Shipping across borders can be quite complex and is one of the main reasons many small businesses face export and expansion challenges.
In this episode of Small Business Snippets, Anna Jordan discusses some of these challenges, the expectations of online shoppers and how the right partner can assist, with UPS’s marketing director Arthur Lam and supplement provider YourZooki’s co-founder, Marcus Mollinga.
Find out more about consumers’ expectations of small businesses in UPS’s Smart E-Commerce report here.
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Hello and welcome to Small Business Snippets, the podcast from SmallBusiness.co.uk. I’m your host, Anna Jordan.
Today we have something a little bit different for you. We have a sponsored episode with our partner, UPS.
I’m joined by Arthur Lam, director of marketing at UPS and Marcus Mollinga, co-founder of vitamin brand, YourZooki.
Anna: Hi, guys, how you doing?
Arthur and Marcus: Good.
Rather than me introducing you, and getting a bit winded, I’ll let you guys introduce yourselves. Arthur, tell us a bit more about yourself and your role at UPS.
Arthur: Sure thing. A little bit about myself, I’ve been very fortunate to have helped customers both big and small in the last 20 years at UPS in different capacities starting, originally, in North America, the nature pack. I’m currently now the marketing director for our UK, Ireland and Nordics businesses. Very happy to be here and to share my thoughts and best practices that I came across.
Anna: And how about you, Marcus?
Marcus: Yep, so I’m one of the co-founders of YourZooki. YourZooki’s one of the fastest growing companies in the UK. We specialise in liquid supplements, which are more bioavailable compared to capsules, pills and powders.
Most of what we’re going to talk about today is around international shipping and how small businesses can deal with the logistics and the issues that they face scaling up – and shipping and logistics. I’m going to start off talking to you a bit more Marcus, because YourZooki has scaled up majorly over the course of the pandemic. How did you deal with the logistics of doing that? How did your shipping provider help?
Marcus: During 2020, we’re in our fifth year of business now. Each year, we sort of doubled in size. Last year, we saw huge amounts of growth, especially on the online side of the business, so there’s a fire alarm going off. Last year, we scaled really fast. Covid, for our type of business, that was good. In a sense where we employed lots of new people – more people interested in taking vitamins and supplements over other products. In terms of scaling and to triple a business in terms of revenue in the space of 12 months is a really difficult thing to be.
So one of the major things we had to do was ensure we had the right partner to get things from A to B, because it’s easy to acquire a customer to get the product made, then get an appointment from A to B is also one of the key elements in our supply chain. With UPS, for us to scale fast involves selling in different countries, and selling into Germany, France, Holland, Ireland is a huge market for us, ensuring that we can get product there, then (within?) a couple of day. Timeframe is key. And UPS, I think at some points, we used to go from having a couple of orders a day, four or five years ago, to having full lorry loads coming in two or three times a day daily just to get orders out. To really scale fast, you need to have a good product, a full supply chain from making the product to getting the product to the customer, and capital. We had to raise investment to take us to that next level as well to keep up with the growth.
Arthur, how do you, or somebody like UPS, support a business as it scales?
Arthur: A lot of businesses, such as YourZooki, are on markets that have gone through a rapid growth in the last 18 months. Especially within the challenges that we see from a pandemic standpoint, we’ve seen a huge surge in online shopping. While the shift towards eCommerce was kind of expected from a long-term trend perspective, but the global pandemic has definitely sped up that trend in regards to planning for changes throughout the shipping and logistics space.
My advice is to really make sure that your business systems and processes are as seamless as possible, tailored to the individual strengths, challenges and goals of the business needs that some of the small and medium-sized business they’re seeing. That’s one of the reasons why we at UPS offer a range of services for businesses of all sizes. Maybe you are start-up looking for a free eCommerce shipping plugin, which allows you to integrate a wide range of UPS delivery services into your e-storefront. Or maybe you are SMB looking to expand your business overseas such as what we just heard. We have a variety of solutions to make the shipping process as simple as possible. But one thing that I would often remind companies, as we just heard, that they know what creating your product and shipping it out, it’s one thing how about, we cannot really just focus on the post-sales aspect, including the hassle-free return process, will really be part of a kind of instead of just creating or acquiring a one-time shopper versus acquiring a long term repeat customer.
To help companies to scale and to really understand that eCommerce market better. Our smart eCommerce report, which you can download via the link in the description box, included findings from surveys for over 10,000 consumers across some of the key European markets. In those reports, it says that 35 per cent of UK shoppers believe that it is easier still to return unwanted products in person.
So, in a way that really tells me that there’s still a lot of room to grow in regards to making the return aspect of the surface easier. If companies have goals to cultivate long term, repeat business, and want to provide a soft, smooth return, I think it is important to work with experienced logistic providers to able to streamline that process and be able to provide different options.
We as UPS, for example, we do have a comprehensive parcel return service option. You can either pre-printed labels to ship out your order, your mobile barcode and also we have convenient drop-off and delivery points through our UPS access point locations. So really, you can choose the best fit for you, as well as for your customers.
Yeah, I’m sure services like that are amazingly helpful. And of course, there’s been loads of changes to shipping logistics recently. Next, I’d like to just talk a bit more about like how you safeguard against those uncertainties. I mean, of course, we’ve had Covid this year, which we weren’t expecting. As a small business who ships internationally, how do you safeguard yourself against those kinds of uncertainties?
Marcus: What we did – initially we were just a UK-based company, and we set up third-party logistics centres in the USA, in Ireland and in the Netherlands. What that allowed us to do, and, with Brexit, we were still using UPS. But we were really focused on LTV, which is the lifetime value of a customer. So any eCommerce company has to really focus on what is the lifetime value of a customer, and forced to open up a 3PLs in a separate company in a separate country to improve that customer experience, still using UPS to get the product to the end customer made complete sense for us, because we could shave off a day of shipping.
What we did to scale fast, which I’m sure lots of other companies are doing, is looking at opening third-party logistics centres in different countries.
How do you go about setting up these third-party logistics centres?
Marcus: I guess it’s like a dating process, you’ve got to speak to lots of different companies. Sue, who’s our account manager at UPS, recommended a few companies we spoke to in different countries. But yeah, you’ve just got to get to know the company, understand their fees, understand how they work and ensure it’s the right fit for your product. There’ll be specialist 3PL companies for clothing, for food and health and wellness products like ours, for drinks, which might have ‘fragile’ stickers on, for example. There’s all these different types of three PR companies. And it’s a similar process to finding an agency or whoever – you’ve just got to ensure you’re comfortable with them as a business.
Arthur: I think it’s unexpected from a UK business standpoint, because of what we kind of discuss the changes in the United Kingdom from a Brexit standpoint, or EU VAT reform that we’re seeing in July. Crossing borders now requires – coordination compliancy is a big issue, and also the right documentation and paperwork that goes all along with it.
As we see that the new regulation takes hold and reforms take hold, we really need to help customers to pivot their business to ensuring that they have all the information that they need in regards to sending packages, receiving packages, working with different partners – as Marcus has mentioned. So for example, a customer might not right now know that what they need in regards to shipping internationally because it is different from the past. Tools that we have at UPS including UPS treatability – it helps customers to really understand what some of the documentation does it require and also provide estimated landed costs, calculation including duties, custom fees and potential taxes.
One of the most important things that I see for my best practice standpoint is really informing your end customers were doing the ordering process that are they expected to be paying for duties and taxes or when the retailer the company is taking that aspect of it included in the overall price. I think that’s really speaking about customer experience.
Another factor, as I mentioned earlier is kind of the EU VAT reform that started in July 1, really impacting any imports into Europe that’s from worldwide, it’s not just for UK that value up to 150 euros, and likely that it’s going to change the way that especially for my eCommerce step one how what is the procedure and process is going to be so for people that are not aware, what’s changing. So as of July 1, the VAT exemption for imports into the EU will the intrinsic value of 22 euros has been abolished. So before, there’s no VAT to worry about going to this customer, so everything’s fine and dandy. Now, the European Commission has created this, they call import one-stop shop, or IOSS platform that they have launched to help to settle this VAT in Europe for goods up to 150 euros.
The last thing is the online marketplace. If you’re selling on that the online marketplace itself will be responsible for the compliancy of the euro VAT, when you’re selling goods up to 150 euros.
Now, that’s a lot of jargon. So far, not going to be able to explain all of the ins and outs in this particular podcast, but one thing that we do at UPS is really to continue our commitment in regards to supporting our small business customer through these changes.
UPS has selected the test consultant PwC (PriceWaterhouseCooper) to offer IOSS intermediary and compliance service for our customers who currently don’t have an EU based establishment. Our customers can register for these PwC hours as assistance on our website, if they so choose.
Great. And of course, we’re talking about small businesses as a customer. But we also recognise that especially since the pandemic has hit a lot of customers of your customers’ businesses are going online and it looks as if that shift could move online significantly for the long-term. I guess, Marcus, is that works quite well for you because I mean, you’re predominantly an online product though, I understand that you do sell in store as well.
Marcus: To be fair, the majority is switched from month to month, but a big part of our revenue is still in retail. We’re sold in close to 4000 stores worldwide. In the USA and GNC, Holland and Barrett and Boots in the UK, but we’re also in hundreds of independent stores around the UK and Ireland and UPS do all of our deliveries to the independent stores. So, for example, a local pharmacy, and who’s ordering a couple of boxes, and UPS does all of our B2B. So, so we use UPS as a D2C and a B2B solution.
The shift online, from an operations point of view, is easier. But I still think being in retail is fantastic. You know, we have some great retail partners and it’s mutually beneficial. We sell a lot of products in their stores which helps build the brand awareness for our brand. I don’t think the high street is going to disappear. I think it’s just going to change and how products are sold. And I still think more and more people will be shopping online, but I don’t think the high street is going to disappear. I think they’ve just got to adapt to how they sell products and put more importance on the experience for the customer in the store.
Absolutely. Staying on the online side of it. Arthur, what advice would you give to SMBs who are dealing with this changing market who are more and more online and their expectations as to what they would want from a business that is retailing online.
Arthur: Yeah, so I think, for customer care, end customer by habits have definitely changed. And I agree with Marcus that the high street is not going to go away. I think people still need the interaction, still wants to see touch and feel and so on. They’re probably just going to be operating in a different way.
Now, in regards to the changing habit and what they expect from retailers or cars, businesses, we saw that from a recent World Economic Forum report actually predicts by 2030, the last mile delivery expected to grow by 80 per cent. As we know, you can buy a lot of groceries online now, there’s food delivery and online stores. All those things add up and unfortunately do create global emissions to rise and the transport sectors, contribute to around 21 per cent of that. And then roll freight is around 29 per cent.
However, we do also see that consumers are really leading the charge and demanding more from businesses in regards to sustainability. Within our report, we actually did see some insights and findings, I can back this up as well. Consumers are not just right now, of course not in the boardroom to fall for any sustainability strategy of a particular business. But we do see that they are indirectly voting with their wallets during their purchasing decision. You see that our survey that 64 per cent of respondents actually said that it is important that a retail delivery partner offers sustainable delivery options. 32 per cent of shoppers wanted to see small and independent retailers offset their carbon footprint and deliveries. And an over a third of UK respondents said that they wanted to see retailers offer out alternative delivery options at a reduced price. For example, if I were to pick up from a locker or collection point, give me that option so that I can choose and be a responsible citizen while at the same time getting that flexibility and such. So, we are UPS we do offer this possibility via our UPS Access Points Locations, as I mentioned, offering free redirect options up to 15 minutes before they deliver, providing choice and convenience to our customers and that’s for our customers who are businesses that are trying to provide that options to the end consumers to help them to become good corporate citizens as well.
Marcus, are you seeing the same sorts of expectations in terms of flexibility and sustainability from your customer base?
Marcus: I think sustainability is a huge thing at the moment. I think it’s going to continue for the rest of our lives, hopefully. And we’ve invested quite a lot of money recently, we’ve recently had our products certified carbon negative – not carbon neutral, carbon negative. I believe we’re one of the first supplement brands in the world to be certified as carbon negative.
We’ve also implemented a recycling rewards scheme where we encourage all of our customers to recycle their sachets. In return, they’ll get rewarded by points on the website, which reduces the cost price of the next purchase. I think consumers are happy to pay and invest more money into brands, who are carbon neutral or carbon negative or investing and giving to charity or doing something good for the local community. That’s definitely a big part for people looking to set up a new brand. I think that, maybe ten years ago, that wouldn’t be part of the business plan. But I think in today’s generation, it definitely needs to be part of the business plan, where part of your business is dedicated to helping the local community and ensuring you have a positive impact on the world.
Anna: Yeah, absolutely. I think consumers are becoming a lot savvier as to where items come from, and then they can do so much research themselves. I think that’s such a huge consideration.
Arthur: If I could add to that point, to follow up figures from earlier. But then there’s one last one that I’ll throw out, because it relates directly to what Marcus is saying. In the research that we saw in the report, it’s very clear that millennials and Gen Z, that people who are under the age of 34, they have confirmed that 53 per cent of them in UK have said that a brand sustainability record is actually their number one priority. This is definitely a major shift from for the previous generations and other target customers. So, as brands continue to look for where they sit in regards to competitiveness and growth is definitely an area that needs to be focused on. It’s very happy to see that, that all the work that YourZooki has been doing on that aspect.
Yeah, no, that’s, that’s, that’s brilliant. And so we’ve covered a fair bit of ground here, is there anything either of you would like to add or you feel would be relevant to anything that we’ve discussed today.
Marcus: I think from a small business point of view, we first started working with UPS literally on our first orders leaving we were working from home, from the kitchen table doing one or two orders a week with UPS. They’ve grown with us throughout the whole the life of the business. And now we have a couple of loads every day come into the warehouse. So I think it’s interesting to see how you can create a partnership and that partnership isn’t there just for six months just to get you from A to B, but there were the whole lifecycle the business.
Yeah, sustaining those long-term relationships is so important. Do you have any advice as to how to maintain these relationships?
Marcus: I think, from my point of view, from a brand owners point of view, any relationship including the relationship of UPS, I think it’s really important to have open communication, whether you’re working with an investor, manufacturer, three PL or your logistics partner. So always good just to communicate. You always want someone you can pick up the phone to and just ask them a question. and you know the answer, and if they don’t answer, they’ll return the call. Lots of companies won’t return your call. It’s very difficult to win a business in the early days, where you can’t pick up the phone and ask someone a question.
And with UPS, especially during the Brexit scenario, we were on the phone to our account manager a couple of times a day in help and advice on how we get products into certain countries and the correct paperwork we need. It’s a very personable approach, which helps us. It saves us money, because we’re not having to employ someone else to head up that department and figure out themselves. We’re utilising UPS as resources to help benefit our business.
Great. Anything you want to add to that, Arthur?
Arthur: No, no. I think as I mentioned earlier, the consultative approach that I mentioned. Everywhere we go through, we really want to partner with our customers through MP. So even in the upcoming seasons, we’ll be working with our customers to understand how they are seeing their orders being projected so that we can work through to ensure that we can provide the top-notch service that they are looking for.
I think, at the end, I think I would say is really I thank, Marcus and his companies I guess patronage in regards to from the beginning, and I’m sure that we would have more years to come to continue to partner and, as their company continue to grow into different areas, different continents, different lanes, we will be continue to be there with them through the process.
Anna: Well, that’s seems like a good place to wrap up, so thank you for coming on the podcast Arthur and Marcus.
Arthur and Marcus: Cheers.
You can find out more about UPS and the Smart E-Commerce Report through the link in the description box below. Find out more about YourZooki by visiting yourzooki.com. You can also visit smallbusiness.co.uk for more articles on exports and international business. Remember to like us on Facebook at SmallBusinessExperts, follow us on Twitter @smallbusinessuk, all lowercase and subscribe to our YouTube channel, using the link in the description below. Until next time, thank you for listening.