for a COI (Certificate of Insurance).  Connect with a broker early to establish your coverage needs and rates.  Most retailers request between $2 million and $5 million and want to be NAMED insured.

Get this started after your operation is legally set up in North America – otherwise it can eat up a lot of time between expression of interest by a buyer and getting to a P.O.  We like business insurance specialist Hadley Wood at www.hlinwood-insurance.com

Warehouse/3PL:  Review and contract with a US-based warehouse and 3PL that can pick, pack and ship orders.

Tips:

  • You’ll want it close to an international port.  E.g., if you import from the UK/Europe, consider NJ, CT, RI, NY for your warehouse needs
  • Review standard pricing
  • Ensure MSDS requirements (for special product storage needs like temperature)
    -One client’s product could not be warehoused in Nevada due to the heat in the facility
  • Build a rapport with the team at your 3PL

One client moved its warehouse 3 times within one year.  It was costly; a pure headache for all involved, but ultimately we found the “Goldilocks” fit for the brand.

Want to know where YOUR warehouse and 3PL provider should be located?  Contact us at Joseph@LOCC.me

Building Your Team

Infrastructure

All too often we see a successful foreign brand believing that it can crack the US with its home team.  It never works.  Simply put, you need boots on the ground to make this happen.

You need a leader and a team to start. They need to understand the goals and vision.  They must be kept well-informed (weekly skype calls & regular check-ins).  And shared learnings from other regions can help kick-start the new territory.

All in all, you cannot expect success to come from a single employee or a loose consortium of freelancers.

An ideal structure mimics your HQ with functional parallels.  In the early days, the team will be small.  Not every team-member need be a full-time hire.  You may find greater economies of scale by hiring temps or freelancers tasked with specific goals.  However, a full-time team leader is critical to manage work flow and steer towards success.

Want to know what your US structure should look like? Contact us at Joseph@LOCC.me

YELLING IN THE DARK: PR

We’ve covered setting up your Americas office and legal entity; becoming savvy about how to enter US retail; the necessary insurance needs you will meet and the location of your domestic warehouse.

Now let’s discuss:

Public Relations:  No matter your product type, it will not move if people do not know about it.  Getting to influencers early & often and in front of the media first is paramount to a successful launch.  Whether you select a PR agency with industry expertise or a seasoned freelancer – start your outreach while you are sorting out the business dynamics.  Getting in front of this effort will put the wind at your back as you launch.

NOTE:  In order for any media outlet to cover your brand, it MUST be available for purchase – whether at retail, on your website (see below) or via e-tail like Amazon.

Case study: All-natural cleaning products from Eastern Europe – super popular throughout the EU and the UK.  Land in the US with great expectation that success abroad = success here.  No one had ever heard of the brand.  Moreover, no one cared!  Most folks were pretty happy using what they had always used – there was no excuse to try something new.

Without any “proclamation of arrival” or media tailwind, the brand failed.  

The 3 critical questions PR answers for your brand are:  
1.    So What?  
2.    Who Cares?  
3.    Why you?  

Answers create relevance to the regional audience you wish to buy your brand.

Want to know which PR agency might be right for your brand?  Contact us at Joseph@LOCC.me

Tune in next week for Part II - Coming to America: Retail Needs. If you want a copy of the full manifesto - feel free to contact us at Joseph@LOCC.me.