Webinar Transcription

Kuntal Warwick (CITC): Hello, everybody. Thank you for joining us today for our second California International Trade Center – CITC Industry Innovation webinar. As you may know, our goal in this series is to connect what’s happening on the global landscape, to small and medium-sized businesses in California that are looking to export more effectively. We’ll highlight trends, opportunities, services, and, of course, innovations that can help businesses anticipate what’s ahead. Today, we’re talking with Josh Aikens, Chief of Staff at Zonos. He’s going to give us a snapshot of the flow of goods and purchases around the world and guide us on how to optimize your website for global business. Josh, thanks for joining us. Please share a little bit more about yourself and Zonos, and tell us what we need to know to sell more effectively overseas.

Josh Aikens (Zonos): It’s my pleasure to join you today, Kuntal. Like you’ve mentioned, I am Joshua Aikens, Chief of Staff at Zonos. And the quick backstory to give Zonos a place in the world,10 years ago, our founder and CEO, his name is Clint Reid, was a DHL and then a UPS account rep for international, and he saw the pains that small package shippers were having selling and then moving packages to international locations. And time and again, they would honestly just turn it off because it was too expensive or too painful, and they didn’t want to bother with it. And he really just got frustrated. He’s like, “This is not that hard. We can fix this problem.” So, he quit his job, cold turkey, and took out an SBA loan and started a tech company and he was not a technologist. He took on a lot of challenges at one time. But what ended up happening is they started creating software tools to help mostly ecommerce merchants be able to more successfully sell cross-border, and that is what we’ve blossomed into today. We are now a 10-year-old company with about 35 employees, and we’re based in St. George, Utah. If anyone’s been to Zion National Park, perhaps they’ll know what part of Utah we’re in. It’s kind of close to Las Vegas.

Ecommerce Market in the U.S. and Overseas

That said, let’s skip right to it here. I, at first, was prepared to talk just for a moment about the market, about where things are going in the world as it pertains to ecommerce. This slide points out that over the last few years, the amount of growth of the ecommerce market in the United States has steadily been declining. It’s still growing, there’s still more and more people shopping online, but it’s at a declining rate versus the rest of the world, where we’re seeing substantial growth in the amount of ecommerce opportunity coming online. And the other thing that’s really happening is the competitive landscape in United States, as everyone on this call will know because they’re all in the space, has become very, let’s just say, it’s become very competitive. So, seeking opportunities outside the United States, there are still growth markets, and there are still places where the competition may not be as fierce, or we might be able to capture areas before others, even of our own competitors in the United States, as far as market share and mind share in places overseas.

This next slide is to help add a little context to what that opportunity might look like outside the United States. And I know in a previous call, Kuntal, you and I had, I got to ask you what your understanding was and how much you knew about Singles’ Day and what Singles’ Day was. And like most people I asked, you really maybe have heard of it in passing, but didn’t really have a big idea of what that is. I’m going to talk about it really quick. Singles’ Day in China is 11/11, and it’s kind of a holiday, a little bit like Valentine’s, but it’s to celebrate singles instead of to celebrate your sweetheart. It’s a day for you to buy something for yourself. A few years back, Jack Ma from Alibaba, seized upon this idea of taking this day and turning it into a commercial holiday by selling things online to people to buy for themselves. Think of it analogous to an Amazon Prime Day, a day where special deals are put out online for people to buy. This past year, Singles’ Day did about US$30.8 billion worth of sales in that 24-hour period, and that was a 27% growth over the prior year. To put that into context a little bit, 180,000 brands participated on that day with selling, and 40% of those brands were not Chinese brands. It’s still dominated by China in the Chinese marketplace, but there were other brands that participated. Now, the context that really is the mind blow is this year, Black Friday, the numbers were up for Black Friday across the board, and we did about US$9.9 billion in online sales that day and Cyber Monday did about US$7.9 billion. 

This was the slide where we could see that the growth in ecommerce has steadily declined across United States, whereas it has steadily grown beyond the United States and continues to grow. Then the Singles’ Day slide that I spoke to talked about this, US$30 billion. The takeaway here is the opportunity outside of the United States is quite immense if somebody in China can have one holiday for one day and do what would be almost three times what we do in the United States over the same type of period. 

One more contextual slide about the opportunity in the market, this one here just talks a little bit about the cross-border growth versus domestic. And then it points out the different size marketplaces where opportunity lies. The number one growth market and opportunity is the China, India marketplace, and then number two would be the United States, three, and according to the data, would be UK, and then four, Japan, five, Europe, six, the Iberian Peninsula, seven, back to Korea area, and then it plays out the rest of the way across the board. But one thing I would point out is even though this is a global perspective, if you are a United States merchant, that number eight up there in Canada is really probably number one. Canada is the largest importer of U.S. goods by a vast margin from my data. We work with small to medium-sized businesses that do ecommerce, and Canada is the number one by far importer of goods from the United States when you look at our data. That said, one thing that Kuntal asked me to come prepared with was some ideas about trends, where things are going, what consumers are wanting, and this particular piece came across my desk just yesterday, and this came from Canada Post, which is analogous to the U.S. Postal Service in Canada. 

What Are Consumers Looking for When Shopping Online?

They put out information about a survey they did, asking what are consumers looking for? What do they want when it comes to shopping online? And, over here on the graph side, I just wanted to talk about a few of these, many of them related to shipping, things like the delivery date not being provided or not being able to see the name of the shipper would cause them to be more likely to avoid or abandon the cart. But the one down on the far right is the one that I’m going to speak most to, which is the inability to pay duties and brokerage fees at the time of checkout. And those numbers are favorable to someone like me. I see that a 24% possible cart abandonment rate because they can’t do duties and taxes is music to my ears as a merchant, but it’s also a sad song because those that don’t know that they’re going to lose out on those sales because they’re not displaying the duties and taxes, they don’t know what they don’t know yet. And then they’re losing conversion without even knowing why because the people are going away. 

Why Online Retailers Struggle to Sell Internationally?

To that end, I’d like to skip right into talking a little bit about what are those pains, what are the reasons that online retailers struggle to sell to a buyer visitor that want their products outside of their domestic country? The first one, which is pretty obvious, is that many of the ecommerce platforms lack the technology today to simplify that. And believe me, they’re coming, they understand that the global marketplace is the future, and they’re coming with this technology. But, as of today, maybe they don’t provide all the tools necessary to make a domestic or international experience feel and look equal to a domestic experience. Number two is international orders can expose you to risk. And I’m going to tell a little story about that and about how that risk can come and bite you and why it turns people off. And then number three is tantamount to number two, which is too many unknowns, not sure how to handle foreign governments, foreign customs, things like that. I want to tell a quick story here about a Zonos customer that I spoke with. This is now a few years ago, but it’s kind of a classic tale that we’ve heard again and again from merchants. 

This particular merchant sells door hardware, like doorknobs and locks out of a website in Montana. And he had a customer come to him from Brazil who wanted this product. They can obviously buy door locks and door handles in Brazil for Brazilian manufacturers, but this was a special case, and this builder wanted to buy the ones that were on sale in Montana. And the Montana salesperson found out what the shipping cost would be from his shipper to get those to Brazil, and he packaged them up. He charged about US$2,000 for the products, he charged another couple hundred dollars for the shipping, put it in a box, sent it to Brazil thinking that that was that and he just made a nice sell. Well, when the package arrived in Brazil, it arrived with a clipboard. And the shipper had the clipboard and gave that to the receiver, the importer of record, the guy that bought it, and it had this description, this is just a picture, actually. This is not the description of my story, but it’s just a picture to illustrate the point. In Brazil, the duty rates are quite high on certain import products, as much as 80% of the product total, and that’s designed to discourage imports and instead have people buy local. Well, in this case, the person buying these door locks got the bill for the duties that he did not know about, the VAT or the sales tax that he did not know about, and the fees. And it made it untenable for him to complete the purchase so he refused the package. After having spent $2,300, he refused the package, and the package is now abandoned at customs in Brazil. The customs call our friend in Montana and says, “What do you want us to do with this US$2,000 worth of door hardware?” And he said, “Well, how much is it going to cost me to ship it back?” and they told him, “Well about double what it costs to ship it down here because it’s not as inexpensive to have shipments going that way as it is this way.” So then, he had a decision to make, “Do I abandon the package, or do I bite the bullet and ship it back?” Then, the customer went to their credit card and disputed the charge because they never received the door parts and got the credit card to charge back the money. The Montana merchant didn’t have the US$2,000 anymore. And, finally, the upset customer in Brazil went to social media and complained about this retailer because they were non-transparent. They didn’t tell them what it was actually going to cost to sell them that product and they were upset. As you can imagine, the merchant in Montana was at that place where he just wanted to turn the whole thing off and stop doing international because how much did he just lose and how much pain was he involved in in just this one order where he just didn’t know would be rates going to Brazil. That’s the story. 

Complete Landed Cost

But to broaden it out a little bit, one more thing that I would like to talk really quickly on is just a little quick overview of what a fully landed cost is, what that Montana retailer lacked was visibility into what the true landed cost was. He got the product right, he got the shipping right, but what he didn’t know was the duty rate. And outside of Brazil, in most countries, it’s something more reasonable like an 8%. You can see here that of that US$128 order total or cart total, about $5.80 would be a part of the duty rate. And then the VAT, or value-added tax, this is tantamount to a sales tax, is a percentage of the order total. There’s the VAT of the product, which is about 15% here, and then there’s also VAT applied to the shipping, not all countries apply that to the shipping but many do, and then some countries also apply VAT to the duty. You have to know the duty rate if you’re going to get the VAT right because they’re going to apply that to the duty. And then, sometimes, some countries also charge VAT on the fees. And let’s go drop down to the very bottom there, those two orange sections. These are the really tricky ones to calculate that very few people really understand and can get right. There are also fees that go along with carrying some package cross border from a common carrier like FedEx, or UPS, or DHL that are associated outside of the shipping costs. So, what you see here is an example of an advancement fee, which gets called a lot of things. But basically, what it is, is when the carrier brings the package to the border, they see the customs officer, they establish what the duty in the VAT is, and then they prepay it. They give the money to customs in advance so that they can carry the package through and deliver it to the customer. Oftentimes, they will charge you a fee for advancing that money. They’re going to collect the money, but they’re also going to collect the fee for the advancement of the money. The other one that sometimes happens is some brokerage fee flat rate, US$15 fee, for us going through all of the hassle of going to customs, and doing all this work, and getting your package through customs to deliver to your customer. When you wrap up duty, VAT, and fees, that’s what you get as a total added cost. When you hear total added cost, understand that usually means that it should include also the fees.

Checkout Process & Customer Experience

Back to a more pertinent conversation for the visitors I had, or hopefully a pertinent conversation, which is what is your customer’s experience like when they come to your website for the first time? And, as you can imagine, most international visitors to a cross border website have gone in, shopped around, put some things in their cart, and then clicked to this page right here, the checkout page, and then clicked on that region or country to change it to their country, and found that all they get is the United States because you haven’t unlocked or opened up any other country and nor have you shown them at any point during the buying process, or welcome them to the website, or let them know that you’re willing to serve them. This is a very disappointing experience. And this usually only happens to them once. The next time they’re shopping on a U.S. website, the second place they’ll go after the homepage is the shipping policy page. If they don’t see a welcome back, if they don’t see something welcoming them, they’ll go check, they’ll go look at your shipping policy page. This is a question maybe for the Q&A that I have for you, the merchants on this call, do you have something in your shipping policy page that speaks to your international customer that lets them know that you do ship to them or that you don’t ship to them? And if you go look at your Google Analytics, you’ll probably see that your international traffic bounces from your homepage to your shipping page if you have one before they go shop. 

What I would do is quickly outline a few of the different steps that would go into what I guess we could call localization, like preparing your website or your checkout specifically to accommodate for shoppers that are coming from outside the United States to your website. Things to consider, first and foremost, or at least one of the very most important is your payment options, are they able to pay with their foreign credit card, because if they’re not, they’re already out of the game. Secondly, most of U.S. merchants, I’m using the merchant meaning, merchants that charge cards, will take a foreign credit card, but in most cases, what they’ll do is they’ll do a conversion on that card immediately at the time of charging the card and convert that back into U.S. dollars. That can be disappointing to your foreign customer because even if you do show them their price on the screen in their currency, what ends up charging on their bank statement sometimes will differ from what you showed them on the screen because they might have a currency conversion fee, and conversion rate used by your bank might not match the one that you’re showing them on screen and that can cause questions and frustration. That’s one item to have on your list. And another one is actual currency itself showing people in their currency. I’ve read many studies that showed that foreign buyers and conversion goes up and they’re much more comfortable when they can see the price in their own currency versus looking at it in dollars on the checkout.

Address localization is basically just not asking someone for a city, state, and ZIP if they are like in Hong Kong where they only have an area or like in Canada where they have a province instead of a ZIP code. And then things like on this example on the screen, the ZIP code is different, so letter, number, letter, number, letter, number versus asking them for numbers, which is what you would do if you don’t have a localized address field. Then, the next things and I’m going to cover the shipping, and the duties, and the taxes in a live demo. Instead of wasting your time or spending too much time on this slide, I’m going to jump into a live demo, and we’re going to talk a little bit about offering international shipping and showing duties and taxes to a customer in real-time using an example of this ProD.N.A. Paris Hilton website. The first thing you’ll notice is down in the left-hand corner, Paris Hilton has a welcome back. I call it a welcome back. There’s other things to call it, but basically it’s something that pops up in the bottom left corner, the little flag, sometimes the flag is in the top bar somewhere, but it’s something that pops up that says, “Hey, we see you’re from Canada. We would love to sell to you.” Usually, customers at that point just dismiss that and go about their business. I’m going to just add one item to the cart here, for example, this boost firmness. It feels a little bit like I’m in a room all by myself. Kuntal, I’m still talking to you and people, correct?

Kuntal Warwick (CITC): We’re all still here, Josh, and you’re doing great and good information. And I know we’re just since we’re taking a bit of a pause, just to let everybody know that after the presentation, we’ll certainly have time for question and answer. You and I will start a conversation, and we’ll really try to make it a little bit more conversational. But if others have questions, please do put that either in the Q&A section or in the chat section at the bottom of your screen. We look forward to hearing from everybody in just a few minutes.

Josh Aikens (Zonos): I’m super close to wrapping this up, and we’ll get into the discussion. I don’t know if anybody noticed, but down in the bottom corner when I went to the product page, a little pop-up slid out and it mentioned the VAT or well, in this case, GST tax and the duty might be on a product like this. This is just a little, like, informational item to give to a customer so that they can kind of prepare them to understand if they’re going to be charged duties and taxes. Just to give it a name, it’s called Zonos Hello. It’s a feature that we provide at Zonos that is a free feature that anyone can use on any website to get out ahead of that conversation of duties and taxes. But maybe go ahead and add one of these items to the cart, and then they’re going to invite me to their newsletter because they’re smart. Let’s get that added to the cart, and then I’m going to click checkout. All right, so as if I’m a Canadian visitor to this website, I click checkout. And here, instead of going to the regular Paris Hilton checkout for the U.S. customer that would see city, state, ZIP code, free shipping, and you’re done, this is the hosted checkout that’s provided to Paris Hilton by Zonos, where because I’m a Canadian customer and we know it, it already says Canada but it’s asking for a province and a postal code instead of city, state, and ZIP. I’m just very quickly going to put enough information in here to pull a quote. Now in the center of the screen, you see the shipping options. This is where I wanted to get to and talk about, how to display shipping to your international customers. And as you can see here, Paris Hilton has a number of options, a slower option, four to nine days, which is free, but also does show them the duty and tax that would be due upon delivery if they choose not to pay it or gives them the option to say yes and pay it. So back to that study we saw from Canada Post, 24% of people might be likely to abandon this cart if they don’t see that they have the option to pay the duties and taxes, in which case they do, or you can go with a UPS priority or a DHL Express feature and then have the choice of adding of yes, I’ll pay the duties and taxes, or no. And in this case, if you say yes, if you look over here, you can see that the duty and tax line now just become part of the overall total. And one of the things that we found is by including duties and taxes separate as a line item, it actually doesn’t decrease conversion as much as if you try to roll all the duties and taxes into the shipping rate because if you do that, it makes the shipping rate seem and feel exorbitantly high. But if you just have a proper shipping rate for the product and then you have duties and taxes as a separate line item, then it doesn’t feel quite as inflated, let’s just say. Although looking at some of these USPS Priority 50 Canadian dollars, to put that into some perspective, that’s quite a bit less than $50 because Canadian dollars are a little less strong than the U.S. dollar today. But what we do is we just show all of the prices in Canadian dollars all the way through to the end, and then with our partner that we use, which is Stripe for checkout, we actually post everything in their bank account in Canadian dollars so there’s no conversion fee and there’s no change between the number they saw on the screen and the number that shows up on their credit card statement at the end of the month.

Products in Zonos

Those are just things to consider. We’re not the only partner out there that does this. We can discuss that in the Q&A about who does different aspects of this, who to look to. But to just finish it off in my final slide here, I wanted to throw up we’ve talked about all of these things or hit all of these things in our overview, I just wanted to mention the names of the products as they pertain to us in Zonos. We have basically a landed cost feature that can integrate with any website as a set of APIs to help you calculate duties and taxes and show that to your customers. We have a hosted checkout feature, which is what I demoed that actually takes care of most of those things on the page for you. We have the Hello feature which we saw, which is a free one, that is a welcome back to the customer. And then the last thing down on the end is Quoter, and that is self-explanatory. If you’re still doing online quotes on the phone or over email sales to international customers and you just want to know the duties and taxes, you can use a tool like the standalone quoter to come up with the duties and taxes to send off the rate. Now done, stop sharing my screen, and I’m going to turn it back to you, Kuntal, and let’s begin the discussion.

Prices & cost structure:

Kuntal Warwick (CITC): That sounds great. Thanks, Josh. That was interesting. And I think one of the things that we’ve talked about is the landed cost of that, the carrier costs, and then also the tax, all of that, how common is it for companies, for merchants to wrap that in to either one fee or to wrap it into the price of the product itself because I know that, sometimes merchants do that.

Josh Aikens (Zonos): That’s a super great question. Merchants on the larger scale like the targets of the world have entire departments to come up with and figure out their sales strategy into, say, South Korea. And, therefore, they can do things on their South Korea website where it’s an all-inclusive price, for instance, where they take the duties and the taxes, the shipping, and then they figure out their margin on the products that they’re selling and they use a strategy to decide, “Okay, how much we’re going to put into that product price?” One of those pitfalls turns out that people now, savvy web visitors can go via like a VPN and shop at your website as if they’re in the U.S. They can see your U.S. price, not just your inclusive price, and then they can start picking away at you and deciding if they think you’re overcharging them for duties and taxes versus what you give to your U.S. customer. It can be a little tricky. We tend to default towards total transparency by having enough information there that you can actually show the product total that everybody gets to pay, the duties and taxes that everyone agrees upon at the border are the duties and taxes, and then you can compete on shipping price like everyone else, and hopefully win the order from the customer because you’re totally transparent, they see what they want, and they make the purchase or they don’t. That said, sometimes, in some markets, that total inclusive price is the desired price. And, honestly, I think you have to have the tools and then understand your customers so you can cater to them.

Kuntal Warwick (CITC): Given that and playing off of that, I guess, I’m wondering, have you seen and what’s your experience with merchants who, or maybe I should ask, is it common for merchants to have one price for the same product in one region, but then heavily discounted in another region? And how likely is it that a customer from the region where the product is not discounted can actually get to the discounted price in a site from another region? 

Josh Aikens (Zonos): That’s a super good question. I wouldn’t know how to quantify the likelihood of that happening. I do know that we all, or at least a lot of people now know what a VPN is. They know that you can enter the web with these days a free service that gets you, it makes it look like you’re from somewhere else. We do it all the time because we have to check our websites in other countries. We VPN or if that country looking back. I think it can create a customer service issue. But I would say that I don’t think it’s not common practice. Right now, I think, you could still get away with having different prices in different regions for different reasons just because it’s not an everyday thing. But it’s coming. In the end, probably opting defaulting towards transparency, in the end, is probably going to be the right thing.

Kuntal Warwick (CITC): Yes. Absolutely. And I think that’s the other thing we talked about as well is that, it’s really in the merchant’s interest to make all of the cost transparent, whether it’s in their policy section or whether it’s the time of checkout, that will save a lot of headache down the line just to let customers know what they’re going to be charged and when. I think that’s one takeaway. The other question I have for you is where are Zonos’ clients’ most popular destinations? Where do you typically see people going and a system with?

Zonos’ Main Markets

Josh Aikens (Zonos): That’s a great question. Like I mentioned during the presentation, Canada is the number one importer of small packaged U.S. goods. Ground shipping is an option there, and the language barrier is nil, a couple of dialect changes and they get along with us just great. And Canadians are super nice, which is wonderful. But the next one for us is the UK, the UK market, and then it’s a neck and neck between Europe, the European Union, so to speak, like everyone in Europe and Australia. And, again, I think mostly it’s following the languages. Again, it’s mostly English speakers. They’re more comfortable shopping on a website that they can read and understand, but it’s very product-specific. It definitely depends on if you’re selling anime comic books and people in Japan, or South Korea, or somewhere are coming across border to buy your stuff, you’re going to be stronger in that whether or not the language is not a total barrier, but growth-wise, the first markets that we see people having success in is Canada, UK, Australia, and then others.

Kuntal Warwick (CITC): Got it. And one thing we’ve also seen a little bit, especially with the larger companies and chains, is that we’re seeing this trend of physical stores alongside ecommerce presence, that it’s almost going boomeranging in the other direction where there may have been just an ecommerce presence and now people are opening up stores alongside, or pop-up shops, or things of that nature. And, what can you tell us about that, and are you seeing that among your clients as well?

Omnichannel

Josh Aikens (Zonos): The answer to that is yes. The omnichannel approach is hitting everyone big and small. And a good example is there’s a Belgian company, a Belgian swimsuit company that we have been serving for maybe a year now, and they’re seeing this omnichannel success in the European Union and in the U.S. where they have stores. They do, like, direct from store delivery. They want to offer everything to everyone. You can store pick up, purchase online, pick up at store, or purchase online, delivery from store, or purchase online, delivery from warehouse through shipping option. And they want the power to create and mix and match. And I mean, I think that in the U.S., that’s been going on for a few years. It just gets a little complicated when you start crossing borders because again sometimes duty and tax apply, sometimes it doesn’t, sometimes there are product restrictions, sometimes there’s not. But I think that everyone is trending towards that approach of just mixing the brick and mortar with the online in a way that serves the customer best. And me as a customer, I love it. I want to know the inventory of the Home Depot down the street, and then I want to buy whatever I want to buy and then run down the street and pick it up.

Kuntal Warwick (CITC): That’s right. It offers a certain amount of flexibility. Now, cross border, it can be an issue, but it would be interesting to discuss how common that is in different places around the world. I don’t know if you’re able to speak to that at all, but maybe we can have another conversation on that another time, but, yes, anything else to add on that front as far as how to do that a little bit more effectively across borders?

Josh Aikens (Zonos): Well, I guess the last thing to add is there needs to be like this Berbequim. the company we work with, what they lacked was that duty and tax piece. I mean, that’s really the hard piece to do by yourself. And that’s the piece we serve up to them through an API and just opens the door for them to open their Hong Kong, and their Macau, and their China organization to be able to do that direct to store, and things that it was just a little bit messy before I think and now that they’ve got that barrier removed, they can grow their business.

eCommerce in Africa

Kuntal Warwick (CITC): Sure. Sounds good. The last thing I just want to touch on and then I really would love for anyone else that’s participating to please use the Q&A section or the chat section to ask your questions. This is a great opportunity to pick Josh’s brain and get your questions answered. But before we go to that, I do want to just address one thing that we also talked about yesterday. Recently, I came across an article from McKinsey & Company on ecommerce in Africa and how the continent has one of the most digitally connected populations on the planet and with really energized consumers. According to the article, it’s the world’s second-largest population of Internet users at 400 million. Jumia and Konga are its largest online marketplaces. And what’s really unique about these marketplaces well, maybe not so unique because they’re probably following in Amazon’s footsteps, but they’ve really integrated their own fulfillment operations rather than outsourcing to a third party. And, the last little factoid is that TechCrunch recently published an article about how Jumia DHL and Alibaba will face off in African ecommerce 2.0, and Jumia actually IPO-ed on the New York Stock Exchange last spring. With all of that, can you share a little bit about your experiences, if any, with preparing businesses for ecommerce in Africa and what you might recommend for businesses wanting to enter that space?

Josh Aikens (Zonos): That’s a super good question. That’s one of those bright new frontiers that’s growing so quickly. And like you mentioned, they’re super well connected because they’re all on mobile. Everybody’s on mobile from the get-go, and they don’t have a lot of legacy infrastructure to overcome. They’re just ready to shop, and buy, and interact in everything online. The one thing that I would suggest at this point as it’s so nascent is to have a two-pronged approach, one play with Jumia. Like with Jumia, it’s like playing with Amazon. It’s got its two-edged sword, but for now, their penetration into the African market is probably beyond what any one individual or small company could possibly do to get their name and their brand out there and start to sell something to the African customer. The two-pronged approach is also what we’re seeing going on right here in the United States, which is a greater focus on your own brand and your own website instead of sub serving all of your brand equity to somebody like Amazon. Even if you’re going to go with Jumia, you also want to start by making yourself available to those African customers directly and then enticing them to come and buy from you directly because everything you do direct eliminates all the fees that you might end up paying to an aggregate or a platform like an Amazon. I would suggest a two-pronged approach, and I think that sooner rather than later, people should be considering Africa.

Kuntal Warwick (CITC): I agree. I really would love to hear from others who are joining us today. If you have experiences to share, if there’s questions that you have, if there are successes that you’ve seen that we should know about, we’d certainly love to hear from you. I’ll just give a couple of seconds here for folks to share their thoughts, or their comments, or questions. We’ve got one from Kevin Santos. Do you also have the customer experience trends for all the top 10 markets identified?

Josh Aikens (Zonos): Good question, and the answer is no. Sadly, I don’t have those at hand, and that’s really not my expertise. I just did the research myself to come up with that. My expertise is more on the duty, tax calculation and customization on the website side. But there are plenty of places to find that information but I don’t have it.

Kuntal Warwick (CITC): And then does Zonos work with new companies launching new products in the U.S.A. and looking forward to sell through ecommerce in Europe and other regions in the world? It might be one sale per day or even as a start. I’m assuming a smaller company who wants to start in the U.S.

Zonos’ Pricing Model

Josh Aikens (Zonos): And the answer is absolutely yes. We have plugins for the most common platforms, like Shopify, Magento, and BigCommerce. And our pricing model is one that is a participating model. Basically, in most cases, our monthly charge is like either US$10 or US$99. Honestly, it changes. It’s changed recently so I don’t want to quote one and say that’s the one because it might be the other one. But it would be a very small monthly charge, and then a percentage of the international order is basically how we get paid. Small guys pay little and do little. Big guys do more, pay more. It’s actually very reasonable, and a good portion of our customer base is probably in that one to five a week category or even, two to four a month and they still find value in the service.

Kuntal Warwick (CITC): Okay, very good. We have another question from Kevin. What do you think is the reason for the downward trend of ecommerce in the U.S.?

Josh Aikens (Zonos): I just think its saturation. To be honest with you, I just think that we have grown, like, if you go look, historically, we grew fast. We grew well beyond any other area in the world, really, and it’s partially because of our prosperity, it’s partially because our larger middle class. I mean, there’s a lot of reasons why we got online quickly and saw, year over year, leaps and bounds. My guess is that it’s saturation. I don’t know anybody that doesn’t already shop online. So how we’re going to grow online retail in the United States if we’ve already reached every corner of the United States? That would be my answer to why the growth is curtailing. It’s the growth that’s curtailing. It’s not the market shrinking. The U.S. market for buying goods is not shrinking, it’s growing. It’s just not growing as fast as other markets.

Kuntal Warwick (CITC): The global or international consumers are catching up with that trend where we’ve been there for a number of years.

Josh Aikens (Zonos): Yes. It’s not shrinking.

Kuntal Warwick (CITC): Another question here. If I’m using FedEx for shipping, do they factor in customs and duties into the shipping charge on checkout?

Josh Aikens (Zonos): That’s a super good question, and the answer is no. If you’re typing in, to get a label from, it depends on how you’re using it. If you’re using Ship Station or somebody connected to your website, or if you’re just going to your local FedEx shop with your box and saying, “Here, send this internationally,” the answer is no. They’re not figuring the duties and taxes, and that is up to you to do and then charge the customer.

It’s a great question. I want to bring something back to simplify things. And maybe everybody on this call already knows this, but if you don’t, I want to go back to being very simple. When you’re shipping something to an international buyer, you don’t have to have a relationship with a broker. You don’t have to have a conversation with customers. What you do have to have is a carrier like a UPS, or a FedEx, or a DHL, or any number of others that handles that for you and they all do that. When you print that label, that FedEx label to send to your customer, there’s a little box, a checkbox generally when you’re setting up the label that says, “Bill duties and taxes back to shipper.” If you check that box, that’s step one in becoming an international company because all you’re doing is, you’re letting UPS or DHL pay all those fees and then bill them back to you. So if you use a service like mine or many others to get the duties and taxes and the landed cost calculation correct, show it to the end customer, collect that money at the time of purchase, then your shipper turns around and sends you a bill just like your shipping bill, you’ve collected the money for it, you pay it. You have a happy customer; you have a happy shipper. But they don’t figure that in at the door today or at the time of giving you the rate for international shipping.

Chinese Market

Kuntal Warwick (CITC): Got it. We have about 10 minutes left, but I’m surprised nobody has asked about shipping to China. So, give us a little bit of a tutorial if you’re able to on that, and even India because I think there are some and maybe I’m overestimating this, but there are some intricacies there, I think, and some nuances that may not be there in some other regions of the world.

Josh Aikens (Zonos): Well, I have to disclaim, at least as far as shipping is concerned, I’m not an expert on that. I can’t really tell you what’s the best way to find the best lanes and shipping into China. But what I most commonly run into is we’re not getting Chinese traffic to our website. People in China are not shopping on our website. Even if we’re showing the duties and taxes in Chinese currency, they’re not buying from us. Why? And I have to give them the answer that everybody gives them, which is the Chinese buyer is like the American buyer. We buy domestic. I mean, most people I talk to really don’t have a story to tell me about buying something on a website outside of United States because it just seems like everything’s offered here to them. Well, so far, even though it’s changing and China is globalizing and growing and looking abroad, the strategy right now is to create a website that looks like a Chinese website, that’s in Chinese, that has way too many pictures or way too much text for what you would do for a U.S.-based customer because that’s what they’re looking for, that’s what they’re used to, and that’s what they want. I think that the bigger barrier to entry into China is not shipping lanes, or good prices, or even duty and tax codes. Those things are all handle-able by people like me. The challenge is the attention of the Chinese shopper, and that’s a question that I’m not really good at answering.

Kuntal Warwick (CITC): That’s a really, really good point. And I think in all of the conversations that we have with businesses about entering into a new market, I think that’s true for almost every market. Price is one thing, but it’s really positioning yourself for the competition in those markets. And that takes a very unique insight into that market. I’m glad that you made that point. And I’m sure we will be talking on that topic at another point very soon in one of these sessions. But anything else that you can add for us or wrap it up?

Why do international consumers buy from U.S.?

Josh Aikens (Zonos): I think one more and it has to do with why do people buy from U.S. websites? If you’re selling a white T-shirt, they can probably get a white T-shirt from the corner store, so they’re not very likely to come to your website and buy a white T-shirt. But if you’re selling a white T-shirt with Taylor Swift’s face on it because you’re Taylor Swift, and you control your image, and you’re selling that product, and they can only come to you to get that product, that’s where cross border really lives. It’s where people can come to the United States or come across the border to get something they just can’t get where they’re at. Some of the places that we are really strong in is fashion. Fashion, unlike a T-shirt, is a special type of T-shirt, a special looking T-shirt, or a special name, or insignia that someone wants. A lot of times fashion is a great place to start looking outside of the United States because there will be demand for your product if you create it to come and get it. Another one is parts, automotive parts being a huge one where a lot of American cars have been sold all over the world, but the aftermarket parts, and accessories, and add-ons, and coolness is in the United States. And if you want to get it, you got to reach in, and buy it, and bring it outside of the United States.

Those are two fields that if you’re in one of those two, you really do have an advantage over other people as far as products are concerned. But then the third one, it just is like, I’ve read a few studies that have shown that people more relate with other people of their same demographic than they do their same location. Think Instagram, think communities on Instagram or WeChat where you have people of the same age, or the same interest, those cross borders. It’s not so nationalistic that it’s, “Oh, well, if I’m a dog lover in France, I have to buy French products.” No. Dog lovers of the same ilk on Instagram, for instance, look at pictures from everybody across the entire spectrum. So, if you’re out there doing that selling across those demographics and you’re doing really good in one niche in the United States, that same niche exists everywhere else in the world and you can sell to them too, and they’ll probably love your stuff as much as the Americans do.

Kuntal Warwick (CITC): That’s right. I think the idea and, again, this comes down, crosses over into the marketing side, which is creating a sense of community around what you’re selling. And so, once again, we tend to share with a lot of the businesses that we talked to, how to do that through content. On that note, I do want to let everyone know about the next session of the Industry Innovation Webinars series, which will happen on March 19th. We’ll be talking to HubSpot about cross-border marketing. We’re looking forward to that, and we hope that you’ll join us for that. But, Josh, thank you so much. We really appreciate your time, and we appreciate the time of everybody who’s attended. If you’d like to get in touch with Josh, especially if you are a trade organization or a small business, please consider joining CITC’s partner project, The California Export Connect. We’ll be sure to reach out to you all when that launches. And that’ll be a great way to get connected to other export-related and export-focused businesses, vendors, suppliers, experts, and trade organizations. I also encourage you all to check out CITC’s website, which is www.cainternationaltrade.org to learn more about how it’s preparing California businesses and students for the global digital trade economy. There are also some free tools, reports, and services, as well as programs for students and colleges.

Once again, thank you so much, Josh. We really appreciated you’re being here. And we’ll look forward to seeing you next month on March 19th, as well as I believe there’s going to be an ecommerce basics webinar soon after that on content development for your ecommerce website. Thank you so much, everybody, for joining us and have a great day.

Josh Aikens (Zonos): It’s been my pleasure.