The Obvi guide to international expansion

Hey everyone, 

Welcome back for another bite to chew on.

You know, even the highest-growth brands hit a ceiling eventually. 

It can happen for all sorts of reasons - internal capacity, funding, supply chain constraints, product development, etc. 

The good news is those are usually fixable with some tweaks to your strategy, team, or tactics. 

But sometimes you just hit a saturation point. 

That is more challenging because now you’re dealing with a macro environment impact - a new hire won’t overcome a saturation plateau. 

This began to happen to Obvi recently. 

And we realized that in order to continue to grow, we would need to look beyond the domestic market and consider international expansion.

Easier said than done, though. 

We found a ton of challenges and hurdles that stand in the way of selling outside the US. 

Let’s go over why decided to go international and what we’ve learned along the way.

On the Menu

• First - Why expand?

• Second - The key challenges of going global

• Third - The Obvi approach

Why Expand to other regions?

The US is a big consumer market - one of the biggest in the world. 

And its DTC penetration/infrastructure is very strong. People are comfortable buying stuff online here. 

But that also makes America one of the most crowded markets as well.

Not only does practically every major consumer brand have a presence here, but more and more startups pop up every day. 

So you’re constantly battling incumbents and disruptors at the same time.

Here’s what we’ve been dealing with at Obvi:

• A highly competitive niche (health supplements)

• Years of high growth, meaning we’ve acquired our early (read: less expensive) audience layers (innovators, early adopters, early majority)

• Differentiation based on marketing and branding, rather than moats like patents or regulation

All of this = steadily rising CACs (even outside of the general trend in DTC). 

Beyond all this, we realized that while the total addressable market (TAM) here in the US is large, it’s still finite. At some point, we will reach a threshold of saturation/diminishing returns domestically. 

So that’s why we started looking overseas. 

Here’s what we found:

• The cultural trend of health and wellness is global - hundreds of millions of people overseas also want to look and feel better.

• Less competition - the landscape isn’t as cluttered with other supplement brands trying to reach people online or through Facebook advertising

In aggregate, the TAM in Europe is about the size of the US. Add on additional markets like Australia, and the opportunity is huge. 

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Thanks to chargeback fees, you’re paying to fight this stuff whether you win or lose – and you lose far more than you win. 

We would know. Chargebacks used to cost us 0.5% of our revenue a month…

Doesn’t sound like much, but that doesn’t take into account the shipping expense, COGS, payment processor fees, and the time you spend to fight the chargeback. 

It adds up. 

For every $100 in chargebacks you suffer, it actually costs you about $200 because of all the associated expenses. That’s just money deleted from your bottom line for no good reason.   

For a long time, fighting chargebacks was a losing battle. We just had to live with it. 

Until some founders in our network recommended Chargeflow - they promised they could automate our chargeback management and help us win more cases. 

Less hassle + more money in our bank? Worth a shot.

The results →  

• Our win rate has gone way up → to 71% (+350% increase)

• We’ve added 5 figures back to our bottom line → +$39,000

• Our chargeback headaches? → Reduced to 0 

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The key challenges

All of this makes international seem like a no-brainer, right?

Well, there’s a reason we didn’t just tackle this opportunity out of the gate. 

Actually, there are 3 reasons:

• Logistics

• Taxes and compliance

• Language and culture

Let’s take a look at each…

Logistics

Managing a global supply chain is more difficult than managing one domestically. And as every operator knows - logistics is never easy. 

Instead of making sure you have adequate inventory for a handful of warehouses in the contiguous 48 States, you need to fulfill orders across continents, which means navigating different international shipping regs and infrastructure. 

That’s just the tip of the iceberg…

📊 Be prepared for new layers of inventory and sales projections being added to your annual and quarterly financial planning.
📈 Oh, and if you start to take off in another region? Hopefully, your suppliers can scale aggressively in the face of new demand. 

Here’s what Obvi had to do:

• Determine how to fulfill overseas demand from our primary supply chain here in the US. 

• Develop international shipping networks while negotiating the most efficient and cost-effective delivery methods.

For now, we have decided against fulfilling from regional 3PLs/warehouses. Instead, we ship orders from the US, where our supply chain is established and strong. 

If you decide to go with regional fulfillment, however, expect your logistics to become an order of magnitude more complex. 

Taxes and compliance

Cutting through overseas red tape can be a full-time job. 

Every new country has its own tangled collection of regulations, tax codes, and compliance rules. And because you’re dealing with bureaucracy, they are never intuitive and can even seem contradictory.  

Bonus - they are often written in another language.

It’s practically impossible to navigate the labyrinth of global laws and regulations on your own. This can be a hard stopping point where a lot of US brands simply throw up their hands and give up. 

We found it essential to partner with expert teams and consultants who understand the various nuances of each region’s tax and compliance. 

When we got the right team in place, we were finally able to handle everything from local business licensing to tax collection & submission to import laws.

Language and culture

If you’re expanding to say, Canada, then you’re probably not going to have to change much about your marketing or pitch. 

Otherwise, you can’t just copy and paste your US strategy. 

In non-English-speaking countries, you’ll need to localize your content. That doesn’t just mean translating it from English to French or German, for example. 

You can’t use Google Translate - swap out all of the wording - and call it a day. 

Instead, you need to understand the culture so that your messaging will make sense beyond the literal “word-for-word” sense. 

For Obvi, we had to research the trends and perceptions of health and wellness within these other countries. Then we had to carefully tweak our messaging so it was not only legible to local consumers but resonant. 

The Obvi approach

As you can see, global expansion comes with a lot of unique and significant headaches. 

It’s why, up until recently, international sales were a rounding error for Obvi in terms of total revenue. 

But when we decided to lean into “going global”, we made it happen with strategic partnerships, and a phased rollout plan. 

Don’t do it by yourself**

If our intimidating list of challenges should teach you anything, it’s that you’re going to need expert help to expand beyond the US. 

We’ve found that partnering with international expansion consultants has been the key driver for our global ambitions. 

It would have been practically impossible to build everything from scratch while continuing to operate our existing business. Finding and leveraging a dedicated partner took international markets from a distant dream to a current reality.

A small example - we were struggling with fulfilling orders in Germany. Costs were high and customer satisfaction wasn’t great thanks to lackluster fulfillment and parcel shipping. 

We worked with our global expansion consultant to connect with German distribution networks. Over time, we increased our efficiency, lowered costs, and improved the customer experience. 

Now think of this type of stuff happening over and over again, in slightly different ways, in every new place you start selling in. 

That’s why you’ll need to augment your core team with expert help. 

**Need international expansion expertise? Reply to this email and we will connect you with the team that helped us.

Start small

Because you can’t just copy and paste your US business overseas, you should avoid trying to take your entire catalog of products, packaging, and ad assets and then dumping them into a new region all at once. 

You need to develop a minimum viable approach, so your rollout isn’t expensive, complicated, and risky.

For Obvi, this meant going to markets like Italy, France, and Germany and testing in English to gauge interest. 

While this isn’t a viable long-term strategy, English is universal enough that you can get some stuff into market and gain some traction. 

Once we got a strong signal in Germany, for instance, we moved forward with full-on packaging, translation, and localization efforts. 

Our CACs dropped, our conversion rates improved, and we had a viable new market to scale into. 

Sum it up - what we’ve learned

Patience Pays Off

We didn’t jump into international markets right away. 

We had to wait until Obvi had enough resources and a strong, established local team + processes before tackling everything that comes with global expansion. 

If we had rushed things, it would have impacted our domestic efforts and likely led to disaster - rather than opportunity - overseas. 

Scaling international = US success

Unlocking new, profitable regions outside the US has improved our bottom line. That means we are able to reinvest in our core business here, helping us remain healthy and competitive.  

There is also credibility to becoming a globally recognized brand, which we think will boost recognition and trust in the US as well.

Obvi’s global future 

Now that Obvi has its “international legs”, we are starting to consider the next phase - Asia and Latin America, where about 67% of the world’s population lives.

For the longest time, international wasn’t really on our radar. But with the threat of saturation and rising costs starting to hit us domestically, it became more of a priority. 

It took finding the right vendor and rollout process to understand how to overcome those three major hurdles (logistics, compliance, and culture).

The reward? We have exploded from six figures annually to a projected eight figures from our global business next year, with huge potential new markets on the horizon.  

So if you’re a US brand looking to unlock new paths to growth, consider expanding beyond our borders. 

Just be sure to have your ducks in a row and some experts on your side first.  

All the best,

Ron and Ash