What about a European Warehouse ?

[GarlicDeliverySystem]

23 hours ago, Dutch_Master said:

There's a very high probability that if LMG opens a warehouse in the Netherlands or Germany the volume of orders from Continental Europe will increase significantly. Sure, you will have increased costs for storing and handling product but especially the Dutch tax-climate is very investor-friendly while Germany is very small-business oriented.

I don't know if it is only the costs of running the warehouse, storing and handling.

A lot of the extra costs are import fees and taxes as far as I understand, so I would think that these would be due (at least partially) for a EU warehouse as well. So those costs would just show up somewhere else on the accounting.

 

Similarly, I would think additional costs would come from having stock in two very different places. "Load balancing" (not sure what the correct term would be in this context) between demand of items in EU vs NA/rest o the world would be an issue, since you can't easily ship between the two warehouses. So you might run out of stuff regionally e.g. in NA, while sitting on a pile in the EU. 

Predicting demand would get a lot more complex all of a sudden.

[LogicalDrm]

On 9/2/2023 at 2:19 PM, PDifolco said:

Selling stuff like screwdrivers or backpacks in Europe is pretty easy

From experience as small business owner? Or just because so many smaller vendors have their stuff on sale through EU warehouse?

 

The way LMG could do this with minimal impact would be to sell to a partner in Europe. Like some bigger or well-connected retailer in IT/Gaming/Fan Merch area. For example Alternate or Komplett. And this was something they were researching before Brexit. The partner would have been Overclockers UK, but there were issues that I can't remember. As the reason smaller producers stuff gets on to remote areas from their manufacturing location is to seller to purchase in bulk and sell from their own warehouse. This has some problems. Like handling warranty since local shop can only hold smaller spare collection and warranty would be done by shipping item back to original producer and back. So fine for shirts, water bottles etc., but not really for backpacks, screwdrivers etc.

 

Having warehouse is whole another set of issues. Last time this was discussed in WAN Linus brought up the note about having large variety of SKUs. So all different color, design and size variations they are able to have and are able to switch pretty freely when mistake happens. Having such large variety in two places rather than one brings in more issues handling stock. Like something is not available in EU store, but is in BC store. Customer would demand getting the item from BC without extra cost and would be butthurt when they would need to pay for extra shipping costs (as the shipping is only thing LMG can't really shave off from prices).

[Dutch_Master]

6 hours ago, GarlicDeliverySystem said:

So those costs would just show up somewhere else on the accounting

Absolutely! However, once goods are inside the EU they are exempt from further duties and taxes as the original country of entry has levied these already. So, import goods via a 'cheap' duty country and you can ship it internally (that is, within the EU) w/o any hassle. Unfortunately, smart EU bureaucrats have thought of this as well and taxes and duty are more or less equal throughout the EU zone.

 

1 minute ago, LogicalDrm said:

The way LMG could do this with minimal impact would be to sell to a partner in Europe.

Which is exactly how I planned to approach this: as independent official reseller for merch from N-A youtubers. Not just LMG/Creator Warehouse, but also others, not even tech-related. I buy from LMG/CW, pay their price (perhaps with some bulk discount), ship it in a 40' container to a warehouse in NL/D, pay Customs whatever they deem it worth, store it in a warehouse and sell it to EU customers with the official LMG blessings. If LMG gives me their hassle-free warranty in writing, I'll happily be equally hassle-free in warranties to my customers.

 

Where is my main profit margin? In bulk shipping. Say you order a single item worth 20$ which is exactly 1 volume unit in size. It costs you another 20$ to get it across the Big Splash, duty/taxes are 20% on both (yes, Europeans pay tax to their Gov't for postal services instigated and paid for in the US!) so that's 20% of 40$ is 8$. So your 20$ item is now 48$ delivered to your door. Not including currency conversion costs.

 

At the height of the economic boom, shipping a 40' container across the Atlantic would cost you 20k$. Say, that's rather optimistic and the real costs are somewhere around 30k$. Assume a 40' container has 15k volume units. This means each volume unit costs 2$. Remember the 20$ item you bought? Now your tax/duty is 20% of 22$=4.40$ Which in turn means your 20$ item is now 26.40$ instead of 48! I need some profit margin too, so I sell it to you for 35$, instead of well over 60 had I bought that item specifically for you. You still have a discount over the "normal" price of the item and if I sell enough of these, Creator Warehouse might consider giving me a discount for bulk purchase, so I can either make more profit or lower my price to attract even more customers. Or both

 

As alluded to earlier, lack of funds prevents me from actually starting the business. But unfortunately, LMG didn't encourage me either: I wrote an email via the contact form on the website relating to a business opportunity for my current employer, but we never had an answer. This was about 2-3 months ago, so well before the recent upheaval and company-refocussing hiatus. Frankly, I'm not expecting an answer anymore and that made me wary to go see a bank for raising capital.

 

If you start a EU-based warehouse/business based on the above business model, you owe me 10% of your annual revenue turnover

[mMontana]

1 minute ago, Dutch_Master said:

Absolutely! However, once goods are inside the EU they are exempt from further duties and taxes as the original country of entry has levied these already

Actually... that's not true.

Inside monetary union (Euro Area) any company must cash-in VAT of the nation buyer, then... use that correctly for VAT taxation.

[Dutch_Master]

Yeah, I noticed that happens when I order from a German shop to ship to NL. But it contradicts the free movement of goods within the EU as stipulated in the Schengen Agreement. If I physically go to the shop in Germany (they have an actual store front) and buy there, I pay German tax. When I order online for shipping to NL, I pay Dutch tax. But after my purchase in Germany, I can bring the item I bought there w/o any issue across the border into NL. Odd, isn't it?

[Middcore]

Hilarious to see people with zero experience or specific knowledge going "just open a warehouse in Europe 4head, other companies do it how hard can it be lmao"

[LinusTech]

The last thing we need is another huge expansion project right now. 

[nbrowser]

39 minutes ago, LinusTech said:

The last thing we need is another huge expansion project right now. 

Yeah...you've got bigger things to work on right now...and that's more important at the moment.

[Hooch180]

I think that LMG underestimates possible sales in the EU. I know a lot of people who stopped the order process as soon as shipping cost got added to their items. Also, shipping time is just to long. I myself wanted to buy something from the store as a gift. I stomached the shipping cost but I didn't finish order as 14-21 days was to long.

LMG should start tracking the number of orders on their website that people don't complete after applying their EU address and seeing shipping costs.

LTT Store prices are really high but I still would buy some stuff from time to time if I didn't have triple the cost after taxes/shipping and waiting 20 days for shipping.

[Hooch180]

On 9/2/2023 at 2:48 PM, manikyath said:

it's a HUGE legal team issue, because they're now operating vastly different regions with different rules, different taxation, import/export laws, a HUGE timezone difference that is actually problematic for management meetings, and that's before the process of managing stock at two completely separate locations comes into play.

 

it could be easily stated that what money you pay in shipping now, will be less than the cost of the overhead of an overseas warehouse.

Or they could find a reseller. Sell their goods in bulk with some discount and that is all done. Let reseller deal with all the stuff.

[mMontana]

Sharing the profits?

Not current culture for LMG...

[Dutch_Master]

7 hours ago, Hooch180 said:

Or they could find a reseller. Sell their goods in bulk with some discount and that is all done. Let reseller deal with all the stuff.

Missed this one, I suppose?

 

Just FYI

[voyager_]

9 hours ago, Hooch180 said:

Or they could find a reseller. Sell their goods in bulk with some discount and that is all done. Let reseller deal with all the stuff.

The problem with a reseller is trying to not only to coordinate sales placed though the LTT store but also trying to guarantee the level of customer service and quality LTT  is aiming for. LTT has no way to be sure that if they choose a reseller to use that that seller would ship the correct orders, how quickly, and how would they handle issues. Any problems would fall back on LTT even though they are not the reseller. 

[Birblover12]

I think an issue I foresee (among the many other issues in this thread) is the mandated warranty for many Eruopean Countries, as I know LMG/LTT has not been too keen on having warranties on products (save some of their most expensive ones). This would mean that they would have to stick to it (not that I think they couldn't) so if for whatever reason there were issues or they suddenly didn't want to keep selling there, they couldn't just "back out" (at least, not immediately in a sense), they'd be forced to abide by the laws whether they like it or not, something I have a feeling they'd rather just avoid altogether if possible.

[LinusTech]

6 hours ago, Birblover12 said:

I think an issue I foresee (among the many other issues in this thread) is the mandated warranty for many Eruopean Countries, as I know LMG/LTT has not been too keen on having warranties on products (save some of their most expensive ones). This would mean that they would have to stick to it (not that I think they couldn't) so if for whatever reason there were issues or they suddenly didn't want to keep selling there, they couldn't just "back out" (at least, not immediately in a sense), they'd be forced to abide by the laws whether they like it or not, something I have a feeling they'd rather just avoid altogether if possible.

No, it has nothing to do with that. We have exemplary customer warranty handling policies and always have. 

 

It has to do with it being a huge pain in the ass from a logistics/tax/management standpoint to have a location and a bunch of inventory overseas. 

[Dutch_Master]

8 minutes ago, LinusTech said:

It has to do with it being a huge pain in the ass from a logistics/tax/management standpoint to have a location and a bunch of inventory overseas.

Which is where an official LMG-endorsed reseller comes in. That overseas inventory is no longer yours, it's his. An EU customer doesn't buy from LTTStore.com, the reseller already did that. That EU customer buys from the resellers website, whatever that name is gonna be. It also means LMG has no longer any legal obligation to said EU customer, that responsibility falls to the reseller. Any warranty issues the EU customer encounters are handled by the reseller, which in turn takes the issue to the Langley team. Not that certain EU customers will understand that differentiation

 

But you're right, it is a major PITA, whomever starts that EU warehouse

[LogicalDrm]

On 9/5/2023 at 11:06 AM, Hooch180 said:

I think that LMG underestimates possible sales in the EU. I know a lot of people who stopped the order process as soon as shipping cost got added to their items. Also, shipping time is just to long. I myself wanted to buy something from the store as a gift. I stomached the shipping cost but I didn't finish order as 14-21 days was to long.

LMG should start tracking the number of orders on their website that people don't complete after applying their EU address and seeing shipping costs.

LTT Store prices are really high but I still would buy some stuff from time to time if I didn't have triple the cost after taxes/shipping and waiting 20 days for shipping.

Shipping costs would be even higher if the speed was increased. At the moment, they use the cheapest possible shipping method. If you want something fast, the price would double. Same applies with having warehouse in Europe. Shipping prices would be bit cheaper, and times faster. But cost for the actual item would have added logistics costs in the price to compensate. 

 

Plus in general, prices aren't cheaper in EU vs US pricing (which is what LTTStore uses).

[Cooldoe]

On 9/2/2023 at 5:28 PM, VascoM said:

Hi. Been talking with my son, my nephews and a few nerd friends about some of ltt mercy, being it backpack , screwsdrivers and water bottles, among other things…the issue we have in the EU is the cost …the price plus shipping plus importing and custom costs and fees can double or triple the cost of any LTT …so I question LMG… do you plan having a European ( EU) warehouse as many companies do ? Is the European market of 448 million people interesting enough today for you in terms of to date sales ?

Err China and India called and they have much more than that in their country alone

South East Asia ASEAn countries represent 679 million people

Why should they choose Europa over those countries based on your logic?

 

448 million people does not mean 448 million buyer. That is just delutional.

You need to calculate the number of actual LTT viewer that wanted to buy LTT products in Europe.

 

It is a bitnif chicken and egg issue. You will not get a warehouse in Europe without significant order from Europe. At the same time you cannot get significant number in Europe without cheaper shipping coming from warehouse in Europe.

With the additional complexity of tax issue, I can see why they choose to skip it.

[Cooldoe]

@LinusTech As someome who work in 3PL company. My suggestion is to talk to your 3PL about consolidated shipping.

Meaning that you can open a weekly or monthly special shipping to specific area to safe on shipping cost.

Even if you ship it by air the cost of shipping 100kg and 1,000kg the price per Kg different is quite significant. Air cargo do allow consolidation.

Clearance can be done individually (depend on the destinatiom country customs)

 

With this you can offer special rate shipping to Europe for customer that can accept that the cargo will leave on 25th Sept for example.

 

Another solution is to set up an overseas warehouse in country that offer Free Trade Zone Warehouse. I do not know if Europe have any countries that have this kind of warehouse though but I know a lot of them in Asia with Singapore as most known one.

 

China usually the most obvious location though as a lot of goods is coming from China. You can use it as inbound/outbound warehouse as well.

So you can order 10,000 pcs/sku then the warehouse can split 6,000 for US, 2,000 for Canada and 2,000 for Europe for example.

The 2,000 for Europe can then be combined with 1,000 pcs that you send from canada to Asia to be shipped as consolidation to Europe.

 

I know a known shoes brand had a FTZ warehouse in Singapore before

[Lord Szechenyi]

On 9/2/2023 at 12:28 PM, VascoM said:

Is the European market of 448 million people interesting enough today for you in terms of to date sales ?

???

https://en.wikipedia.org/wiki/Demographics_of_Europe#Population_by_country

751 million people

[Cooldoe]

2 hours ago, Lord Szechenyi said:

???

https://en.wikipedia.org/wiki/Demographics_of_Europe#Population_by_country

751 million people

He is referring to EU nations population only

[Outta_Hwrw]

LMG are over-estimating the complexity of European distribution.

There's already a system in place for this all over the world.. AMAZON.

For sellers who choose FBA (fulfilled by Amazon), the only requirement is for the (Chinese, presumably) manufacturer to ship stock DIRECTLY to an Amazon warehouse, and they look after all the shipping, eCommerce listings, invoicing etc. Sure, Amazon charge some small fees, but it's very reasonable on a high volume sales item.

For international sales, the seller never needs to touch the products at any stage of the process, from manufacturing, on-forwarding or shipping to customers.

[LinusTech]

1 hour ago, JaySonic said:

LMG are over-estimating the complexity of European distribution.

There's already a system in place for this all over the world.. AMAZON.

For sellers who choose FBA (fulfilled by Amazon), the only requirement is for the (Chinese, presumably) manufacturer to ship stock DIRECTLY to an Amazon warehouse, and they look after all the shipping, eCommerce listings, invoicing etc. Sure, Amazon charge some small fees, but it's very reasonable on a high volume sales item.

For international sales, the seller never needs to touch the products at any stage of the process, from manufacturing, on-forwarding or shipping to customers.

You are under-estimating the complexity of our business. How many SKUs do you think we have? (hint: it's well over a thousand)

That times however many regional warehouses will need to be taken care of on at the least a bi-weekly basis. If we over-do it we could easily create a lot of overhead and cost for us.

Also, FBA is NOT cheap, especially if you leave slow-moving stock in their warehouses and you have to pay for storage.

 

The plain and simple truth is it's not just a simple thing and we have a lot on our plate right now.

[Outta_Hwrw]

4 hours ago, LinusTech said:

You are under-estimating the complexity of our business. How many SKUs do you think we have? (hint: it's well over a thousand)

 

My bad, when I commented, I was thinking only of the screwdriver (since Im looking at screwdrivers today). I barely give a though to the 999 pieces of crap you sell, only the screwdriver. An undoubtedly awesome product that likely still attracts enough global interest for those who have been reluctant to buy due to no local region shipping options.

Launching a seven million dollar product (in gross sales of the screwdriver) to market is truly incredible, but there's a few more million to be made in global sales, and Amazon already has the framework for non-EU retailer to step straight into the European market with relative ease, few logistical hurdles and a proven dispatch model.

Shipping pallets from China to North America, or from China to Europe is all the same for the most part. More import duties ? Add that to the ticket price. More accounting to contend with ? Jeeze, hire someone to sort it out. There's millions more to be made in that screwdriver's lifespan as a product.

Anyway, WTF is the king of tech media wasting time responding to random forum comments ?! That's time that could have been better spent on telling your purchasing officer to have the manufacturer ship a couple of thousand drivers to Germany.
 

[DeltaBruggemann]

18 minutes ago, JaySonic said:

Anyway, WTF is the king of tech media wasting time responding to random forum comments ?! That's time that could have been better spent on telling your purchasing officer to have the manufacturer ship a couple of thousand drivers to Germany.

So you expect Linus to be working 24/7? It was around 10pm his time when he responded. Plus is he not allowed to interact with the community on his own forum? With that logic you may as well go tell Elon to get off twitter and go remove some other useful feature from his cars.