#418 - How to Tap into Latin America’s $200 Billion E-Commerce Market with Christie & AJ

#418 - How to Tap into Latin America’s $200 Billion E-Commerce Market with Christie & AJ Kevin King: Welcome to episode 418 of the AM-PM Podcast. This week my guest has two guests actually Christie and AJ from SkyPostal. We talk about why you should be considering expanding to Latin America. There's some massive opportunities in Latin America. I think 200 some odd billion dollars worth of e-commerce activity going on and it's super easy for you to ship directly from the United States into Latin America. We talk about that and a whole lot more in this episode. I think you're going to get a lot of value and it's going to open your eyes. Enjoy. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast, where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Let's do this. Here's your host, Kevin King. Kevin King: Yeah. Look who I have this week on the AM-PM Podcast. It's a two-for-one. That's right. It's Christie and AJ. Christie, how are you doing? AJ, how are you doing? AJ Hernandez: I'm doing great. Thank you so much for having us. Christie Rugh: I'm doing amazing. Thank you. Kevin King: So you guys, probably people are like, who's this Christie and AJ? They're listening to this. I haven't seen them in the Facebook group or in the forums or Helium 10 or anything. Who are Christie and AJ? Christie Rugh: We are SkyPostal. We are a logistics solutions partner in Latin America, really focusing on driving your Latin America business and really showing you what the opportunity is there. We know that this year alone, Latin America is going to do $195 billion in the e-commerce market and by 2028, which is less than four years from now, it's going to do $270 billion. It's one of the fastest growing markets out there. Kevin King: That's really good. I think AJ, she needs a raise because she's got the elevator pitch down. AJ Hernandez: She's got it really well. Kevin King: She's got it down, man. Exactly. AJ Hernandez: I'm not sure I could have done much better than that to get everybody interested in what we're doing. But just to add to what Christie does, we are a delivery company. We focus on the delivery of e-commerce parcels into Latin America. That's our expertise. We've been there for 50 years. We'd like to position ourselves as an alternative to the very expensive express carriers like FedEx or UPS or DHL and the very unreliable postal services that the USPS has to rely upon in the region to deliver their packages. So that's kind of our niche. That's where we are. We have all the benefits of a courier service, tracking, tracing, online visibility, but we're more closely priced to a postal product. Kevin King: A lot of people don't realize the opportunity, I mean, especially in North America, I mean, we call it America and South Americans might take, and Central Americans say, well, we're America too. But in the United States, a lot of people don't realize that they might have been to Mexico, to Cancun on a vacation or something, maybe to Costa Rica and stayed in the jungle, but they don't understand the culture and what's really going on down in America. I was married to a Colombian for several years and I've been all over, I've been to All but one country in Latin America and Central America and I've been all over. I was down in Colombia probably 30 times, you know, living down there for three or four weeks at a time sometimes when I was doing long distance with my now ex-wife. So I'm very familiar with the system and I've been running e-commerce before Amazon. I have a calendar business, and we had people ordering in Latin America sometimes these calendars, and we'd ship them down there, and you're right. The cost to do FedEx or something was prohibitive for a $20 item, or the US mail, it might take forever, and it's got to go on the back of a donkey across a mountain. You don't know if the donkey's going to get there, if it's going to die on the way, and they're just going to leave the packages in the woods. It was frustrating, but that market It's a different market. It's still much more of a cash-based market than the United States, but it's growing with Mercado Libre and several of the other big marketplaces. More and more people are coming online. They may not all have credit cards, but they pay differently. I think a lot of people don't realize they're ordering from the United States. And I don't know, you said you've been doing this 50 years. Are you just small parcel or were you guys involved? I know there's these mail drops that will, in Miami, for example, and you ship to Miami, ship to a US address and they collate them all and once a week, send them down to Ecuador, send them down to Columbia or to Peru or to wherever. Do you all do that kind of stuff or is it more single package delivery type of stuff? AJ Hernandez: Well, let me give you a little bit of history. We've been doing this for 50 years. We've been delivering to Latin America. When we started, it was really delivering bank documents. We were delivering checks back and forth. We were delivering checks from Latin America to the United States to get them into the Federal Reserve. And that's where the need was born for this sort of service, a delivery service. That expanded to mail delivery where we started to deliver mail again on behalf of the post offices that could not deliver mail efficiently. And then we got into the U.S. address business that you're alluding to. We actually started a company in 1992 called Skybox. Skybox was one of the very first U.S. address services that gave people an address in the United States from which they could shop as if they lived in Miami. So they could go on to a, and at that time there was no online. This is, you know, this is a catalog, right? So they would go to the Disney catalog, the J.Crew catalog, the Victoria's Secrets catalog, and they would fax in their orders with our address as their receiving address. And then we would receive and ship down to Latin America. Fast forward a couple more years to 2000, the internet starts to really grow. Online shopping starts to expand in the United States and people that are a little bit ahead of the curve in Latin America are starting to shop, but they still can't. The Amazons of the world at that time are still not delivering to Latin America, so they still need this U.S. address. Fast forward to 2008, we started to say, you know what? A lot of these big sellers and these big marketplaces are starting to sell to Latin America. We need to start catering to them as well. We refocused ourselves on the seller, the shipper, the sender, rather than being focused on the buyer, the person in country receiving the packages. So we offer both. The U.S. Address Service, by nature of the fact that there's so much growth in cross-commerce now, is becoming less and less. There's less of a need for the U.S. Address Service now that the big boys are starting to send directly to Latin America. So, that represents probably less than 10% of our business. The other 90% is us delivering for companies like Amazon, eBay, Shein, Teemu, all these big marketplaces in the region. And of course, also partners that we work with that are offering sellers the ability to sell into Latin America through a platform such as Knock Knock. Christie, who are some of the other ones that we work with? Cross-commerce. Coming up in Q1. They're able to take clients' product database and display it on a one-stop shop where they can handle the transaction on behalf of the buyer, transact it with the seller, and also handle the logistics with a partner like us. So that's kind of what we do. Kevin King: You're actually running the trucks and the people or you're partnering with local people in these countries and you're overseeing that or do you actually are running the whole operation where it's your trucks and your planes? Are you buying excess capacity on cargo ships and cargo planes and stuff? That's correct. AJ Hernandez: We buy space. So we don't own anything in Latin America. We've been down that path in my early career. We used to own everything in Latin America and we've kind of divested ourselves of that. We felt that it gives us more flexibility to be able to move around, add providers as we need. You know, for example, in countries like Brazil and Colombia, we might work with six different providers delivering the last mile. So our service is about receiving the packages in Miami. Transporting into country, managing customs clearance with our partners in every country, and then handing off to our last mile providers, be it one or up to six, depending on the size of the country. The one thing that they are all is tied into us through our technology. They're all fed into us. They print our labels and they feedback all the tracking and online delivery information that a client would need. For the client, it's a seamless SkyPostal delivery. We work with 40 different providers throughout the region. Kevin King: A lot of Latin America, they don't have established postal service like the U.S. that's pretty dependable and reliable. I mean, some countries have that and it's not dependable and it's not reliable and there's a lot of theft. And then there's some, like I know in Colombia, I've sent stuff and it gets there and they find it's almost like an Uber driver. It's like, who wants to take this from Barranquilla to Cartagena? And here's the package. Here's the value of it. And they're like, no, I ain't taking that because I might get robbed or this one. So how do you mitigate the risk for shippers that are selling out here? Because it's much more difficult. A lot of times I know when I ship internationally, I have to put a disclaimer. We ship it, but we don't guarantee delivery because we can't control what's going to happen sometimes or at your own risk. How do you mitigate that? AJ Hernandez: Well, we do guarantee the delivery. We could also offer insurance. Yes, there's always the inherent risk of something happening. Things do happen. In my 50 years, I've seen it all down there and I know that things happen in the region that are out of our control, but we work with the best in class providers in country. We provide the security at the airports that are necessary in order to clear customs and get packages delivered to the final mile providers. Usually the theft occurs in that movement from the airport to the final mile providers. Trucks get hijacked. So that's an important thing that we do with our partners. And then in the final mile, you know, listen, sometimes packages get lost. We handle millions of packages every single month. So that's something that we've got to be able to handle. I think it's just as important to be able to give good customer service. And responses to our clients when there are problems that occur, because in any logistics business, there are always going to be challenges. But we do strive for 98% reliability with our service. Kevin King: Does everywhere in Latin America have addressable addresses or is there some places where the address is the third door past the tienda with the bananas? AJ Hernandez: A hundred percent. Yeah, that's called a descriptive address. That is definitely a challenge that we face in Latin America. But again, when you are working with experts in those regions and our final mile providers are always best in class players in those countries, they know these areas. They know how to map it out. We do work with many of them that geocode their routes. So whilst they might have the greenhouse behind the SO station, even if that house gets painted, they have geocoded that address and will be able to find it. Kevin King: Well, that's good. That's good. Yeah, that's always been some of the challenges down there is just the delivery system. And then, you know, you got 20 people living in a house and they deliver it and hand it to one person and it never gets to the person it's intended to. And so they, I never got it. And, you know, Johnny, the son took off with it or whatever. It's always a challenge, but the opportunity, though, is immense. A lot of people don't realize, a lot of Amazon sellers, mostly who's listening to this in the United States, sell in the U.S. They might have ventured to Canada, and they have the option to do the integrated with Mexico. They might dabble, like, eh, I don't know. It's just not going that well, and it's not a major focus, but there's emerging markets that are huge, like Colombia and Brazil, especially, and Latin America and South America that are huge opportunities. I think a lot of people just aren't waking up or realizing up here in North America what those are and probably don't realize how many of their Amazon orders are actually being shipped to Latin America now if they took a deep dive. AJ Hernandez: Yeah, it is a fantastic opportunity. We have over a thousand Amazon sellers that are tied into us that sell to Brazil and Mexico. And they've had great success going into the region. We act as a guide. Our job is to make the transaction as similar to the U.S. transaction as we can. Obviously, we have to deal with customs duties and all that good stuff. But what we try to do is and what we do with all of our clients is we are the guide to the region. We're going to help you through it. It might be unknown to you, but our job is to make you feel as comfortable as if you were sending something to New York or California or Chicago. Kevin King: Some of the countries down there, there's not a lot of tax, but some countries like Brazil, it can double the price of an item or sometimes even more. Is that just something that that culture is just used to that we just accepted that this iPod case is going to cost twice the price if I was in the United States? Or is that a big hurdle that sellers have to overcome? What are some of the hurdles that they got from a mindset point of view? AJ Hernandez: I think it's important that you focus in on the products that you're selling to the different markets. For the most part, especially into Brazil where you are paying 100% duties and taxes of the value of the goods. Those are goods that are not easily found or not available in Brazil, so people are willing to pay for them. I was in a meeting yesterday with our partners in Argentina, and I was arguing this exact same thing. I'm like, goodness, the taxes are going crazy. It's going to cost them $50 to get this case. He goes, yeah, but you don't understand. This case is costing us down here $150. So you're still saving money by buying it in the United States and paying the exorbitant taxes. So I think it's important to identify products that are good for that market, that there's a need for them and a want for them. Christie Rugh: In some cases, there's a de minimis. Columbia has a $200 de minimis. There's no taxes or duties on those items that are shipped that are less than $200, whereas if they go to a retail store, that retail store bought more than $200 of that item. The retail store paid duties and the customer is going to pay taxes. There's 40% right there on clothing that if they're ordering it from the States, they're not getting charged, whereas they're going to get charged for it in a retail store there. Kevin King: Why do you think Brazil does that 100%? I mean, a lot of times those are protective measures to protect like local artisans and protect local things and like Indonesia does that now. Again, you know, they ban Timu and they ban a few people because it's going to hurt the local artisans and craft makers and seamstresses and stuff. But why does Brazil do that? Do you know any background on that? AJ Hernandez: I think it's twofold. First of all, it is protectionism. Number one, absolutely. But number two, it's also revenue, tax revenue. The country's always looking for revenues to run the government. And this is an important, I mean, think about this, into Brazil, just from China, the marketplaces are sending over a million items per day into Brazil. So there's a big tax opportunity, big revenue opportunity for the government there, and they're not going to let that go. Kevin King: Brazil's what, about 200 million, something around that? AJ Hernandez: 220 million people in Brazil. Kevin King: And what percentage, I mean, a lot of people know, they've seen the scenes of the favelas and all that and the poor, but what percentage actually, or more, I guess what you would call the middle class or something and up that could actually afford to pay these kind of prices? AJ Hernandez: Well, the numbers vary throughout the region. There's about a 35% of the population, but there's a growing middle class in Latin America and the best part is it's mostly 80% of the population has cell phones and cell phones have really become the conduit by which a lot of the shopping is being done and people are finding ways to buy things. That's why we're seeing so much growth in the region. I think that's why it's such a great opportunity for your listeners that selling to Latin America is very fertile ground. People are American goods crazy. They love to shop online and now with the methods of payment that are available to them that weren't just five years ago, really make it easy for them to do so. Kevin King: I mean, you got more and more Latin Americans starting to get credit cards now and be comfortable with that. But for the longest time, everything is cash. AJ Hernandez: Oh, yeah. Kevin King: You stand in line at the grocery store to pay your bill. When you buy $27 worth of groceries, they ask you at the checkout, cuántos cuentas? How many payments do you want? Pay your $27 grocery bill over and they break it up right there. It's a whole different mentality, but the fintechs and the financial system is coming around to make this much more easy. AJ Hernandez: Exactly right. And they are offering what you're talking about, Kevin. They call them parcelas or payments and installment payments. That's another thing that a lot of the sellers, especially the marketplaces that are focused on the region of Mercado Libre, Lineo, they are offering this sort of thing. And even a lot of the Chinese marketplaces are offering payments and quotas or installments. Kevin King: So, what's better? Is it better for me to use your services? Mercado Libre, do they have fulfillment or is it they're just a market, just a facilitator? AJ Hernandez: Mercado Libre is very big on the domestic, intra-regional, in-country. They're not so big on the cross-border side. I would look at some of our Partners like CrossCommerce and Knock Knock. Absolutely, I would look at Amazon and their global stores into Brazil and Mexico. We're a big partner of theirs, handling all of their sellers into those countries. But yeah, try to go to a place where you can really just get the support you need that is able to localize your store, language-wise, currency-wise, and be able to manage customer inquiries. Kevin King: So you can coordinate, so if I'm understanding correctly, SkyPostal can coordinate not only individual shipments, if I'm shilling off my Shopify store or FBM and one-by-ones going into Latin America, but you can also, if I need to ship in three pallets to Mexico or to Brazil or to Mercado Libre in Chile or something, you can help facilitate that as a almost like a 3PL as well. Is that correct? AJ Hernandez: We can. Kevin King: At competitive rates. AJ Hernandez: At competitive rates. Kevin King: And what is the time right now that's taken typically for a standard package? I'm not talking about like overnight or something, but a standard package to get from the U.S. into one of the bigger markets, let's say Brazil, and to get to Rio de Janeiro or something in Brazil. How long has it taken from that process? AJ Hernandez: Overall, the average is going to be four to eight days from arrival in Miami. Depending on, obviously, as you mentioned, if we have to deliver it, you know, up the Amazon River using a canoe and a donkey to deliver it, it might take a little longer. But for the most part, we're in the four to eight day range for delivery throughout the region. Kevin King: So, the way it works is if I'm selling on Amazon in the U.S. and I do an FBM order, I'm going to ship that to your drop spot, your warehouse in Miami. Do you ship those turnaround in like 24 hours later just going out in a batch or does it take batch up every three days as soon as you fill up a container or something they go or how does that process work? AJ Hernandez: No, no. The major markets like Brazil are going to go daily. The way it will work, you'll be able to integrate directly with us. We'll give you the ability to print a final model label at origin. And if you've not got the volume to create a consolidation of shipments, and by that I mean 10 or 12 shipments at a time with the final model label on them and you send it to Miami, we can also give you the ability to print a USPS label if you're only selling one or two items at a time. Our system gives you the ability to print the US label, USPS label, gets it to us in Miami. Upon receipt in Miami, we'll scan that item. We'll print the final mile label and then it will go into our regular streams, our daily streams going into each of the countries. Kevin King: So I'm paying the UPS or USPS rates to get it from, say I'm in Texas, I'm in Austin. So if my warehouse is in Austin, I'm shipping it to Miami. So if it's a one pound package, it's costing me around eight bucks or so, seven, eight bucks to get that to you. And then you get it and then you're putting another label over the top of it and sending it on. Or if I have 26 orders that day, can I put those all in one big box and send a 26 pound box to you and then you break that up? AJ Hernandez: Correct. Kevin King: You can put all your orders in one box. They don't have to be the same items. It can be a mixed mishmash or whatever. As long as each one's individually packaged and labeled, then you'll sort it from there and distribute it out. That's how I can get economies of scale and save on that. It's like my own little smart post or something. What's that one pound package going to cost me from Miami to Rio, just roughly? AJ Hernandez: The one pound package is going to be a half a kilo or 500 grams. It's going to probably cost $8 to $10 to get it delivered. Kevin King: All in with box and fulfillment and everything, I'm about $20 to send this item, a half a kilo or one pound item roughly. But the consumer on the other side is more than happy to pay that. AJ Hernandez: Oh, sure. And I'm sure we can help you on your first mile in the US to better that $8 you paid. We also have excellent domestic services that we can offer our clients. Because of our volumes, we've got excellent domestic rates that we're able to pass along to our partners. Kevin King: Do some of your bigger partners just have warehouses in Miami where they're just pulling it out of the local warehouse and just driving it over to you? AJ Hernandez: Some of the big guys do, but some of them have distribution centers throughout the United States and they'll just create consolidations. They've shipped to us from Los Angeles, Chicago, New York. They'll mostly truck down to us via road and they'll send the consolidations whether it be two, three times a week, these trucks will come in. Kevin King: Besides Brazil and Mexico, what are the next two or three markets people might want to consider? AJ Hernandez: Great question. We always look at it in tiers. Obviously, your major tier is Brazil and Mexico. The second tier markets are Colombia, Peru, Ecuador, Chile, and Costa Rica, I would say, are the next tier. Then, after that, I would start looking at the Uruguay, the rest of Central America, and obviously, let's not forget about the islands. The islands also have some big growth. Jamaica, the Dominican Republic are very big buyers. There's opportunity everywhere. I mean, there really is opportunity. Kevin King: And the Caribbean too, not just Latin America, but the Caribbean as well. AJ Hernandez: Sure. Unknown Speaker: We can handle the Caribbean as well. Kevin King: How am I finding out, like you said earlier, like if, especially if on the products, if you can figure out what they want in those markets, if they're willing to pay that extra fees for and the wait for and pay the shipping and the higher tariffs in some cases, what are, how am I finding that out? Like in the United States, I'll use a tool like Helium 10 and I'll see what's selling on Amazon, what people are wanting. What are some tools or some methods, but if I wanted to find out, What's working in Peru or Colombia? What's the best way to do that? Is it to go to Mercado Libre and just use some tool there, or is there something that some of your clients use to kind of get that market insight, that market research? AJ Hernandez: You could do some of your own research, but you can also speak to us. As I mentioned, we're a guide. We're delivering millions of pieces. We know everything that's being sent, so we can tell you what are the hot products that are going into it, what are the categories that you should be looking at, and what are the categories to stay away from. To Mexico right now, supplements is not a good idea. But to Brazil, supplement is a very big business. So we can tell you, and you can come to me and say, hey, I have a store that does perfumes. I go, well, perfumes to this country are no good, but perfumes to Brazil, fantastic, to Columbia, fantastic. We're going to talk a little bit about clothing, supplements, cosmetics. These are all things that are very popular, but you have to know where they can go and where they can't. Obviously, clothing is always going to be big, especially U.S. brands. Electronics, phone accessories is another very big thing. But I think that we can help and we can guide you and if you have a specific target or you have a product that you want to understand how it's going to work in each country, we can certainly help you with our local contacts. Kevin King: Do you help with any kind of liquidation? You know, when the Super Bowl happens and the Chiefs win over, you know, the Cowboys or something, and they have all these Dallas Cowboys Super Bowl tracksuit shirts that they have to destroy, or what they usually don't do is destroy them. They send them down to Latin America or Africa. Do you do any of that kind of stuff as well? AJ Hernandez: That's funny. Yeah, we've not handled anything like that. I have seen that, and as a matter of fact, I have seen shirts like that in Latin America, so you're not lying. We haven't been approached to handle those type of products, but we certainly could. Kevin King: What's something that's coming up? You said you told us a few examples like in the beauty category and supplements that you should or shouldn't do, but what's something that you're seeing emerging right now that's maybe a hot trend that someone listening to this might want to consider? It doesn't matter which country it is. What do you see as a big opportunity right now out there in Latin America? AJ Hernandez: Health and beauty is a very big, big category. Very, very big. As I mentioned, clothing is very big. Home goods is an interesting thing. Alarm systems, surveillance systems or cameras for your home, ring cameras and all that stuff. We send a lot of that down there. Yeah, so there's so many opportunities, but I would definitely say that electronics and accessories to those electronics is a very, very big popular thing into Latin America. Kevin King: And just to put this in perspective on the size, Christie, you were saying earlier about the market size. I think Amazon is about 700, when you count in the 1P and the 3P, it's about $700 billion in the US. Amazon's Prime Day is the equivalent to the entire year of TikTok Shop in the US. TikTok Shop last year did 20 million bucks and Prime Day did 15.3 million this year. Put that in perspective, Amazon does in a couple of days what TikTok Shop does in a year, but still everybody is super up on TikTok Shop. It's a shiny object right now. But to put it in perspective of where Latin America is growing, you gave me a number earlier that's pretty significant into the couple of hundred million billions. Christie Rugh: $125 billion this year and by 2028, so just less than four years from now, it'll be $270 billion and only 5% of US Amazon sellers are even selling on Amazon Mexico. The market penetration is so low. It's the time for sellers to get in early, build their brand reputation up so their items show first easier. Kevin King: Now, usually a lot of times on these accelerated markets, a lot of times the US sellers, they're just content staying in the US. I know the laws. I know this is my people. I know the language. I've got to figure something out. For the same amount of effort I can put in to sell on Amazon US, I put in that same effort for Amazon Mexico, the return is just not the same. And so why should I put in that same effort? What do you say to those people? Well, the Chinese guys, they've got whole offices of people that are coming in and doing it. You should come in. And then people say about localization, like in the U.S. we have a competitive advantage. If I'm a white guy in Austin, I know my culture versus the Chinese have a hard time understanding the Western culture. Latin American culture is more similar. I mean, there's differences, but it's more similar to United States culture than, say, Chinese culture. And there's enough people in the U.S. that have immigrated here from Latin America where it shouldn't be too hard to find people that understand that culture and the little idiosyncrasies about how to market to them and what they like. So what would you say to people that are just resistant? Like, that's not worth the effort. I can put the same effort here. Or I don't understand the culture. You know, what would you say? How would you coach people to overcome that and give this a try? AJ Hernandez: I'll give you one good one, Kevin. It's ad buys. It's much cheaper to buy advertising in Latin America than the United States. You get a lot more bang for your buck with your marketing dollars and it's easier to acquire clients. Again, yes. Is it more challenging? Yes. But our job is to try to make it as easy as possible and make it as much of a U.S. transaction in the eyes of the seller as possible. Let us do the hard work. Customs clearance and the final mile delivery. You just sell. From your point of view, it's just you selling to another state. And that's how we try to do it. Christie Rugh: The other way to do it is through the platforms that are acting as sellers for them, similar to like a pattern in the U.S. I'm not not cross commerce and then there's two more that are coming in q1 of twenty twenty five where they act as a seller for you so you look they you know you give them there your items price in the three items and then they do all the work they do all the advice they praise it the way it needs to be priced out you know they've got skin in the game to. You know, get the sales because they're putting all the work into it. So that's another solution. And for me, I would say, you know, go on all of them because it's like you're selling on eBay, Walmart, Wish, Amazon in the US. I would say go to all of them. It's like being in the aisle, you know, five times in Walmart versus one time. Kevin King: Yeah. Knock Knock has been on the podcast and that's an interesting model where they basically, for those that haven't listened or haven't heard that you can go back. It's about a year, a year, year and a half ago. But Knock Knock, the way they work is they basically have their own storefronts, like what Christie said, a pattern. They have their own storefront and they put your stuff into their storefront. They do the marketing and they negotiate a price with you. I didn't realize that they're using you guys, SkyPostal, to actually facilitate a lot of that delivery. They just made it sound like it's almost their own little warehouse, but that makes sense. AJ Hernandez: The secret's out. Kevin King: They're white labeling you guys. AJ Hernandez: That's okay. They don't have to know who we are. We just deliver for them. Kevin King: That's cool. That could be a way to test it if someone's a little hesitant or something to test it. Absolutely. Christie Rugh: We can help facilitate the introductions onto all of these platforms. Making the introductions, making sure that the right items are getting placed and that you're getting the attention that you need. Kevin King: Now, is there a certain type of seller that typically does better here, like someone that's more experienced in the U.S. marketplace? Maybe they're doing over a million dollars a year and that's the time to let me expand over and put some resources to Latin America or someone that's doing $50,000 a year in the U.S. where it's super competitive, go, you know what? I'm tired of wasting money on ad spend and I just can't make any money here. But my product, maybe I can make 50 grand in all of Latin America because it's not as competitive and I can actually make a profit. What's the mentality you would teach, tell somebody that they should, when should they take a look at Latin America? AJ Hernandez: We have seen very small sellers who have now, after having joined us, sell more in Latin America than they sell into the United States domestically. So to put a dollar amount, it's hard for us because we do have guys that are big that do over a million dollars. And then you have these small ones that really started, they cut their teeth with us and they are actually doing more business to Brazil and Mexico than they're doing into the United States. And maybe it's because they found some sort of niche. And like you said, it's easier to market these products. It's cheaper to market these products. They don't have the competition they deal with in the United States and selling them and maybe that's the way to go. I mean, you're definitely going to see less competition in a market where there's only 5% penetration from U.S. sellers. Kevin King: What about coming the other way? Do you do anything? We've been talking about shipping from the U.S. into Latin America. What about from Latin America back into the U.S.? You said you used to do it with checks and stuff, but there's opportunity in the U.S. where you can go online. You can see there's Canadian, I mean, not Canadian, Colombian candies. You are Dulce de Leche from Argentina or different honeys or whatever, that there's opportunity to sell these types of products in the US. But people are like, I don't know how to source this. I don't know who distributes this. I don't know where to get it. Do you do anything on the reverse logistics on that of coming back into the United States? AJ Hernandez: Yes, we do. So the good news is we have offices in every country. So these partners of ours are able to handle this. And it's a reverse. So they're the ones receiving it in their hubs. They're transporting it to us. We're clearing customs in Miami. And then we're utilizing our partners here in the United States, which is UPS and USPS, to do the final mile. Kevin King: So if I've got a factory in Colombia that's making my, you know, there's a big factory that does a lot of the foams for Crocs and stuff. They have offices in Mexico and in Colombia. So if I'm trying to diversify my sourcing outside of China and I'm looking at Latin America, You guys could actually perhaps help me find a manufacturer because you have offices there and also then coordinate the logistics of getting back into the U.S. market. AJ Hernandez: Yes, we can. As a matter of fact, there's a lot of companies that are doing fulfillment out of Mexico for the U.S. So we handle it from Mexico. Our partner gets it in Mexico. We truck it across the border and then distribute it throughout the United States. Kevin King: So you're doing the thing where someone instead of shipping a container load into the U.S. and having to pay the Trump tariffs and duties, they ship it in a Guadalajara or somewhere and then put it over small package, small packet via under the de minimis, totally legal, everything's totally legal and above board, but under the de minimis rules and just piece that, store it cheaply in a 3PL. Just across the Mexican border from El Paso or from San Diego or wherever. AJ Hernandez: That's exactly right. We go through Laredo. Kevin King: Piece it over piece by piece and you end up saving 30-40% in some cases on duties. AJ Hernandez: That is correct. Kevin King: So you guys can help with that as well. AJ Hernandez: Yep, because we bring it in as an individual order, not as a consolidation or a formal invitation. Kevin King: Yeah, that's a big... What do you think is going to happen with all this Minimus stuff? I mean, just in the United States alone, Timu and TikTok Shop and Sheen, it's billions of packages coming in right now. AJ Hernandez: I think that these challenges... Kevin King: They raised it in 2016, I think it was, from $200 to $800. What do you think is going to happen? AJ Hernandez: I think that all eyes are on China. I think that especially the U.S. and Europe are taking very close looks at China and that's why China has focused so much on Latin America. That's why we're seeing so much growth. And I think all of e-commerce is looking towards Latin America because right now it's 4, 5, 10 years behind where the US and European markets are today. But there is going to be a certain level of protectionism that's going to happen, in my opinion. It's happening already in Europe. It's going to happen here in the United States. The 800 De Minimis, I think, is going to come down. Kevin King: I think the $800 might stay if you're actually traveling on an airplane. I think it might stay for that, but I think for shipments through the mail, I think it's going to go back down to $200, maybe even lower. In some countries, it's like $20. AJ Hernandez: We fight that all the time because I'm a very pro de minimis kind of guy because of my business, but I understand the need for it. But there comes a point in time where you say, is it really worth the amount of work it takes to collect taxes on a $20 item? I think a $20 de minimis is ridiculous. I think it should be no less than $100 to make sense to reduce the work on that country's customs authorities while still collecting duties on higher priced items. Kevin King: I got stung in Chicago with taxes about two years ago. I went to a mastermind in Paris, a buddy of mine was doing this high-end mastermind and I was with my wife, then wife at the time. We did a little bit of shopping in Paris at some of the designer stores and flew back through Chicago and got pulled over for not declaring everything. AJ Hernandez: Are you kidding? Wow. Kevin King: Yeah. It turns out that the way it worked is I researched it afterwards, but we were on a flight from From Paris to Chicago, land in Chicago, there's no line in customs, no line in immigration, and they're passing out those blue pieces of paper that they had basically gone away from. Now everything's online. AJ Hernandez: Oh my goodness. Kevin King: They're passing them out, but I didn't have time to fill it out because there's no line. And they said, oh, don't worry about it. And they asked me, were you bringing any cigars or cigarettes, normal questions? I was like, no. It's a pleasure to be here. And they're like, oh, the code meant flag. I was flagged somehow. So they sent me over and my then wife was like, just be honest with them. We had like $35,000 of clothing and stuff. AJ Hernandez: Oh my God. Kevin King: So, and purses and a watch and things. And so we, we went over to the next lines and he's like, what do you guys say? I was about $5,000 worth. And he's like, Are you sure? I'm like, yeah. And my wife's like, you know, almost like kicking me a little bit, like, just be honest. And I was like, it's like 5,000. He's like, all right, put your bags up on the table. I put my briefcase up on the table. He never went through any of the bags. He opened one zipper on my briefcase and right on top were all the VAT refunds I'd done in Paris. All the receipts for the VAT refunds that showed how much money we'd spent. I got like $4,000 or $5,000 back or something in VAT refunds, some crazy amount. And it was like, what is this? I'm like, that's our VAT refunds. Unknown Speaker: It turns out- It's your fault. Kevin King: It's my fault. I ended up having to pay $7,000. Oh my God. Then I got put on a list for a year. They wouldn't tell me how long. If I had global entry, they took it away. I didn't have global entry, but they were taking it away. I didn't lose TSA pre, but they told me, you're going to be, plan all your international trips in the foreseeable future. Plan extra time because you're going to be on every single flight. So it worked out to be it's five trips. I figured out after five trips, I travel quite a bit. So within a year, I'd done five international trips. I'm off. So now I'm off of it. But I was dead on honest. If I had a piece of bubble gum that I bought in the In the airport, I declared it. But it turned out there was a competition going on between New York, Chicago, and Dallas at that time to see what they could confiscate. They were looking for flights out of Milan and Paris because those are two common ones that people don't declare. It turns out when you do those VAT refunds at those machines in certain parts of Europe, that information is shared with the US government in advance. So they know coming off the plane who has stuff and who doesn't. So they have the ability to pull that. It's a new system that they're testing out and we just got caught up in it. So I'm very familiar with all that De Minimis stuff. AJ Hernandez: Man, you got hit hard. Kevin King: So the opportunity is huge right now. A lot of people don't know about you guys. So were you just kind of like under the radar for a while and just kind of playing behind the scenes and now you're having your big coming out party or what's happening? AJ Hernandez: Yeah, I think for the most part, we were well known in the wholesale community. So wholesalers are what are considered consolidators in the United States, big companies that you've never heard of that receive packages, you know, Ascendia, Landmark, Pitney Bowes, APC. These are all clients that would work with these sellers and then they would use us as their Latin American arm. So we didn't appear to the sellers or the shippers and that's changed now because people are looking to eliminate middlemen and so they come directly to us and that's how we've become more well-known, I should say. Kevin King: So how's the process work? If I want to expand on Latin America, Considering doing that, maybe I've got some products already or I've got some ideas for something I might want to do. What do I do? Do I pick up the phone and call you? Do I go to your website and fill out a form? Is there a monthly fee? Is it just a by shipment fee? Explain the whole SkyPostal system to me as a client. AJ Hernandez: You can contact us via email. You can call us via our website. Any way that you can get a hold of us, we'll get you rates. We do not have a monthly fee. You pay by the shipment. You ship, you pay. And we get you integrated with us. You'll have access to the system. You'll have access to be able to print our labels, whether it be first mile or final mile. And we'll get you set up. We'll train you on the system. We'll train you how the process works. We'll give you an SOP and we'll get things rolling for you. Kevin King: So is this a separate system or does this integrate with like ship station and stuff like that? AJ Hernandez: We are integrated with companies like ShipStation and EasyShip if you're using those label platforms. So you can integrate to us through those or you can directly integrate with us if you prefer. Christie Rugh: And Shopify. If you have a Shopify account, we can use that as well. AJ Hernandez: And, of course, Amazon. Kevin King: You said Amazon is using you for some of their prime stuff. AJ Hernandez: Yes. Kevin King: Sometimes, if I want to ship into Brazil, a lot of times someone from Brazil will go on Amazon.com, not .br or whatever, and they will actually order. I think there's a setting that I have to turn on that allows international shipments or maybe it's by default. You can turn it off. But there's a setting in Seller Central for sellers that you can, I think you can even do it country by country because sometimes there's rights issues. If you're selling Disney products, you can't. I ship a Disney product to a certain market or something like that. So as long as those settings are correct, a lot of times Amazon will just ship it FBA without you ever knowing it, that it actually went into somewhere else. So where you come in, it's not necessarily in that because you already have a relationship with Amazon for that. It's more the FBM or the Shopify or my individual website, or if I'm working with companies like Knock Knock or something, sending in stuff to them. Is that correct? AJ Hernandez: That's correct. Kevin King: And there's no minimums or volume or anything? AJ Hernandez: We do have minimums. It's a monthly minimum, but it's not a material number. I think it's just a way for us to be able to make sure that we're able to give clients the attention they deserve. It's hard for us. To work with a client that generates one package a month, it's just not feasible for us from an economic standpoint, and we can't give them the attention that they need at those levels. But our minimums are, I believe, on a monthly basis, I think $250 a month. You know, which is 25 shipments, you know, 30 shipments, you know, so we don't want to say no to anybody, but we've unfortunately found ourselves in a position to say, Hey, look, we have to have a certain minimum in order to be able to give the quality of service that we want. Kevin King: So if you had to sum it up, why should someone consider Latin America and consider using you? We've talked about it, but if you could have to sum it up and create a little sound bite for me here of why someone should be looking at Latin America and consider using SkyPostal for all their logistics needs. AJ Hernandez: Well, Latin America is the fastest growing online shopping region in the world. There's no argument about that. You should look at any resource that will tell you that. And SkyPostal has been in the market for 40 years and we're considered experts into the region. So if you're going to go into a region that you're not familiar with, I would expect that you would want to work with someone who knows what they're doing, that's been there before and can act as a guide, not a worldwide provider that happens to offer Brazil as one of its 120 countries. We are experts in Latin America and that's what we do. Kevin King: I had one other question that just came to mind. What about, are there any kind of packaging requirements? Like when I go into Europe, I have to have stuff in French and German and whatever. Are there rules that go into Latin America that you need to have stuff in Portuguese or Spanish or anything? AJ Hernandez: Any language requirements like that, it might be required on the manifest, which is what we send in. So we're able to put it into the language of the country. So the sellers do not have to do anything with their labels or their packaging. Kevin King: And what about on, like, there's certain rules. Do you help with compliance? Like, you know, like. AJ Hernandez: Oh, God, yes. Kevin King: Like, like, you know, certain Mountain Dew is banned and certain Cheetos are banned in certain European countries because of some of the ingredients that they use. Do you help with, like, making sure that your client stuff is actually compliant into the countries it's going to? Like, you can't send Cheetos into somewhere because of diet number seven or something. That's some orange weirdness. AJ Hernandez: Absolutely. We will give our clients a list of restricted items. And categories by country that they'll be able to see what they can and cannot ship. Kevin King: Well, it sounds good. I really appreciate you guys coming on, AJ and Christie, and sharing some really good insights. I think people need to wake up to the opportunity in Latin America. It's in your back door here, for those of you that are living in the United States. And it's a culture that you already somewhat understand because there's a heavy dose of Latin American culture in the US already. And it just makes sense and same time zones, very similar culture and a very big desire for your goods. So I think SkyPostal and some of what we talked about today should be on your roadmap to explore. If people want to reach out, what's the website or email or phone number? What's the best way to get a hold of you guys and learn more? AJ Hernandez: Our website is SkyPostal.com. You can click on there and you can immediately get in touch with us. You can also email Christie or myself. I am AJ Hernandez at SkyPostal.com and she is C-R-U-G-H at SkyPostal.com. Christie Rugh at SkyPostal.com. Kevin King: It's been really good speaking with you, Christie, today. No, I'm just kidding. It's really good speaking to both of you. Christie, she piped in the good stuff. She piped in, but that's awesome. Thanks for coming on the AM-PM Podcast. It's been fun and I think this has probably been enlightening for quite a few people and probably opened their eyes to some opportunities they didn't know existed. AJ Hernandez: Kevin, we appreciate the opportunity to get on your show and talk to all these people. I think this is a great opportunity and we hope we can help them. Christie Rugh: Thank you so much, Kevin, and we look forward to seeing you at Amazon. Kevin King: That's right. I'll be there. AJ Hernandez: That's right. Kevin King: You're sponsoring Innovate. I'm sponsoring Innovate. This is coming out right before Innovate, so it's perfect timing. So those of you listening to this at the end of October when this comes out, hopefully we'll see you. Myself, I have a booth at AMC Innovate in New York and so does Sky Postal. So go up and tell them, hey, I heard you on the pod and see what you can do and get all your questions answered. Awesome. AJ Hernandez: Look forward to it. Christie Rugh: Thank you guys so much. Kevin King: Most obvious that's just laying in your hands is Latin America. So if you haven't considered expanding to Latin America and you're selling in the US and especially if you live in the US, Latin America should be on your radar and it should be something you take a look at. So hopefully this has opened your eyes to a little bit. Reach out to SkyPostal if you got some more information. They can definitely help you and hold your hand a little bit as well like AJ said. Or if you're listening to this in time and you're going to be in New York for the Innovate Conference, come see me. Come see the guys at SkyPostal. And give them a chat and see what you can do. We'll be back again next week with another awesome episode of the AM-PM Podcast. Thanks for joining me this week. Before we leave, I've got some parting shot for you. The more valuable you are to your business, the less valuable your business is. The more valuable you are to your business, the less valuable your business is. Have a good one. See you again next week.