The south German manufacturer Venta also sells its products via Amazon’s U.S. marketplace – Levent Iscan, Senior E-Commerce Manager North America responsible for the U.S. business, notes some peculiarities in comparison to Germany.
Amazon is one of several partners that are important to our US success!
Levent Iscan is responsible for ensuring that the south german manufacturer continuously expands its US business. In addition to classic retail channels such as Lowe’s, Home Depot or Bed Bath & Beyond, the US marketplace Amazon is also an important sales channel for Venta.
We spoke with Levent about the opportunities and challenges of internationalization via Amazon.
Table of contents
- How long have you been present on Amazon’s US marketplace?
- Why do you use both the Vendor and Seller programs?
- Is Amazon your only vehicle for internationalization or have you been active in the US through other channels before?
- What do you need to consider when launching on Amazon USA?
- How do you determine which products are suitable for the US?
- What about issues like pricing, taxes, liability?
- Where do you get all the information?
- Where are the biggest similarities and where are the biggest differences between the Europe domains and the US marketplace?
- Are there also differences in marketing tone?
- How important is the feedback on the platforms, for example in the form of ratings?
- Are the reviews in the U.S. used more intensively and subsequently evaluated more intensively by you?
- Let’s take a look at the logistics. Where are the differences between the U.S. and Europe?
- Can Amazon USA be managed from Europe or is that only possible locally?
- Do you have a different focus on operational issues in the U.S. than in Europe?
- Why do you rely on a local service provider for warehousing?
- How do you rate Amazon service providers in the US in general?
- Do you also use Amazon USA as a bridgehead for neighboring regions such as Mexico or Brazil?
- Do you approach such a country rollout via Amazon USA successively or do you do it in one go, so to speak?
- Which marketplaces in the USA are interesting for you apart from Amazon?
- Do you have the other marketplaces in the same team or do you have separate teams for them?
- You also sell through your own brand store in the USA. How important is D2C now and in the future?
- Do you offer other channels than phone in support? Chat or questions, for example?
- Do you plan to focus more on D2C in the future?
- How is the US business with Amazon developing for Venta?
- What would you do differently if you could start over?
- What is your focus for the next 12 months?
Levent, how long have you been present on Amazon’s US marketplace? And why did you decide to do so?
Levent Iscan: Amazon is the No. 1 e-commerce platform in the world – and in the U.S., of course. That’s why we very quickly decided to play on Amazon. Both as a vendor and via the seller platform.
All in all, we’ve been on Amazon for eight years now, and of course we’ve already learned a lot about how to sell on it, how to prepare the content properly, and so on.
Why do you use both the vendor and seller programs? Did this strategy grow over time or was it a conscious decision?
L.I.: I think it came about gradually. Before I came into the company, Amazon was mainly played through the vendor program. And there are pros and cons to that. The contact with Amazon is very good, you are better looked after in many respects and the deliveries work very quickly. But there are also advantages in the seller program, for example, in terms of pricing, strategy, or driving smaller deals. In order to be able to act faster and manage our products better, the seller option is definitely the better choice for us. However, we don’t actively list all of our products via this option. The reason for this is as follows: As a vendor, you can adapt the content much better. This causes problems in the seller program again and again; you have to open cases more often and be actively behind to be able to improve the content.
Is Amazon your only vehicle for internationalization or have you been active in the U.S. through other channels before?
L.I.: No, we have used other channels before, mainly through our own web store, but also through distributors and channels like Lowe’s or Bed Bath & Beyond. Before I came into the company, it was widely distributed through distribution. But we have since channeled the whole thing. We have separated ourselves from the small retail partners and are focusing the business on the big players, which of course includes Amazon. Accordingly, Amazon is one of several partners that are important for our international success.
What do you have to consider when you start on Amazon USA?
L.I.: There are a lot of points here. In the USA, for example, Amazon is even more of a marketplace than in Germany. Accordingly, there are very many participants who act as marketplace retailers. So, if you fire up distribution and distribute a product across the entire country, 10 to 15 different marketplace retailers quickly get involved, which ultimately leads to cannibalization and you can no longer manage the business as sensibly as you originally wanted. Also, since we ship our products from Germany to the U.S., we have to keep a close eye on all the costs. So what are the logistics costs for shipping to the U.S.? What are the storage costs at Amazon? And then, of course, you have to look at what the competition is doing on Amazon and develop your own strategy. There are also certain content requirements that we have to meet.
What about the product range? How do you determine which products are suitable for the USA?
L.I.: In the USA, companies that sell products from the air treatment sector must comply with various certificates. For example, if you don’t have the California Air Resources Board (CARB) certificate, you can sell anywhere in the U.S., but not in California. But of course it hurts the brand if you state on Amazon or in the web store that you cannot deliver to California. For this reason, our range in the USA is not always congruent with Germany, as the additional certifications can take weeks to months. But basically, the goal is to have the same portfolio listed in the U.S. – and not just on Amazon, but with all retail partners.
What about issues like pricing, taxes, liability? Is Amazon in the USA a completely different world?
L.I.: We present tax-free prices because taxes are interpreted differently in each state. Nevertheless, we have to calculate our sales prices in such a way that they fit everyone and all fees and other conditions are included.
Compared to Germany, however, there is a big difference when it comes to pricing. Whereas in Germany it is an absolute gray area under antitrust law to set a minimum price for partners at which they must offer, in the USA it is actually the law. We have to set a minimum advertised price (MAP) for our trading partners and can penalize them if they undercut it. But this also gives us rules to which we must adhere. This puts a stop to unfair pricing games. Tax and liability issues, on the other hand, are manageable. Of course, U.S. customers are more eager to hurt you when it comes to liability issues – everyone knows the famous million dollar damages for a spilled coffee that was too hot. So we’re aware of the challenges we’re getting into, and we factor that into the strategy.
Where do you get all this information? Do you have help there?
L.I.: We have a very competent team overseas that has a handle on the issues and is working with me to drive the business forward. My local colleagues, of course, also have the answers to all the important US market-related questions.
So where are the biggest similarities and where are the biggest differences between the Europe domains and the US marketplace?
L.I.: I would say that the advertising platforms and marketplaces are 70 to 80 percent identical. Of course, there are a few features here and there that have already been activated in the U.S. but not yet in the EU. But that is quite normal. For seller accounts, there is something called “Seller Account Service” (SAS) in the US. This is basically a direct contact person who takes care of all your issues and supports you, just like with the vendor (AVS). We don’t use it at the moment because we don’t need it. But in principle, it is of course reassuring to know that there would be someone on Amazon’s side to support you.
The competitive situation is also different from that in Europe. Some of our biggest competitors in Germany, for example, have almost no presence at all in the U.S., but other manufacturers play a bigger role that are not to be found at all in Germany. In addition, the entire category is in a different price range. While our cheapest product can be purchased at 199 dollars, the prices in the US are rather between 10 and 50 dollars. And then the category in Germany is also much more educated than in the USA. There is still considerable potential for education in the U.S. on the subject of air treatment, i.e. humidification and cleaning, etc. So we have to approach the market in the U.S. quite differently than in other countries.
Are there also differences in marketing tone? Are the Americans louder or more striking?
L.I.: The Manufacturer’s suggested retail price (MSRP), i.e. the equivalent of our recommended retail price, is extremely important in the USA. There must always be a difference between the MSRP and the street price so that the American consumer feels he is really saving. This case is not as pronounced in Europe. In addition, you also have to pick up customers differently in the USA. We have a product that needs a lot of explanation. Many customers plug it in and then expect mist to come out, for example. However, our humidifiers use the most hygienic and effective method of humidification: cold evaporation – and this method does not. Moreover, it can take up to 10 days for the indoor climate to change. For example, carpets and furniture are also happy about the extra humidity and absorb it first. You have to explain that to customers, because otherwise they think the unit is defective and return it. For example, we put an insert in the box that explains this process.
How important is feedback on the platforms in this context, for example in the form of ratings?
L.I.: This is almost more important in the USA than in Europe. The idea for the insert, for example, came from the reviews. We had a customer who described how he filled water into the device, it was empty the next day, but it still didn’t work. We have to take these customers by the hand. Based on the reviews, we were able to redefine our approach to customers. By the way, we manage reviews & questions very successfully with the software from gominga.
Are the reviews used more intensively in the U.S. and are they subsequently evaluated more intensively by you?
L.I.: I would not say that reviews are used more. Questions and response rates have almost the same frequency. But it is extremely important that we as Venta respond very quickly there – much faster than here in Germany.
Let’s take a look at logistics. Where are the differences between the USA and Europe?
L.I.: There’s a whole range of issues there. If we leave aside FBA and look in the direction of fulfillment by merchant (FBM), then shipping from our warehouse via a logistics partner directly to the end customer is extremely expensive. In the EU, we can send a package our size from Germany to Hungary or the Czech Republic for 50 euros. In the U.S., you quickly pay $70 to send a package within the country, say from Illionois to California. For FBA, on the other hand, the fees are similar. What caused us problems there was that in the past it took us up to two months to deliver goods to the various Amazon warehouses via our logistics partner. We’ve now reduced that to two weeks because we now know which partners we need to contact directly, who can handle the shipment for us directly, and who can book the delivery dates better and faster. These are really immense improvements. We often had out-of-stock situations and didn’t know what the problem was. Little by little, we’ve been able to figure out that it can work within a week or two.
Is it possible to manage Amazon USA from Europe or is it only possible locally?
L.I.: You can already see from my example that it is possible. All high-level tasks such as pricing, product listings, deal management, etc. can be controlled from Europe. However, day-to-day business – customer service, fulfillment, shipment – is only possible to a limited extent from Europe. You need a team on site. Of course, there are companies that deliver FBA directly from Europe or China. You can do that, but then you really only use the Amazon channel. With our logistics partners, we target all retail partners in the U.S. and not just Amazon. The same applies to customer service. You can’t compare it with customer service in Germany. The U.S. customer is much more impatient and if help is not provided immediately, it can escalate quickly, for example on social media. There is no real room for maneuver.
Do you have a different focus on operational issues in the US than in Europe? Do you use different tools? Or do the best practices apply to all Amazon platforms and countries?
L.I.: The main ingredients are always the same. The seasonings differ. In the U.S., for example, we are extremely content-driven. We make sure that all content is presented in a very understandable way or run other types of dynamic ads on the platforms. Such small nuances can make a big difference. We work on optimizing the business more and more. It’s learning and improving every day.
Why do you use an on-site service provider for warehousing and not do it yourself?
L.I.: With some trade partners we sell via dropshipment. The order is generated in the trading partner’s store, but shipped via us. This means the other way round: We cannot send a package directly from Germany to the end customer. We need either third-party logistics or our own warehouse. In order to operate our own warehouse, however, we would need more employees and an interlocking system to be able to organize the entire distribution to our partners, Amazon, dropshipment customers and also our own web shop customers.
How do you generally rate Amazon service providers in the U.S.?
L.I.: They are definitely more active than in Germany. As soon as sales increase, they approach you directly and want to sell something. With the “Seller Account Service” that I mentioned earlier, Amazon also approached us and actively offered us this service. But if you take a closer look, it’s just a step towards the vendor program. However, you have to accept the front margin structure in the U.S. here – it’s much higher than in Europe. The more successful you become, the more Amazon tries to win you over for the vendor account and impose the margin structure. It often makes much more sense to use the seller account.
Do you also use Amazon USA as a bridgehead for neighboring regions such as Mexico or Brazil?
L.I.: In principle, we would of course be able to supply Mexico and Brazil with our products. But such countries have a much higher humidity as well as an unfavorable water hardness. Our product category is therefore only suitable for these countries to a limited extent. Canada is more exciting for us.
Do you approach such a country rollout via Amazon USA successively or do you do it in one go?
L.I.: In fact, Canada has a different set of requirements. We already have English and French content for other platforms, and our packaging is printed in English, French, German and Spanish, but the problem with Canada is that it’s a big country with a population of only 43 to 45 million. The bottom line is that there are more bears than people. That’s why it’s hard to go full throttle there. We are building up the business more on the side with an adapted strategy. On the other hand, Canadian customers are much friendlier and more understanding than in the USA. It’s a much more pleasant endeavor.
Which marketplaces in the U.S. are you interested in besides Amazon?
L.I.: Only Walmart is of interest to us as a real marketplace. With the others, such as Best Buy, Bed Bath & Beyond, or Lowe’s, we are on the road as vendor customers. Walmart is really the only one that we use as a marketplace. We are not present in Walmart’s stores because, as a premium product, we simply don’t fit into their store concept. Otherwise, the other marketplaces have been out of the question for us so far.
Did you hang the other marketplaces on the same team or are there separate teams for them?
L.I.: Here, too, I have a responsibility. I actually contact all customers together with a colleague from Marketing, but I also have a direct exchange with Finance and Logistics. Since the U.S. is such a huge country, you can’t manage everything on your own.
You also sell through your own brand store in the USA. How important is D2C now and in the future?
L.I.: Very important. Our customers are very happy to do business with us. In Germany, many customers actually still order over the phone. But customers in the U.S. also like to be advised. Our customer service – especially in the U.S., but also in Germany – is simply very well positioned. Our colleagues help, advise and sell a product in the same breath. But not for the sake of selling, but to give the customer even better results.
We have several webshops worldwide, e.g. in Germany, Switzerland, the Netherlands and the USA, and more are planned. Even in the USA, the web store is an important sales channel for us. Our marketing colleague is doing a terrific job.
The U.S., however, is the pioneer as far as our webshops are concerned, because customers are more willing to go to the manufacturer’s websites and find out more about the product. At the end of the day, the main purpose of the web store is to explain the products to the customer rather than just to sell them. However, it is really exciting to observe that a large number of customers also buy directly from the store.
Do you offer support channels other than the phone? Chat or questions for example?
L.I.: At the moment, there is only the telephone service or a contact form. However, telephone is used vehemently. Our colleagues have a lot of work to do. Of course, we also receive many inquiries via the social media channels, which my colleague in marketing looks after.
Do you want to focus more on D2C in the future?
L.I.: Much can be covered by CRM systems. We send individual mailings to pre-segmented customer groups, so we can cover the customers’ interests with suitable product recommendations and relevant information. E-mail marketing always sounds a bit old-fashioned, but we have an excellent opening rate of over 35%. By the way, in the USA, unlike in Germany and Europe, it is completely forbidden to contact the customer directly. You’re not allowed to collect customer data and make tailored offers to customers in the U.S., so we work with the segments I mentioned earlier here. In Germany, on the other hand, you can create customer data in the CRM, as well as the customer’s product history, and use it to target them. This will also be an issue in the future when it comes to D2C.
All in all – how is the US business with Amazon developing for Venta?
L.I.: At the moment, it’s really developing very well. In the past, we didn’t treat Amazon stepmotherly, but there wasn’t much focus on it. Today, we prepare the products and the associated content sensibly and pay particular attention to availability. Even if everything is going very well, as it is at the moment, there is still a lot of potential left unused. We are currently in the process of exploiting this further.
With the knowledge you have today – what would you do differently if you could start again?
L.I.: I wouldn’t do much differently – just faster and with a slightly different focus. Instead of focusing only on Amazon and content, I would also focus on logistics right from the start. Logistics is and remains the key to success in the USA. The country is huge. With just one warehouse, delivery time can quickly add up to 10 business days. If you need 10 days and a competitor only needs two, then it should be clear who the customer will choose.
And what is your focus for the coming 12 months?
L.I.: Logistics remains a major issue. We will expand our product range in the USA and increasingly sell air purifiers, in addition to our humidifiers. In addition, we have to make sure that we optimize the channeling of products. The focus should not only be on Amazon, but on all marketplaces. We want to target and develop all important and large customers more specifically in order to ensure more growth there. There are many customers who do not buy from Amazon on principle. If we don’t reach these customers, we not only have a problem in terms of brand awareness, but also in terms of sales. That’s why it’s important to be represented by other partners as well.