Expanding Your Business to Latin America with Christie Rugh - Episode 40 of the Agency Operators Podcast

Expanding Your Business to Latin America with Christie Rugh - Episode 40 of the Agency Operators Podcast Speaker 1: Hi, everybody. Welcome to the Agency Operators Podcast. My name is Pasha. Today, I'm joined by Christie Rugh, SkyPostal. Hey, Christie. How are you? Speaker 2: I'm good. How are you? Thank you. Speaker 1: Very good. Very good. I'm excited to chat with you. I love the topic. Today, we'll be talking a little bit about expanding into LATAM and what that means for people. I think with all these regulations that we're hearing about and all these tariffs and things, People are looking for ways to expand both selling-wise and just import-wise, so both directions. So I think we're really becoming such a global marketplace in that type of way. So I think this is a great conversation. But before that, Christie, I want to just ask, how did you become VP of SkyPostal? How did that happen? What was that process like? Go as far back as you like. Speaker 2: Sounds good. I've actually sort of been in the retail space most of my life until the last few years where I sort of merged into this cross-border world. I started my years way back at Circuit City back in the day doing the store buying. Moved over to Sears doing online management in 2013. Took over Sears Marketplace, so I started running the marketplace there. Was there for seven years and Aeropost actually approached me to develop a new marketplace for Central South America and the Caribbean. So developed that from scratch, Seller Portal, the whole site itself, as well as, and I was a VP there of Marketplace and eventually added on marketing to that, took over the marketing team and marketed not just for the Marketplace but for their cross-border logistics services that they offered. And then shortly after that, I guess about three years later, I joined SkyPostal as the VP of Sales and Marketing. So sort of continuing that track. While we don't have a marketplace, I do feel that it's very important for sellers to expand into this growing and lucrative region. Speaker 1: Yeah, absolutely. So what are some of the, I guess, hurdles when it comes to that type of expansion? Because I have friends that live, like for example, I have friends in Colombia or even in Ecuador and I hear a lot of, there's difficulty when it comes to those regions in terms of infrastructure and such. So what are some of the things that you guys are seeing as kind of like obstacles that you've overcome? Speaker 2: I think the biggest obstacles is determining as a seller which way you want to get into these markets, right? Like you can join the marketplaces direct. So Amazon Brazil, Amazon Mexico, probably the easiest because you can turn on your North America catalog. Fairly simple. Amazon takes care of all the duties and customs calculations. They take care of the translations. You know, obviously they've got customer support. So like that's probably the easiest. The other would be though, you know, to continue on that path and open it in some of the other top marketplaces. McCarty Libre obviously is the number one marketplace in Latin America, but there's other, Brazil is the number one country in Latin America and continues to grow at strong double digits. You know, so the other ones you'd want to get onto are like, Magalou is one. And then to get into like some of the countries like Colombia, Lineo, you know, those are some of the top marketplaces that I would say, you know, if you're going to go that route, you do need to go into a couple of different marketplaces. It's not just going to be Amazon that's going to get you where you are because MercadoLibre is number one right now. The other way is you can turn on your own website to ship to these countries. Or you can turn on your North American catalog to ship to the countries as well from Amazon. But you can turn on your own website to ship to these countries. And doing that, though, you do need to make sure that you're following some of the regulations that they have with tax setup and stuff like that, which a lot of the marketplaces already have. On your behalf, when you sell through a marketplace versus if you sell direct on your own website. If you go that route, though, I've seen within two or three weeks, if you turn on your meta catalog, because social media is such a big social media ...selling is so massive in Latin America that I've seen a positive return on investment in just three weeks. Really? Yeah, it's really simple. It's crazy. I saw an article I posted on my LinkedIn, it's been a few months ago, but it was like 150 million people in Brazil shop more than three hours per day at any point in the day. Speaker 1: Wow, that's crazy. Speaker 2: More than three hours. That's a long time to be on your phone shopping. Speaker 1: I wonder what the statistic is in the US. Do you have any idea how that compares? Speaker 2: I don't know how that compares, but I got to imagine it's not three hours. I flip through Facebook and Instagram ads for three hours a day. I don't even have three hours to spend on that. So I can't imagine it's that strong. But social media shopping is huge in Latin America. And it's less expensive than it is here too. It's far less expensive as it is here. And then the third way, so you've got, you know, you can go direct on the marketplaces. Obviously you do need to do sponsored ads. It's just like here in the States. If you turn on eBay or Amazon and you don't do any sponsored ads or anything, you're not going to get, your products are never going to get seen so they're never going to be sold. So you do have to work the account. You can go, you know, turn on your own, You can do this catalog through your own website. And like I said, the easiest way that we did it was we turned on the MetaCatalog and we saw crazy sales. And then obviously the other way is there are these platforms like KnockKnock. And KnockKnock is the only one right now, but there's two more coming this year and possibly a third coming out. Definitely 1Q1. A second one either Q1 or Q2 and then a third one I think maybe second half or Q3, Q2, Q3 that sort of do this where you import your items into Knock Knock's platform and they are the seller of record and then they sell your product. The thing with that is they won't get any sales. If they don't sell, they won't make anything off of you. There's no fees like that. The hard thing is though is you're not, you don't have any control over sort of what they're doing, right? Like it's hard to influence them and they're very big. They do $30 million in GMB annually. And at least in 2023, I believe 2024 has been a stronger year than 2023. So they're big. They're kind of a giant, which is why I think some of these other players want to get into sort of this, this sort of opportunistic type of selling to help US sellers expand and possibly, you know, have a smaller, easier person to go to that will make it more meaningful for them. Speaker 1: Nope, there I am. All right. Sorry about that. I think my connection got lost. Awesome. So the last thing I heard was that Knock Knock is doing just a lot of volume, and so they're the ones who make the rules, right? Speaker 2: They are, because they're the seller of records. So you load your products into their platform and they sparse it out to the different marketplaces. But like I said, there's two more coming out, at least two more coming out. One Q1, one Q1 and Q2, and I think a third one will come out by Q3 that will do something similar and gives you alternative ways to expand than just knock-knock. And for me, I feel like it's like It's like having your, you know, I would do all of them like if I could because that would be my recommendation because it's like having your items and multiple items in a store, multiple aisles in a store, right? Like if you're just in one aisle, you might get seen in your mind. If you're in an aisle and an end cap, you have a lot more likelihood to get seen if you're in two or three aisles and an end cap. You definitely should get right just taking up more real estate absolutely so like my Recommendation is to go out as in many ways as you can to sort of get your products out there and seeing and heard Right. Speaker 1: Yeah, I think usually the go-to with expansion is alright America is doing well Let me let me try a Europe right because that's like yeah, you know that but I see that that is changing a lot I think that just There's like a whole continent out there that people are just not paying attention to. And a lot of things have changed over the last 10 years in terms of shopping behaviors and the way that people consume. I think infrastructure has played a large role in that in terms of how efficient logistics has become outside of the US and outside of Asia and outside of Europe. There's still even places in Europe where it doesn't, you know, you can't get your product in two days. I mean, a lot of places probably, but I don't think they're maybe as used to two-day shipping as we are here in the US. But still, online shopping has really entered into that kind of mindset of like, all right, we can get everything delivered from pretty much anywhere we want. And I think that there's probably a lot of demand for Goods from the U.S. in South America and in Central America because they have products that they're used to, but everybody wants a taste of something different, right? And we're like that too. So SkyPostal, how do you guys play a role in all of this? Speaker 2: Yeah, so we are the logistics provider. We do everything from customs clearance to last mile delivery. We have customer service for our shipments in English, Spanish and Portuguese. We ship for big companies like Amazon. We've shipped for Amazon for years, eBay, Timu. Alibaba, a lot of other logistics companies like Ascendia, Landmark Global all use us for their Latin America services. So we've really been focused really on these big players in the past and I really feel like the seller world is missing out on this opportunity. Currently only 5% of US sellers sell in Mexico. I'm like blessed to Brazil. So the opportunity is huge for sellers to get in the door now and get their seller reputation up and establish themselves on these marketplaces early in the game as we sort of get there. So SkyPostal would be like, so for Amazon Brazil specifically, we are a preferred seller. So for Brazil, they have the PRC program. Basically, we're a mess that can form a program, which is a fast track program for custom. So it offers lower duties and taxes for customers or for Logistics providers and marketplaces. You have to have both people using it. So you have to have the platform and the logistics provider certified for this program, of which Amazon Brazil is and we are as well. And that basically less paperwork, cheaper customs duties for customers, and it gets through customs faster, which in Brazil is like probably one of the worst ones to get through. Biggest company, biggest country, most volume, hardest to get through. Speaker 1: Yeah, they want to keep everything domestic probably up until now, but they're seeing the value. I mean, it's bringing so much to the country as well, right? I mean, yeah. Speaker 2: I mean, you know, so I talked to people. We have offices in all of these countries that we ship to and so I've talked to some of our employees in like Brazil specifically and they said, Babies are huge. Everybody keeps saying baby, baby, baby. And I'm like, don't you guys have baby products? It's not like people don't have babies there and you don't have strollers. But they say the level of quality is not the same as it is in the U.S. And I would assume it's the regulations and stuff that we have up here in the U.S. make our quality better. And that's what they want for their babies and children growing up and stuff. Speaker 1: Sorry, I cut out again. Speaker 2: And then the other thing I think that takes a big role in it too for customers is the de minimis. So Columbia, you mentioned, they have a $200 de minimis. So any product that you order that is $200 or less, not including shipping, that ships from the U.S. to Colombia, doesn't pay duties or taxes, yet if you go into the retail store to buy that item, that retailer ordered it in bulk, so they pay duties and they are certainly going to charge that customer taxes. And that could be upwards of 40%. So my old marketing team was from Colombia and one of the guys had no idea. And he was like, oh my God, I tried it. It was like, I saved like 20%. He was like, I'm going to do this more often. He had no idea. So it's really like letting people know, especially getting a name out there and stuff. And I think with new marketplaces coming, Chile opened a new marketplace, Paris. I don't have a name for it, but you know, and then Argentina has changed their de minimis to $400. It used to be like $50, $1,000 maximum a year. Now it's $400 and 3,000 maximum per year import. So it's, you know, I think some of these countries are understanding the need and the desire for U.S. products. And I don't think like Colombia doesn't have a maximum import for customers, you know, buying from the U.S. and shipping in. You know, you just want to stay at the $200 level or below whenever you can. Ecuador's $400, Peru's $200. So, you know, there's a lot of these Latin American countries who make it You know, worthwhile for their people to buy from the U.S. Speaker 1: Some years ago, I have a friend who has a farm in Colombia and he ordered this giant roll of rope from China. And, you know, it was like for this kind of design, you know, like instead of having like a fence or a gate or something like that, he just wanted it to kind of like look nice with this very thick kind of rope. And that turned into a disaster where it got held on customs for a long time. They did all types of laboratory inspections on the rope to make sure that there was nothing in it. And then on top of it, he paid extreme amount of duties, customs, because it came from, maybe because it came from China. I don't know. That really threw him off from doing anything import-wise. He just relies on traveling to places and taking stuff in his carry-on, whatever he can. He got scared from that experience. But I know that for a long time, in the same breath, they were just using forwarding services, buying stuff from Amazon.com and then it gets sent to a location in Florida and then just basically forwarded over the water. So I guess it really just depends on the item and where you're kind of getting it in from. Speaker 2: And how you're getting it in. So like Timu, Sheen, Alibaba, they all ship from Hong Kong or China to the U.S. To get the U.S. de minimis and stuff like that, the tax benefits basically for the customers. And then it gets broken out in Miami and sent to the destination country. We actually have a U.S. bonded warehouse, so nothing has to go through customs when it does that for us, which is nice. Yeah. Speaker 1: Wow, so you guys have all the streamlined avenues right there. Speaker 2: We have all the streamlined avenues. The first time I went into our warehouse was in the afternoon, and I guess the warehouse starts at 3.30 in the morning, and it was like completely empty. They're like, everything goes in and out in a day, like the UPS, FedEx trucks start hitting our, and Amazon trucks start hitting our warehouse. By 4 a.m. So we can catch early planes out that day. And then the idea is we get as much as we can on the planes and the warehouse stays as empty as possible at the end of the day. Speaker 1: Wow. So since you have so much exposure to this world, how, I'm just curious, like I always think about this, how many planes in the sky are actually moving product and not people? Like if you had to kind of put a guess on that. Speaker 2: I would say most of the planes have the cargo space underneath is being allocated and sold to freight forwarders and stuff like that. So we pre-negotiate all of our airline space early on. That way, when it comes to holiday and stuff like that, our product doesn't get bumped. Whereas at my old company, we would get bumped. We just didn't have enough volume to always get allocated space. But basically, I mean, they're buying space on any airlines, you know, in the cargo to add, you know, pallets and stuff on and they come, pick them up, ship them to the airport and they're done. Speaker 1: So you want to say that majority of passenger aircrafts are moving pallets for somebody. Speaker 2: To fill the plane up. Yeah. Speaker 1: Yeah. Wow. Speaker 2: Especially because with the big influx of like Sheen and Timu to Latin America, it's become a challenge even to get enough planes to have enough room to get all these orders in. The amount of volume of Sheen and Timu Orders that are going through there daily is crazy. And probably not so much on the weekend because most of us are closed on the weekend. We're open for Amazon and that's it on Saturday, but we're closed on Sundays and I would say most of the other logistics companies doing this are closed on the weekends. But definitely like a Monday through Friday, those airlines want to fill their planes up, sell their space. Speaker 1: Sorry about that. I don't know what's going on with my internet today. It's very unusual, but I'm sorry. So could you repeat that just the last 30 seconds there? Speaker 2: Yeah. No, I would say, like I was saying, not on the weekends because most of us are closed on the weekends, except for we do allow Amazon shipments to come in. So we do work our Amazon shipments. But besides that, I would say that the majority of planes Monday through Friday, there's a good chance that they have sold and allocated space to move products. Speaker 1: It's amazing to me. Unknown Speaker: Hello. Speaker 1: Okay, we're back. I moved over my network to another one. So hopefully we should stop. Sorry about that. I was just going to say, you know, it's kind of amazing to me because TSA is so strict on everything that you're bringing in. And like, is it just like all that product that's supposed to go on those planes? Speaker 2: So generally, the products that's coming to us, I mean, it's shipped either via Amazon, so it's FBA, if it's coming through Amazon, so they know what the product is. I'm not worried about that. Or it's shipped via USPS, UPS, FedEx, DHL to us. Which means that they haven't, you know, if it's dangerous goods or something like that, it had to been marked clearly before. We also have to have a manifest of what the product is to have it to clear customs when it gets to the destination country. So anything that we're shipping has a full manifest of everything that's supposed to be in that box. And at any point, customs in those countries can stop a package and say, I want to inspect this. And they do regularly. Speaker 1: I see. Speaker 2: Most of the most of the countries. Uh-oh. There we go again. Speaker 1: Oh, today's this, yeah, this connection thing today. Sorry about that. I was saying, there's probably still a large, I imagine, a large volume of planes that are just dedicated for shipping. Because I see them just, you know, UPS or FedEx planes that are just branded. But you're saying that still a majority of the shipping that happens is just like rented or bought space under an aircraft. That's kind of mind-blowing to me. I had no idea about that. I knew that they were doing it sometimes, but I didn't understand that it's like, there's such a large industry in that. Speaker 2: Costa Rica, DHL just got planes to Costa Rica and a port into Costa Rica or a hub into Costa Rica within the last... 12 to 18 months. So prior to that, they were using other people's planes. They were using commercial planes. You know, they were sending stuff on that. So, yeah. And you think if they, you know, if they have a whole plane full, they're not going to send a plane that's not full to a country, right? Like, they're going to want their planes full. If they've got, you know, partial shipments, they're most likely going to see how they can ship them otherwise. Speaker 1: Very cool. And what about the other way around in terms of, you know, instead of like expanding into Latin America, what about people who want to actually produce, like let's say you're a manufacturer in Latin America and you actually want to sell in Europe or in the US. Do you guys work with any of that type of thing? Speaker 2: So we are. So actually Walmart International is starting to do that with Chile and Colombia. I think it's Chile and Colombia. It's Chile and Colombia. Maybe it's Chile and Mexico. It's Chile and somebody else, but they are actually, they've opened it up, the U.S. marketplace, Walmart U.S. marketplace, up to those countries for those sellers to ship into the U.S. and we are one of their preferred logistics partners. Speaker 1: Wow. Speaker 2: Yeah. Speaker 1: Very cool. Yeah, because there's so many great things that I think American consumers and European consumers or just anywhere in the world would love. Like when I go to South America, I mean, I'm in heaven because you have delicious food and you have a lot of culture. Yeah. I think that probably a lot of, especially because there's all this thing, whatever is going on with China and these new tariffs, I think a lot of people are starting to look at potentially manufacturing in other areas. And I think that just from like a quality standpoint, there could be a lot of, like, I know that Mexico has become a huge importer, very competitive with China, which. Speaker 2: Uh-oh. Unknown Speaker: Are you back yet? Are you back yet? Speaker 2: There you are. Speaker 1: Yes, I'm back. My goodness. Okay, what was the last thing you heard? Speaker 2: Mexico is becoming a huge importer, which it is. Speaker 1: Yeah, Mexico is becoming a huge importer. I was shocked to hear that it's actually competitive with China on that type of level, right? Because almost everything comes from China, but Mexico is becoming huge. So I know that what's next in line is people are going to start looking for places to source around Mexico. It doesn't have to be Mexico, but starting with Central America and then, yeah, I mean, Brazil, Colombia. Speaker 2: And I'm working with one of my clients who's going to open up a similar Knock Knock type platform. They're actually based out of Mexico and they want to actually ship from Mexico like to Brazil. So they want to do like McCarty Libre and stuff like that. So they would be able to ship from Mexico to a different point. So we're working with them sort of on that solution as well for them. So that allows, you know, some additional expansion of, you know, even those in the U.S. that are manufacturing in Mexico to different ways to get to South America. Speaker 1: Okay. And every single country has to have that importer of record. So unless you're using one of those platforms like you mentioned, Knock Knock or the other ones that are coming out. So you would have to be the importer of record or work, I mean like SkyPostal can do that, right? Speaker 2: SkyPostal will be the importer record but most of the countries require that you have a tax ID within that country. So you have to set up a tax, like an EIN number that we have here in the States. It's generally not that hard. I mean it's very simple to get an EIN number in the States. For the most part, it's easy in those. It's just tedious. You know, there's, you know, there's probably six or seven countries that I'd recommend going into. Right. So it's a little tedious because there are numerous countries that you have to kind of set that up for. But I mean, it's like the States, it's not that challenging to do. It might, you know, I think some of them are slow to respond. Like Brazil, I know, isn't. It's not very hard to get. It's just, you know. Speaker 1: They take their time. Speaker 2: They're on their own timeline. Not like here in the US, which I feel like we kind of do things a little faster. Speaker 1: Very fast. Yeah, we want things to keep moving. So, bank account wise, you can just use a US bank or you have to have something. Speaker 2: So on any of the marketplaces, they do currency translation, they do language translation, they take care of the duties and taxes for the most part. So it's really simple if you're going through a marketplace to do that. Like I said, I just make sure you're working your sponsored ads and stuff like that. But they take care of the harder stuff. If you're doing it on your own site, You're probably going to have to, you know, work through the currency conversions and stuff like that on your own and work with a bank that does take, you know, sort of whatever local payment is there. Speaker 1: Right. Yeah. Okay. So, I mean, then it's pretty straightforward. Like if you set up the EIN, you work with a company like SkyPostal to be the importer of record, you have your bank account just as you normally would, so you don't have to diversify that at all. And then you're basically good. So, like the way that Europe has VAT, In this case, there's some type of an equivalent, right? Speaker 2: Yes. And we can help with what the taxes and duties and taxes are. So we've got the HS codes that we can supply everybody with. We've got how to calculate duties and taxes for the major countries. So we can assist with any of that if you're going on your own and not going through a marketplace. Speaker 1: Okay, this is all in case of like I want to have a Shopify store that accepts these territories. Okay. And there's an integration that you guys probably like a technological integration that you have like with Shopify. Speaker 2: We are. We're connected to Shopify, ShipStation, EasyShip and then of course we have our direct API integration. Speaker 1: Okay. I mean, that's pretty straightforward. And then with Amazon, since you're a partner directly with them, it's not something that you guys would be kind of working with sellers directly. It would just be like you're opening that option in your account and then... Speaker 2: You do have to set up a SkyPostal account, I think, because we are the importer record. So they do have to set up a SkyPostal account and they would print their labels through our account for their orders. Uh oh, froze. Are you back yet? Speaker 1: I'm back. Speaker 2: There you go. Speaker 1: All right, Christie. I mean, I really enjoyed this conversation. I don't have any more questions for you. Do you have any final comments for our listeners in terms of just kind of getting started? You already mentioned what some of the first steps might be, but just any last comments? Speaker 2: They can always reach out to me for any questions. I'm happy to hop on one-on-one meetings with everybody. Just so everybody knows, this year, Latin America is predicted to do about $195 billion, so probably got close to that. Right? And the e-commerce market by 2028. So just in three years, there's going to be $270 billion e-commerce market. So this is what I'm saying. Amazon, Brazil and Mexico are their number three and four. It's US, Canada, Brazil and Mexico. So it really is a huge potential out there and only 5% of US sellers are selling into Latin America. So the potential is huge to get in early and really sort of gain your share now. Speaker 1: Amazing. Awesome. Thank you, Christie, for your time. Thank you for the nuggets of wisdom here, good nuggets of gold. Once again, apologies for the connection today. And thanks for our listeners. Catch you on the next one. Speaker 2: Thank you, everybody. Have a great day. Bye.