How to Ship Bulky Products Internationally Without Breaking the Bank | Robert Khachatryan

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Matt Edmundson: Well, hello and welcome to the eCommerce Podcast with me, your host, Matt Edmundson. For those of you who don't know me, a very warm welcome to you. I've been an eCommerce since 2002. Uh, I like to call myself an eCommerce because I like to make it works. It's just generally the way it works. Uh, but I've been one since 2002.

Uh, I tend to partner with e-commerce brands these days, helping them grow, scale and exit. And obviously if you'd like to know more about that and how we could work together, excuse me. Just head over to the website eCommerce Podcast dot net, where incidentally you can sign up to our newsletter called the eCommerce, uh, which has got lots of added value, so, uh, and it's totally free as well.

So do go check that out, all at the eCommerce Podcast dot net website. But that's enough about me. Let's talk about today's guest, Robert. Robert, welcome to the show, all the way from Sunny Los Angeles. Uh, how are we doing today? And tell us a brief bit about yourself. Good sir.[00:01:00]

Robert Khachatryan: Hey, Matt. Thanks for having me. Um, we're, we're doing great. It's, um, you know, uh, it's an unlikely rainy day, uh, in Los Angeles, but we're, uh.

Matt Edmundson: You should try living in Liverpool. We have a sunshine day, which we're happy to see as well, so maybe,

Robert Khachatryan: Well, we test to burn down here every once in a while. So rain is always

welcome. But, uh,

Matt Edmundson: Yeah, no doubt.

Robert Khachatryan: yeah, so I'm, uh, I'm the founder and CEO of Freight Wright. Uh, uh, what started as a, uh, as a logistics company, then evolved into logistics and logistics technology company. And, uh, do quite a bit of work, uh, these days on the, on the intersection of e-commerce, uh, logistics, uh, and technology that, you know, uh, ties all of that together, uh, with more emphasis on, uh, on larger items

and, and then more expensive goods than your typical, you know, parcel.

Matt Edmundson: Yeah. That's great. Well, Robert, I've been looking forward to this conversation because, uh, two [00:02:00] reasons. One, we don't really have many people on the show talking about shipping products and two, I. There is probably one important aspect of e-commerce, which rarely gets discussed and that shipping products, right?

So it's, it's, it sort of worked well on both sides because I know from my own experience, we get people on the show and, uh, you know, all our guests have been great and we, we talk about email marketing, we talk about social media and, and social commerce and so on and so forth. Um, but actually once we've sold the product, obviously we've gotta get it to our customer.

And this has been one of those things that's actually had a big impact on our business. So, uh, I, I, I think it's great that you are here. So thank you for joining us. Um, let's jump straight in. Uh, you obviously have shipped millions of products, uh, all over the world. I think you, if I, if my data and research is correct, you are involved in 166 different countries, uh, as things currently stand.

So, you know, a thing or [00:03:00] two about moving boxes around the world. What's the, what's the biggest mistake you see e-commerce businesses making Time and time again?

Robert Khachatryan: Yeah, definitely. Um. Boy. Um, that's, that's, uh, let me choose one. a,

Matt Edmundson: There's a lot, uh.

Robert Khachatryan: there, there, there's a lot. Now, um, again, the, I'm, I'm, I'm going to approach this from the lens of, uh, bulky items, right? Because

that's kind of, uh, where I have the most expertise. So, uh, the biggest mistake we see, uh, eCommerce brands make is actually not. Internationally, right? Not, not expand into international markets. Um, and that's probably a tie with, um, again, in the bulky, larger item, um, space. Um, the second or maybe, uh, tie that first place. The other mistake is, um, [00:04:00] brands basically build in the shipping into the cost of goods. Um, because. It's, you know, they, they, it's very hard to figure out how to calculate shipping for larger items.

So they tend to basically just, you know, mark up the product enough to hopefully cover most cases where they have to.

Matt Edmundson: Right. Okay. Right. So these are, well, we've got two there. Let's dig into the first one. So not expanding into international markets. Now, if I'm gonna think this through, and I'm, I don't ship bulky items. I ship, I ship tiny things like this, like supplements. Uh, although that said, we are just about, hopefully we're, we're, we're getting involved with a company that does ship very bulky items.

Big old, I say very bulky. I'm talking, you know, maybe four foot. By three foot, by two foot, not, not like a couch or a car kind of book. Um, I can understand if I say sell couches, which is the immediate [00:05:00] bulky item that comes into my head, why I would only ship those I. Nationally and not internationally.

'cause it will just fill me with dread. Do you know what I mean? Just, just even thinking about shipping those internationally. So I'm curious as to why you see this as the biggest mistake e-commerce entrepreneurs are making. 'cause that's quite a bold statement and I'm, I, I want to dig into that.

Robert Khachatryan: Yeah. And again, um, this is from the lens of, you know, lo logistics guy, right? Um, or, or a global logistics guy. So, uh, by the way, uh, a four foot by three foot by two three, that's pretty much. That's very bulky, considering, you know, like FedEx, U-P-S-D-H-L parcel carriers, that they, they don't like that stuff.

It doesn't

fit very well into their workflows, into their processes, into their conveyors, right?

So that's essentially freight. It's not parcel. So, uh, what, what we see time and time again is, um, [00:06:00] basically. If, if you are a brand and, uh, that, that, that's especially has, you know, social media presence, let's say, because with social media, you don't really have a lot of control on where your content is, uh, shown in which country.

Right?

So you see, like, especially if it gets, you know, uh, picked up by some kind of an influencer, they might have. You know, influence overseas, right? And then so you get all these people clicking on your, um, social media content in other countries, then your home market, uh, and they essentially can't buy your product in most cases, right?

So, uh, we hear from brands all the time, oh, you know, this is like, we sell exercise machines and, you know, um. Let's say a US brand gets their, uh, social media content, uh, clicked on in Europe and people click on it, they like it, they want to buy

it, and then they go on the shopping cart. And there's no shopping shipping [00:07:00] options available to Europe from

United States. Um, one of two things happen. Uh, one is they. Basically give up and move on. So you've lost the sale. Two is they actually reach out to the brand and say, Hey, I want to buy your stuff. I'm in Europe. How do I buy it? Uh, then the brand, you know, operators are kind of, you know, at a loss, uh, at what to do because, you know, two, the traditional method is to go and request quotes manually and then get back to the, to the lead.

And by the time you've done all that, there's so much work goes.

Matt Edmundson: Yeah.

Robert Khachatryan: So this is, this is the, the status quo, if you will. Right. But, uh, this is especially true again, of brands that have social media as as a, you know, um, as a channel to advertise. Um, or not, I shouldn't say advertise because advertising, you can control

Matt Edmundson: Yeah. No, I, I, I, I get what you mean. It's an interesting one, and I, there's a [00:08:00] brand that springs to mind, right? And there's a, you talked about exercise equipment. There's a brand called Rogue, okay. R-O-G-U-E. And Rogue is an American manufacturer of fitness equipment. Um, they're quite popular in strongman and CrossFit kind of areas.

And the way that they seem to have got around this, because CrossFit was a worldwide brand, was they set up, I'm guessing, a distribution center in Europe. Um, and so I'm guessing there's some distributor in Europe somewhere, which imports a whole, I'm gonna imagine a container load of goods at any one point in time.

And then they distribute across Europe. Is that. What, say a US brand wanting to get into Europe should do, or can actually the US brand ship from the US direct to the consumer now, has that become a lot easier and maybe a lot more cost effective?

Robert Khachatryan: Yeah, that's, [00:09:00] uh, see, uh, fitness is a great, uh, example because fitness is your traditional. Into new markets, which is essentially you find a distributor, either you find a distributor or you set up shop in that region,

right? You, uh, essentially, you know, it's the same setup essentially, because now you are giving up. Uh, first of all, it's a huge undertaking because a distributor, you have to convince a distributor to carry your brand, to buy inventory, uh, to hold inventory, to have a marketing campaign.

Uh, right. And you are competing against the distributors, other brands, the distributors representing now to get that.

You go to trade shows and, you know, uh, it's just like this really big undertaking and takes months and years sometimes to establish in a new market. Um, again, alternative being, you go and set it up yourself. You set up a branch or, you know. So you set up local offices and then it's [00:10:00] basically all that cost. So, uh, you know, what we're seeing, uh, this is very general and obviously may vary, but, uh, rock Fitness probably spends about 40% of the, uh, of their. Overseas. Basically they give up about 40% of their revenue, either to their distributor or to inventory costs and to logistics costs and, uh, administrative and all of that stuff.

So it's, it's at some point you sort of graduate to it because that's the most, uh, I wanna say efficient place to be where you have enough business in that region where you can establish yourself. Right. But what do you do before that? What do, if. A bunch of smaller countries, smaller markets where you don't want presence or it's not worth going and spending money and finding distributors, right?

So, uh, if you are selling smaller items, this is, there are solutions for that, right? You can, uh, actually integrate your shopping cart with, you know, [00:11:00] FedEx, U-P-S-D-H-L. Uh, they will automatically populate, calculate shipping. Uh, there's a bunch of products out there that calculate duties and taxes. They'll manage them for you. And, you know, I think, uh, Shopify recently launched, uh, a product where they will actually act as your, uh, fiscal representative locally to, uh, actually pay duties and taxes on your behalf. Right now, uh, it, it of course cost a 3D penny to do that, but, uh, uh, ultimately there's a solution. Now, again, if you're selling larger items, say exercise equipment. Uh, the solution doesn't exist because UPS or DHL would not carry your exercise equipment, uh, because it's just too heavy and too big, right? That you need a freight solution for that. So, uh, it, it hasn't, uh, the, you know. The, the way we approach it is basically we're, uh, replicating the DHL service or FedEx service, but with freight. So [00:12:00] it's commercial freight, you know, delivered with heavy trucks and, you know, dollies and, uh, often multiple people, you know, doing unpacking and assembly even sometimes. Uh, and, you know, uh, essentially we're, we're treating the, uh, the buyer as our customer. Right, so, so that we're able to represent them for local customs in the local countries and all of the duties and taxations so that the brand doesn't get involved in all of that. And what that allows you to do as a brand is, uh, you know, let's say you are getting interest, your US brand, and you're getting interest in Europe, right? Instead of trying to go and spend, you know, tens and hundreds of thousands of dollars to build out the distribution network, you basically just enable shipping to that country. Enable duty and tax calculation to that country and maybe use that budget instead on some, uh, ad campaigns in that country or in that region. And that allows you to ship directly to the individual [00:13:00] consumers in those countries, uh, to at the very least have coverage. Not lose the sale, but also to test the orders

and see is your product actually doing well in these regions?

Matt Edmundson: Does it mean then, um, and this maybe speaks to your second point about, uh, brands building shipping costs and cost of goods. Does it, does it mean then that I am. I'm a British customer, I go onto a rogue fitness website or the equivalent, um, you know, uh, what's another website in the states that I use quite a bit.

Woodpeckers, uh, which is a woodworking brand, right? So, um, I go onto the Woodpecker website. There are certain things that they will sell and there are certain things that they won't sell. I'm guessing it's due to freight. 'cause one they can shit with FedEx and the other one they can't. Um. Does it mean that the costs though are gonna start to become quite prohibitive?

Because, um, I'm thinking maybe with a hat of [00:14:00] 15 years ago, Robert, where it was just like crazy money to ship from the states to the uk. Um, when I lived in the States, it was crazy money to ship from the US to the uk. I I, I dunno if things have got any better. Um, how do, how do you deal with the shipping costs of, of this activity?

Robert Khachatryan: Now that part has gotten, uh, has gotten better, uh, granted. Uh. You know, assuming you're working with a, with an eCommerce, logistics comp, logistics company that specializes in eCommerce brands, right. Uh, so I think one key differentiation is, is to keep in mind is, you know, freight versus parcel.

So parcel we're all used to, uh, we're all used to Amazon or UPS drivers showing up, you know, with small, that, that, that's very efficient, very mature. Service slash product.

Uh, freight has always been a commercial product. It's always been businesses buying [00:15:00] large items for, from

businesses, right? So it's, it's, you know, most freight companies, uh, don't actually have even customer service personnel so that they're not geared towards dealing with consumers. So you, the service expectation, the service level is kind of. But it's definitely changing as we get into more and more, you know, uh, as, as, uh, species, I guess.

Uh, we're getting more and more into, uh, buying stuff online, even larger stuff, right? Like, think of mattresses. It used to be bulky deliveries of these large

pieces that were pretty buly requires tool and to deliver.

Now. Most mattresses shipped, basically vacuum rolled up, right?

And they

Matt Edmundson: right.

Yep.

Robert Khachatryan: So, so we've graduated to buying mattresses online. The design of the product is evolving to support digital, sort of purchasing and, and, and, uh, e-commerce deliveries and things like that. So as we're moving more and more into that space, even heavier stuff is becoming more and more common to buy online. [00:16:00] Right? 20, 30 years, you wouldn't really buy furniture online. Now

Matt Edmundson: No. Yeah, it's quite common.

Robert Khachatryan: um, so we as an industry, like the logistics industry is definitely evolving, uh, with, uh, you know, e-commerce, uh, brands like Temu and cn and, you know, uh. Uh, the efficiency game, uh, when it comes to consolidations, you know, making basically, uh, building up containers, uh, or, or airline containers, let's just say, or ocean containers of consolidated e-commerce goods, which basically reduces the cost is you bringing the same kind efficiency that, uh, retailers use.

Matt Edmundson: Mm-hmm.

Robert Khachatryan: For eCommerce brands. So think of, you know, instead of a container that has, let's say 10,000 t-shirts, uh, going to say [00:17:00] Walmart or Target, you have a container with 10,000 t-shirts that are individually labeled to go to the final buyer.

Right, So you, you are still consolidating the container. You're still making use of that space. Uh, you could also, uh, I think successfully argue that, uh, you know, shipping directly, again, I'm gonna jump back to bulky items here. Uh, shipping bulky items directly from the country of Origin to the consumer in the country where you're selling individually, uh, saves a lot of logistics cost compared to, uh, shipping to a distributor. Who then has to basically inventory this stuff,

you know, add a margin, right? Cover their operations. There is, there is like a whole world of logistics cost there where, you know, shipping an individual item, you are basically bypassing all of that. You're cutting all of that out. [00:18:00] Uh, so you've done efficiently, uh, it could potentially be a game changer, right?

And think of all the de mini rules, which admittedly are, uh, under attack and getting cut in

Matt Edmundson: A little bit under flux. Yeah.

Robert Khachatryan: But that, that's huge because then for a lot of products, you're also avoiding, uh, duties, So, so in the US it's, uh, it's been a game changer. Obviously, uh, you, you know, not, not a great one for the consumer, uh, but, uh, you know, under $800, basically you don't pay duty.

Uh, which means, you know, traditionally if you bought, let's say, a. A chair that cost a thousand dollars, right? A lot of it is logistics cost. A lot of it is duties, warehousing and all of that. Uh, whereas if you ship it from the Origin under the minis rules, you only declare essentially the cost of the product and not any of the logistics.

So that allows you to bring that declared value under $800. Therefore. [00:19:00] That whole thing just

makes it a lot more, uh, cheaper.

It also throws out a lot of regulation and a lot of consumer safety style, so it's, it's not necessarily a great thing, but at least Costwise.

Matt Edmundson: Yeah, it makes it easier. Makes it easier. Listen, uh, this is great. If you are listening to the show and you're involved in eCommerce yourself. You're an eCommerce founder. Uh, why not check out E-commerce Cohort? Yes, e-commerce Cohort. These are, uh, monthly Cohort groups which are run totally free of charge.

You can come meet other e-commerce entrepreneurs. There's one in the states, there's one in the uk. There's one in, uh, Australia, uh, which also services New Zealand. So, uh, if you'd like to know more about Cohort, hello to the website eCommerce Podcast net, it'd be great to see you in there. Um. Robert, you mentioned, uh, briefly there, and I, I want to circle back to it.

How's the whole tariff thing, uh, at the moment with e-commerce? Um, [00:20:00] especially, I mean, I know if I import steel into the US I'm screwed. If I try and sell cars to the us I'm screwed. Um, but I mean the, you know, how, how it feels a little bit wild westy at the moment. Um. Just because you never know what's gonna happen one day to the next, but how's that affecting shipping?

So, um, maybe customers who are actually exporting to the US and maybe not the US shipping to Europe. If I'm in Europe and shipping to the us, how's it, how's it all looking out there?

Robert Khachatryan: It is, uh, it is very volatile. Uh. Uh, I think Wild, wild West is, um, a comparison. Uh, I've made a couple of times. I've heard of it, I've heard a few times. Um, and then I, I think there's a good reason for it.

Uh, the, look, the tariffs are not, it's not just about tariffs, right? The f first of all, nobody likes v like.

Business doesn't like volatility. So, you know, having, uh, containers on the [00:21:00] way or having shipments on the way that you already pre-planned and in a lot of cases pre-sold to be hit with tariffs, um, is, is uh, uh, quite, quite, uh, quite a disaster,

right? If you are a, if you're a business. Uh, but there's, uh, a whole logistics challenge side of it because, uh. What ends up happening with, uh, you know, the current administration, they're, they're kind of, they're moving very fast and a lot of times seems making decisions on the go. Uh, you know, maybe based on, uh, negotiations they're having at the time with a particular country or, you know, whatever the case may be.

But, uh, but it's very, it's moving very fast and, you know, the world of logistics, uh, is, you know. System wise, you can't move that fast. Right? So I'll give you an example. When they announced, uh, a 25% tarone, uh, steal, right? The, the new one, um, or I think aluminum

or aluminum for, uh, our [00:22:00] European

Matt Edmundson: Europeans. Yeah.

Robert Khachatryan: uh, so when they announced that. You know, it went into, it supposedly went into effect. And the way, as a customs broker you handle that is there, there's a, you know, you have your HS code or HTS code for the product that you type into your system, and it calculates the duty amount that you're supposed to pay. There's another one that you type in there specifically for aluminum that would add another, you know, tariff on top. Problem is customs, you know. It takes a lot of software programming and a lot of system administration to actually make that work, and it took a good, I wanna say, seven to 10 days for it to start working. Now, all of the shipments that were in transit and arrived and were pending clearance at that time, couldn't be cleared. Now, seven to 10 days, maybe not that big of a deal. I think of all the air freight shipments that are sitting at the airports, they cannot be

cleared, cannot be picked up. You're talking about God knows how much money, storage [00:23:00] charges and, you know, delays. You know, uh uh, like a thousand kilo shipments that arrived in United States and sits at an airport past 24 hours can easily accrue like $600 a day in storage charges

and $6 if your freight sits there for. Literally the doesn't work.

It hasn't been program yet, so, so there's a lot of this kind of things happening. They're happening all the time. Uh, we have a brand, uh, customer of ours that's, uh, you know, their product seemingly fits into the, uh, the aluminum tariff, but it's not actually on the list. So they don't know how to set the sale price.

They don't know if this is a mistake, it's gonna get added later, or can you, you know, because you're talking about 25% on your cost. Obviously there's a lot of. Inconsistency. There's a lot of risk, there's a lot of [00:24:00] unknowns that people are, uh, you know, battling

Matt Edmundson: Yeah. And I imagine it's not just into the states as well. I imagine it's the same for the US now. 'cause a lot of countries have retaliated, right? They've gone well, if you are putting tariffs on me, we'll put tariffs on ours. And so you've got, you've got problems with it. Kind of reminds me, I suppose a little bit, Robert, of um.

The pandemic, you know, with COVID and just, it just, nobody knew what was do. And of course in the UK we had Brexit and then that just went and screwed everything up worship and was concerned. And so it kind of feels like it's been a volatile thing for a few years. Uh, if I'm honest with you, the, the, the whole shipping thing.

Robert Khachatryan: Correct. I think we got a little bit of a break between, uh, COVID and, uh, this trade war, um, um, explosion. Uh, but you're right. I mean, you know, honestly, um, you get a little desperate at times with, uh, you know, [00:25:00] with all the problems. Uh, uh. But then, you know, I always look back and, you know, my, I've been in, I've been handling international logistics and customs for like 23 years, you know, so, uh, it's very rare that you have like a period of no disruptions,

right?

It's so, there's always something. It's, it's, you know, you have the,

Matt Edmundson: Well, you're dealing with governments, aren't you? So there's gonna be something.

Robert Khachatryan: Well, governments, pirates, uh, I mean, natural disasters, right? You've

got, uh, you know, uh, ever given, getting stuck in the Panama. I mean, uh, not Panama Canal. Uh, Swiss Canal, right?

So it's, it's just, it's just not a, not a day goes by. something being a disruption in the role

of logistics. Uh, and as for us, logistics logisticians, right? But really not a year goes by without something that becomes mainstream media kind of level disruption. So, uh, it's just, uh, I feel like it is what it is. It's just, uh, times are, uh, volatile and [00:26:00] uh, you know, I don't think it's something that just happened,

you know, it's been many, many years I think. You know, it's, it's, it's, uh, that's the paradigm, uh, we operate in. And I think, you know, so,

Matt Edmundson: Yeah, it

Robert Khachatryan: you know, there's that saying like, life is really hard, but if you really accept that life is hard, it just no longer matters, right?

So, so that's international trade. You know, like, uh, once you truly accept that this is just how international trade

works, then you learn to, uh.

Matt Edmundson: So that actually, I mean, that ties in nicely with your first comment about how not expanding into international markets is a big mistake. I wonder if part of the reason for that is because people just, there's too much uncertainty in people's heads. Like, if I, if I ship this item that is big and bulky, will it get there?

Will the customer claim that it's not arrived? Do you know what I [00:27:00] mean? There's all these kind of questions that just get magnified. I think when you put an ocean between the two countries, don't they?

Robert Khachatryan: Uh, correct. Now I look at it a little differently, right? Um, I, well, in fact, I look, I see it quite the op, quite the opposite sort of light because me, um. Especially in the context of, let's say Europe and United States, or UK and United States, that the trade between, uh, these countries, you know, a lot of the goods are actually not manufactured in neither of these countries, right?

These are brands that manufacture typically in Asia,

Matt Edmundson: Mm-hmm.

Robert Khachatryan: right? So, um. You know, when you're talking about international freight and, and, and international expansion, uh, now think of expanding and actually fulfilling from the source, right? Let's say, uh, you're a UK brand selling to us, uh, let's say Chinese made goods. Uh, now you bring them to CHI to UK and then you ship them to [00:28:00] us. Uh, there's, you know, it's a longer, longer lifecycle for the product. There's a lot more things that can go wrong in between, you know, now. Imagine fulfilling that product from China. Maybe not the best example given the tension between us and China

with the trade, but, but at least you, you know, you are removing all of these other things in between.

You're removing the time it takes for this product to move around. You're removing a third country with its own, you know, sort of, uh, trade and political dynamics. So it, it's becoming a more straightforward, um, transaction. Now looking at it from a US brand perspective where, you know, we, Americans are not. You know, the most popular country right now, um, in, in the world, right? So if you're sell, if you're selling Asia made products to, let's say Canada or Australia, or you know, Europe, it would be like a whole different thing. Shipping your product stream from the factory to the [00:29:00] consumer

versus shipping it from your US inventory where it's subject now to retaliations and

all this other stuff.

Right? So it's actually, it could be an enabler and it could be a, a nice, uh, sort of hedge strategy, uh, basically allowing you a lot more flexibility than just selling in the United States or just selling in the uk.

Matt Edmundson: that's very true. I, I had not thought about that. So the, the idea that with the trade war, especially if you're not a popular country like the US at the moment. Um, then actually that, that makes a lot of sense. So you can send your goods to, to Canada still, but to send 'em straight from China as opposed to bringing them into the US first, where it's just gonna be problematic and then shipping 'em out the US to Canada is another set of problems.

Whereas I imagine the trade between Canada and China's pretty reasonable. In fact, I think team, you have just started something in Canada from memory, so I think there's. I, I, I see that making a lot of sense actually. Um, and, and hopefully [00:30:00] resolving at least some of the issues, uh, if, if not all of them, where do you, let's say, um, the company that I was mentioning to you with the four foot by three foot things, where, where's a good place to get started?

So they're in, they're in good old Blighty, um, uh, good old uk, uh, Blighty as we like to call it. Uh, they. Manufactured, uh, the product's manufactured in China, and so let's say we go, actually, we feel like we could do a good job in the US market. We feel like we've, we're starting to get some traction there.

How do I get started? Where do we start?

Robert Khachatryan: I think, uh, you know, well, uh, I guess a good start is to understand, uh, uh, which you seem to have done already, how well you can do in the United States, right?

Matt Edmundson: Mm-hmm.

Robert Khachatryan: Uh, I would start with, uh, uh. Very, you know, if you're talking about like the shipping and tax calculation, that's you, [00:31:00] you know, for, for us, that's, that's very easy. That's what we do. Uh, we can probably, uh, uh, set that up within a week or so and you can actually start playing, right? If you're a brand, you can start playing around with, uh, you know, analytics and maybe put a little bit of a, a campaign behind it to see if you can get people to, uh, to purchase. If you don't need a new shopping cart, you don't need to enable anything. It's just you're basically enabling additional countries for additional products and you can, um, select which, uh, skews you want to enable internationally. So it's, it's, it's pretty dynamic. I think the, the first things you wanna look at is, uh, returns are still challenging, right?

So you

want understand, uh, how returns. Either not accept returns or maybe change your return policy a little bit. Uh, typically if you're shipping [00:32:00] international and it goes through commercial customs clearance, you wanna have custom return policy for that market.

So I would definitely look into the return policy. One of the most obvious things is, uh, that is, is your product. Uh, compliant in that country. And there's your product work in that country. I mean, we're talking about electronics. You wanna make sure you know it. Outlet,

Matt Edmundson: Yeah.

Robert Khachatryan: uh, you know, these days most products. Do you just include an additional sort of, uh. An adapter of some sort, and you can start with including an adapter.

And then once you see your market develops, basically, then you make a US specific product, right? With, uh, you know, whatever that may mean for that particular product. But those are some of the things I would look at is, is can I actually readily ship the stuff to the United States and would work there? And, you know, on a very general level, uh, is this product compliant with the US regulation? You know, [00:33:00] can, will it run into some kind of government issues? You know, uh, we, we do have slightly different standards between US, Europe, and uk. Um, but, uh, you know. For most products, it's, it's not, it's not that big of a deal unless you're selling specialized things, right?

So, so those are the things I would look at first, and then,

you know, if you clear those hurdles, then actually talk to somebody who can, uh, enable, you know, instant shipping calculation and duty and tax,

uh, handling.

Matt Edmundson: So the. This is an interesting one, isn't it? That you sort of, you've raised there that the, the, there are legislative differences between the us, Europe and the uk, um, and Australia as well. I'm gonna, you know, throw those guys in there as well down in the Southern Hemisphere. So there you do have these different regulations, which I know about this because shipping supplements to the UK is different to selling supplements in the uk they've got the FDA, they [00:34:00] have different sets of rules, um, some of which are.

More intense, some of which are a bit less, uh, like statistical. I, I suppose, um, my question here, Robert, is, is it legislatively, uh, is it a case of generally legislation is more intense in the US than it is in say, Europe and the uk? Or is it the other way around? I'm just kind of curious which one's easier to ship to?

Robert Khachatryan: You know, uh, I feel like, uh, us, uh, is a little more intense than, uh, uk um, Europe and, and Europe. Um, I think regulation in U Europe and UK is largely sort of, uh, uh, on par,

uh. But us, uh, in some respects is a little more intense. Uh, but it's also, [00:35:00] uh, in, in, in all of those four, right, the Europe, uk, Australia, actually New Zealand, uh, us, it's, it's actually generally pretty easy compared to everywhere else in the world, right? Uh, so they're all sort of declaration based, right? So it's all what you declare kind of is taken as. The basis, uh, versus let's say middle Eastern countries or, you know, uh, Asia, where, you know, you have to have like a whole, um, sort of proof of everything, right? Uh, from the declared value has to be based on actual purchases versus like a declaration and things like that.

So in some respects, they're all pretty easy. Um, in others. Um. You know, if you're shipping, uh, I guess again, it depends, uh, whether you're shipping supplements or you know, things that are under a certain value and under de minimis rules versus larger items, which typically tends to be more expensive and typically tends to be commercial clearance.

You know, [00:36:00] they tend to require commercial clearances. Uh, with commercial clearances, you have to comply with all the government requirements, right? Declarations, those processes. United States, uh. And, and to some extent in Europe as well, uh, if you fly under the minimums, you fly under radar essentially, because other government agencies don't actually check, uh, you know, if you were shipping like a parcel, it's considered a personal, you know, it's going to an individual, it's a personal parcel. FDA actually doesn't look at it.

Matt Edmundson: Mm-hmm.

Robert Khachatryan: Which is, uh, good for the brand, but for the American consumer because, you know, you don't know what you're putting in your

body,

Matt Edmundson: Yeah. Yeah. Yeah.

Robert Khachatryan: But it kind of depends on, you know, are you under the minimus or above the minimus, right? That's, that's, uh, that's the biggest, uh, I guess, differentiator whether, um, compliance is an issue or not.

Matt Edmundson: Yeah, it's an interesting one. We, [00:37:00] in the early days, we used to ship from Jersey in the Channel. Islands a small, for those of you and Dunno, Jersey is a small island off the north coast of France, which is kind of independently British. And um, we shipped from Jersey to the UK and to Europe, and there was no sales tax.

If the product was like. Under 20, I can't remember what it was. Let's say it was 20 pounds. You know, if the value was under 20 pounds, you didn't have to pay the sales tax, which in the UK is 20%. So that's a lot of money, right? You're, you're saving instantly. And so what we used to do was actually, it was cheaper.

I. I dunno if this works and when you multiply it out, Robert, maybe, maybe, but when it was cheaper, um, or it was cheaper to send out three parcels, but all under 20 pounds than one parcel with a value of 60 pounds because of the VAT savings versus the cost of shipping, if that makes sense.

Robert Khachatryan: Yeah, definitely. And we, we've, you know, uh, a lot of brands do this [00:38:00] kind of optimization. You even hear, um, which, uh, that, that, it was pretty shocking to, uh, discover that that's actually done is. You know, if you go to a retail chain, let's say, uh, Nordstrom's in United States, now I don't, I, if Nordstrom actually does this, but this, this is, you know, similar retailer.

You could go and buy, let's say an expensive purse. And if it's, uh, uh, let's say it's, it's an 800 per, if you go, uh, to Norstrom and it's, it's in stock. It's in stock, and you get it off the shelf and you pay for it, you pay everything right due and taxes, everything's included in there, you know, the sales tax calculated on

Matt Edmundson: Mm-hmm.

Robert Khachatryan: Uh, but if, if they, if they're out of stock and they ship it to you, right? You order it, you go in store and you're like, I like this person. Like, we don't have it, but we can order it for you, right? And they take your information and they ship it from their supplier overseas directly to you. Now that becomes a de minimis [00:39:00] transaction because it's addressed to an individual.

It's not addressed to Nordstrom. And you know, it bypasses duties, it bypasses, uh, even sales tax at that point.

Well, maybe not sales tax, but it does bypass the duties because now it's shipped from overseas. It's an international de mini transaction to the consumer, uh, handled by a large brand that just bypass paying duties on the product, right?

So these kind of optimizations, uh, you know, the more the very organized companies do this really well. Uh, and you know what's interesting in that example is that the consumer is none the wiser. The consumer doesn't actually get passed on the savings, right? Because they just paid the retail price that, uh, that was in the store. So,

Matt Edmundson: That's really interesting. Yeah. Yeah. I, I, I'm thinking actually, like with subscription e-commerce, that's, that's a really interesting strategy because you actually know what's getting shipped. I. When, so if you're shipping internationally and it's gonna take a little bit longer to try and take advantage of [00:40:00] the, those kind of rules, then I suppose you can plan a bit more ahead of time.

Right? So, um, 'cause there's, as I know in the UK there's such a large expectation on next day delivery because the in the country is so small, right? Why would you not get next day delivery? Of course, if I'm shipping from. Source. If I'm shipping from say China, then it's five to six days delivery. It's not.

It's not next day. And so that, I think you either do that on a subscription model where you can plan ahead of time with the dates or you give, I suppose, the customer the option if you want it next day, it's this much money. If you want it in seven days, it could be a few, a few pence, less maybe. I don't know.

It's an interesting problem.

Robert Khachatryan: Absolutely. I think, uh, it's, it's a very interesting problem and I think all the, sort of, all the pieces and the foundation is there to explore it. Exploit. Maybe not the good for for it, but optimize it, right? [00:41:00] Optimize for this stuff, because this is a huge, this is a strategy. Could, that, could be, that could have a huge impact.

Now, you know, the example I always like, uh, to bring is, uh, you know, uh, especially after COVID, but even now, if you go on a, uh. Well, let's say a a a a brand website that sells, you know, furniture furnishings, uh, you know, let's say, and none, none come to mind. But, uh, you know, you, you select a couch, right? You like a couch.

You select it and it'll give you three options. Actually. You'll say the colors that are available to ship immediately, colors that are available to ship in seven to 10 days, and then everything below this, 50 colors you can choose is gonna take two months to get your product. Uh, and you know, it's obvious, right?

The, the ones that are shipping immediately, they have them in stock. The ones that are shipping in seven to 10 days, it's inventory in transit. They know it's coming. It's not necessarily in stock, but they can trace it back to even to, um, the skew. That's, uh, an appeal that's in

transit. [00:42:00] And then everything else is essentially like, you, you, you click this color, we're actually gonna go manufacture this thing for you, right? Uh, and it's, you know. It makes so much sense that it's broken down into these three categories and these three shipping timeframes because, you know, not everybody is urgently wants this couch, uh, right. People would

rather have the color they want. They don't care if it takes two months. Uh, so not especially when you get into bulky items and more expensive items.

The, The, sort of instant gratification thing, it's a lot, uh, uh, less prevalent than

Matt Edmundson: Well, yeah, there's an expectation isn't there, that it's gonna take longer, uh, with a bigger, bulkier item just 'cause of the shipping. I've just gone and ordered a new ho and it's gonna take a week to get here. And you kind of, a week would be insane if it was a supplement. But because it's a ho coming from John Lewis, you kind of go, well, I, I okay it.

It's big, it's bulky. We've gotta arrange that. Right.

Robert Khachatryan: So, yeah, [00:43:00] so, so with bulky, larger, expensive items, that's, I think, uh, the expectations are different with, uh, after COVID especially. I think people are used to it and, and you see more and more brands doing this with this, these different options, right? So I think it's become, uh, pretty common. Uh, people are used to it.

It's not, you know, it doesn't look weird. It doesn't look out ordinary, it doesn't look to sort of diminish the brand's performance anymore. Um, so I think it's definitely a great strategy to do that, especially if you can optimize for, you know, cost. Right?

Matt Edmundson: It is a really great idea. I, I'm, I'm curious Robert. Uh, 'cause I don't know the answer. Now you've got my brain thinking. Now. It is dangerous. Uh, really, um, if I'm, let's say I'm shipping goods to the US and the current rate, the current level is $800, isn't it? I think the current de minimis level is 800 bucks.

Now, is that [00:44:00] $800 cost of goods or is that $800 invoice value value that the customer has paid?

Robert Khachatryan: Uh. So, so it's invoice value, but uh, with a nice kick to it so you don't actually have to include the freight charges in it. Um,

Matt Edmundson: so invoice value less freight.

Robert Khachatryan: yeah, so if you're charging, you know, if you're charging $790 plus, you're charging $200 to ship it.

That's not a $990 transaction. It's a $790. full under the minimums

Matt Edmundson: Mm-hmm.

Robert Khachatryan: you know, uh, is, is, is broken out. Uh, US and, uh, Europe and uk, um, are different in that US doesn't duty, uh, the freight. Uh, if I'm not mistaken, in UK you pay, uh, duty based on CIF value, which is basically cost of goods plus insurance, plus freight. In the US you take the insurance and freight out. So it's not [00:45:00] considered cost of goods when customs looks at it.

Matt Edmundson: Yeah.

Robert Khachatryan: So this is another thing that de minimis allows you to do is basically, uh, you know, you break out the freight, whereas if you sold local inventory, your landed cost already includes all of that stuff, right?

So your sell price is much higher. Your sales tax is much higher. Your, your everything's much higher.

Matt Edmundson: That's really interesting. I'm gonna go and investigate, uh, and have a little think about that because that seems like an interesting idea. Like you said, I wouldn't be surprised if England charges more because we like to tax everything to stupid levels, uh, in England. It's just the way it works.

Robert Khachatryan: Well, and I mean, at 20, 21%, that's, that's, uh, that's a huge problem for international trade because, you know, like international eCommerce, because you're se you're selling something that's $10,000. It shows up at customers country and then they get a call and they're like, oh, you have to pay thousand pounds in,

Matt Edmundson: yeah,

Robert Khachatryan: in taxes. Right.

That, that's, it could be quite the.

Matt Edmundson: Well, it is, [00:46:00] and it's, I mean, it's not even on smaller items like I've ordered a pair of trainers, um, I didn't realize they were actually shipping from the us but they were, and I, I had to pay not only the import duty on those trainers, but I also had to pay UPS for handling the, Do you know what I mean?

That they shipped it. UPS charged me 20 some bucks just to handle the money, and then somebody else charged me some money and it, and I paid the value of the trainers again. Which I ironically didn't fit, but I couldn't send back. And so it was just, it was, the whole thing was a nightmare. So, um, it's quite an extraordinary thing when you, when you, when you go through things like that, but I, it wouldn't surprise me.

'cause, you know, welcome to Britain. Um, Robert, while I remember. Uh, I like to ask my guests for a question, a question for Matt. This is a question where, uh, I will go and answer it on social media. Uh, I don't answer on the podcast. This is my little tease. Ladies and gentlemen. If you don't follow me on LinkedIn, come follow me, uh, at Matt Edmundson, [00:47:00] uh, and you'll find the answer to the question, which Robert is about to ask me.

Robert, what's your question?

Robert Khachatryan: Oh, that's, uh, that's interesting. Uh, lemme think I'm, I'm keep it conversation. Um, I'm curious what. What do you think is the most popular American item that Brits like to buy

Matt Edmundson: Oh,

that's not, that's a really good question. How would I answer that? Uh, I'll answer that, uh, maybe slightly different ways. One, from my teenage daughter's point of view,

there. Certain flavors of m and ms that are only available in the us, but no, I will, I will have a think about that. Um, uh, and uh, um, and I will answer that question if you'll know I'm gonna answer that question, come follow me, like I say on LinkedIn at my Edmundson. Speaking of contact details and how people reach you, Robert, how do people find you?

How do they connect with you if they wanna do that?[00:48:00]

Robert Khachatryan: Um, real easy. Uh, freightright.com. F-R-E-I-G-H-T-R-I-G-H T.com. Everything's there. Uh, if you wanna contact me directly, click on teams. Uh, click on. File there and, you know, uh, send me a message or you can contact the company directly. Uh, there's a lot of stuff on the website about e-commerce, uh, solutions, international taxation solutions, and how to sell your vegan, bulky items internationally, uh, as well as your traditional logistics, uh, you know, for, uh, brands that, you know, import and export commercially.

Uh, all of that information is there.

Matt Edmundson: Fantastic. We will of course link to Freight wright, uh, freightright.com in the show. Notes. Um, and so if you're listening to this on the podcast app, just scroll down and just click the link in the, if you wanna find out more, just go and click that link. Of course, you can also be able to in the YouTube description if you're watching online.

Uh, and also of course, if you're subscribed to our Rot [00:49:00] Wonderful newsletter, even if I do say so myself, uh, you'll find the information in that as well. Robert, thank you for joining me. Uh, I genuinely enjoyed this conversation. I feel like I've got a few strategies now, uh, which is always super helpful. Um, but before you go, before we sign out, we've started doing this.

Save the best till last thing. Um, and so I'm curious you, according to my notes here, um, you started selling newspapers from the age of nine years old, um, in Armenia, and then you are now living in la. You started the logistics company in the middle of an economic crisis. 'cause, you know, what else are you gonna do in the middle of an economic crisis?

Um, what's your top tip for, um, entrepreneurs, whether e-commerce entrepreneurs or just people in business generally when things are genuinely unstable, um, and as they are probably quite rightly now in the world. Um, [00:50:00] what's your, what's been your biggest tip as an entrepreneur?

Robert Khachatryan: Yeah, I think, uh, you know, there's never probably a good time to start a business. Uh, you know, starting in the middle of a recession, in the middle of a crisis, in the middle of volatility seems, uh, very counterintuitive. Uh, I have discovered, uh, it's not, uh, I, I've discovered it makes a lot of sense, uh, because this is where. People are looking, this is when people are looking for solutions,

right? Um, you know, people are dealing with a lot of issues with a lot of unknowns. Uh, and, you know, search volumes around specific things may be higher than usual. It actually is a great opportunity to start. Uh, when I was getting started in 2007, uh, I didn't understand this.

Uh, I was doing it because I was forced to, uh, I couldn't find a job that paid enough to pay my bills, so I, I basically jumped into this entrepreneurship, uh, [00:51:00] experiment a lot sooner than I had planned. Two, two customers of mine at the time, basically, uh, their, their, their advice. So simple was so simple, it kind of registered.

And I, I always repeat, uh, those two. One was, uh, if you start in the middle of a recession, there is no where else to go but up. Right? It's not gonna get any worse.

Uh,

Matt Edmundson: true. Yep.

Robert Khachatryan: and then the other one was saying, Hey, we, we had a meeting, uh, with our board and we basically decided that we're gonna participate in the recession.

Right. That's, that's the other one that, uh, that really stuck, which is, you know, just, they just, just. If you truly believe it, uh, you can play above it.

You don't, you don't need to participate in the recession. It

doesn't need to be your problem, especially if you're getting started, because that's the environment in which you're getting started.

This is, you know, no surprises. It's, it's, it's pretty crappy. So, uh, you know, just, just, uh, make the best of it and bring real solutions to the [00:52:00] problems and people will.

Matt Edmundson: Yeah, that's top advice. Top advice. I do like that because like you say, in the middle of all the, in the middle of a recession or when things are turbulent, um, people are uncertain. And when people are uncertain, you've got a tremendous amount of opportunity, I think. And I. Figuring out what that is, is, is a, is not always straightforward, but I think there is opportunity there and, and, and finding it is a, is a, is a great thing.

Robert, listen man, loved having you on the show. Thank you so much for coming on. Uh, it's been a wonderful, wonderful conversation. Um, but yeah, and if, like I say, if you're new to the show, very warm, welcome to you. Make sure you like and subscribe and do all of that really funky stuff 'cause I'll be back again next week with another fabulous conversation.

But from Robert and from me. Thank you so much for joining us. Have a phenomenal week wherever you are in the world. I'll see you next time. Bye for now.

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