Anyone who has worked in e-commerce knows one of its biggest advantages over bricks-and-mortar stores is reach. Customers can shop online day and night from anywhere in the world.
And while it’s certainly not as easy as just launching a website and announcing (into the vast void of the internet) that you’re open for business, many online retailers receive at least some international orders without much effort.
But what about when you want to expand overseas in a big way?
Sure, you can localise your website with the right payment and fulfilment options and target your ads to international customers on social media, but if you’re really serious about growth, you will need a local team to manage operations on the ground and external investment.
These decisions bring with them a host of other questions: where do you locate your office, how do you find the right people to hire, do you need a visa?
Phoebe Yu, founder and CEO of sustainable bedding brand Ettitude, has figured all of this out the hard way.
She expanded to the US through an accelerator program in 2017, and is now based in Los Angeles full-time. She also has a small team in Australia, where she founded the brand in 2014.
At the Online Retailer conference last week, she shared 10 practical tips for expanding to the US, from figuring out sales tax to networking like an American. Here are the key takeaways.
1. Build up a US customer base
Yu suggests building up your customer base from Australia before you invest in physical expansion. While Aussie and American consumers have a lot in common, some products might not actually be suited to the US. It’s better to find out before you make the leap.
2. Choose the right location
The US is a big country, so how do you choose your home base? Yu suggests narrowing it down to the top cities and states where most of your customers are located. For her, Los Angeles was doubly attractive because there is a direct flight to Australia and a three-to-four-hour window each day when Ettitude employees in the US and Australia are both online.
Sales tax in the US varies by state, and online retailers need to collect sales tax based on their location. Thanks to a recent court ruling, they may also need to collect sales tax based on the location of the customer (once they cross a certain threshold in revenue). Yu suggests using one of the many solutions on the market that calculate sales tax for you, such as Avalara and Taxjar.
3. Hire local talent
Yu is a big proponent of hiring local talent, since they have a better understanding of the market and may have connections that come in handy for seeking out investment or collaborations. For growth-oriented brands, she recommends the website Angel List, which is geared towards startups and people looking to work at startups.
4. Consider participating in a startup accelerator
An accelerator program can be an effective way to grow your brand in the US. “The investment was not as important as the training and network they provided,” Yu said about the accelerator program she participated in.
Yu recommends choosing a startup accelerator over an incubator because it is faster-paced, which is an important factor for Australian business owners who may not be able to stay in the US for the amount of time an incubator would require.
5. Select the right entity structure
Growing your US business starts to get tricky once you establish an office in the country and raise capital from investors. It may be necessary to make your US company the parent company of your Australian business.
There are various ways to do this, but Yu recommends consulting a certified public accountant in the US and Australia to choose the best and most cost-effective option for your business.
6. Hire a tax expert
In addition to popular accounting systems like QuickBooks and Xero, Yu believes “a good CPA is worth every penny”.
“The US tax system is very complex and you don’t want to spend time sorting out all the tax issues,” she said. Yu also recommends closing your books on a monthly basis, so you always know how your business is doing.
7. Start the visa process early
Yu initially went to the US on a tourist visa, which allowed her to stay in the country for up to three months at a time. But when she was looking to move there full-time, she applied for an E2 visa, which is available for owners of US businesses and allows them to bring family members to the US.
Australian employees will need to apply for an E3 visa to go to the US. Owners that no longer hold a majority stake in the business will need to apply for an EB1A or an O1 visa.
8. Follow up on your pitches
Fundraising is a “numbers game”, according to Yu. She says roughly one in 80 investors you speak to will write you a cheque, so it’s important not to get discouraged. “The more investors you talk to, the better you’ll get at your pitch,” she noted.
An accelerator can help introduce you to potential investors – Yu says she spoke to 400 people over a four-month period – but it may be a good idea to wait to approach your “dream investor” until you have perfected your pitch and can demonstrate some traction.
Even if someone isn’t interested in investing in your business, don’t take silence as an answer. “Follow up at least three times until you get a yes or no,” Yu said. You could gain important information to improve your business, or your pitch.
9. Expand your team
When you’re ready to expand your team in the US, it’s important to think of perks you can offer employees, since you may not be able to offer competitive salaries, Yu says.
“By law Australia has 20 paid vacation days and 10 paid public holidays; the US has no regulated paid vacation days, so we are matching that 30 days paid leave [for our US employees], and they love it,” she said.
Yu also recommends using a professional employer organisation or PEO, for payroll, health insurance, bookkeeping and other operational solutions in the US. They have group buying power, so can negotiate better rates than you are likely to be able to get on your own, and can also save you time.
10. Network like an American
Americans have a different culture to Australians, according to Yu. “People often brag about their achievements, so if you just say the truth [of how you’re doing] you’ll be underselling yourself,” she said.
“Grab any opportunity to promote your company, your products and yourself.”
She also suggests connecting with other Australian businesses operating in the US for support and collaborations.