What Is Cross Border Ecommerce with Mike Michelini

This week’s show we are talking about my experience and a broad overview of cross-border e-commerce more on the export side. I did this as a presentation at our Global From Asia Shanghai meetup. I share some of the insights and the history of how cross-border e-commerce came to be and some perspectives being involved in the industry and watching it over the years from a China angle.

√ Jeff Bezos
√ Cross Border Matchmaker

Today’s podcast is brought to you by Aurelia Pay. I use them for sending money to my Chinese supplier from Hong Kong – it is a cross border payment solution between China, Hong Kong and South East Asia. So when I need to make a payment to a Chinese supplier, I just hop in to place a remittance, pay to their HK bank account, and Aurelia Pay settle RMB within the same business day! Check them out

Thanks so much for listening everyone! I am working hard to capture content both online and offline, aka O2O. We are full steam ahead with the meetups, just had one a couple days ago in Hangzhou, working on recording this and Lorenzo has been doing an amazing job there. These meetups are growing and it is a great way to engage the community and see people who are taking action!

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Welcome to the Global From Asia podcast where the daunting process of running an international business is broken down into straight up actionable advice and now your host, Michael Michelini.

Today’s podcast is brought to you by Aureliapay. I use it personally for sending money to my Chinese suppliers from Hong Kong. It’s a cross border payment solution between China, Hong Kong, and Southeast Asia. So, if I need to make a payment to a Chinese supplier, I just hop online to place the remittance, pay to the Aureliapay Hong Kong based big account and Aureliapay will settle RMB within the same business day. So, check them out online at www.aureliapay.com A U R E L I A P A Y .com or check them on their link at our show notes.

Mike: Okay everybody, Global From Asia podcast. What number we at, Angelica?

Angelica: We’re at episode 194.

Mike: 194 shows. Thank you and I’m doing this from Shanghai, you’re in Manila and we are definitely Asia business going to Hangzhou in a couple of days, were got to have our 2nd Hangzhou meetup, our member Lorenzo has been doing amazing things for us, right?

Angelica: Yes, he is.

Mike: So he’s been always trying to get us come up. My first time ever to Hangzhou. It will be cool to see the community, he says amazing things happening there and I’m also got to get to see Alibaba’s campus. Alibaba really likes Global From Asia’s content and we’ve been contributing some content to them to their site as well. So, interested to check out what’s going on there. And then Lorenzo, actually you met him in Manila, so he’s doing great things and you got an audio interview. So we’re actually get to use that in the future podcast, which is pretty awesome. How about this member’s series, which member are we featuring this week?

Angelica: This week, we have Mike Caja of Truly Scaled Limited. So we already posted that last Wednesday on our forum regarding the link where they can read about Mike and hope they can check out our forum as well as Global From Asia Facebook page.

Mike: Definitely. I know you’ve been working hard getting current VIP members going and taking care of everybody. Also, Guiddo’s coming to the Matchmaker. He’s been excited, even talking to him. We’re just trying to get this global communities going. Then this week’s show, it’s me. I stucked on the mic while I was doing my speech in the Shanghai Global From Asia meetup this past Wednesday, September 20th. So it’s kind of an overview export e-commerce, Cross Border e-commerce, I’m talking about it’s history of what I believed Cross Border Ecommerce started. I get a little bit passionate some of this stuff. I might speak to our editor Boban and about cuts. But we might just live it in there. So it’s a little bit raw. Actually, I’ve been getting more bold, Angelica. Some of my friends are saying I might get in trouble one of these days somewhere. But this is one of them, we want to keep it real, we want to keep you guys interested and engaged. So, let’s tune in.

Angelica: Okay.

Mike: So like, what is Cross Border E-commerce? I think there’s some experts here, there’s might people better than I. But I think the history is eBay. I think eBay from what I research and when I talked about, they’re the pioneers. Well, of course e-commerce technically means is selling something form 1 country to another country. So a lot of people think Cross Border Ecommerce is Chinese Ecommerce. I do a lot of cross border commerce events and people come thinking it’s about selling on Jingdong or Tao Bao from overseas. That is definitely Cross Border E-commerce but of course e-commerce is also selling some to China overseas. Actually Google Cross Border Summit, there’s another cross border summit in the UK, that’s about Cross Border E-commerce in Europe to UK. So they are all about cross border in Europe. That’s also another type of Cross Border E-commerce. I always tried to clarify that to everybody. So I know we’re in China and we talked about selling in China and we’re going to talk about that today. But it’s really anything. So the story of eBay, I think a lot of you guys know Jack Ma kick their butt pretty hard in China. So of course they tried to do the marketing correct and localize enough. But what happens is ebay.cn is about Chinese factories to sell in the US or overseas markets. So it’s all about how to sell your goods overseas. And I think that start in 2006 or so. And from what I understand is the beginning of Cross Border E-commerce. Before that it was shipping part of B and B into America or into that market and selling it. But at that time people are start selling like mobile phones from China directly into the US market. So I think it really started that way. Then also people start selling into China and technically Cross Border E-commerce needs to sell B to C if this is the consumer from Hong Kong, I don’t want to get a political fight but it’s a border. I’m not got to say if it’s China or not but is the the border and has to go import into China. And then the taxes are doomed, Dom will talk about in more details is better that taxes are doomed to the person receiving it. So that’s the real definition. And then there’s 3 parts of cross border or actually any kind of e-commerce really. There’s the seller which I said is a gladiator. There’s the marketplace, even a shopping cart technically is a marketplace. But basically its Amazon, or Taobao, TMall or even WeChat stores are kind of marketplaces. And then there’s this flyers where you get your product. So I just like kind of high level of understanding of the ecosystem. And then this I’m sure you guys know him.

Audience : Of course.

Mike : Basically, he said he will reply to my email. I emailed Jeff Bezos at Amazon, I pulled it up coz I got a new seller account. And it helps now. Its free of help. It’s Dominic on the way here, all these gatekeepers they are very strict now on new accounts. So you know, but he has all the power. I have to get on Amazon. Of course I got on my shopping carts and other things but I think if you’re selling in the US or most international markets maybe, China doesn’t matter on most places, you need to work with him, if you’re a seller or a gladiator, I don’t think he really cares about us. So, he cares, of course, while I talked about CEO. A CEO actually has 3 parts. You’re selling to your customer, your employees, and the owners or the shareholders. I don’t think sellers fits into that neither. But basically, he secure, more about his customer which is the buyer. Not the seller and his investors, shareholders. So he has tons of power and for a seller we have to listen to his rules and do what he says. There’s a funny picture about a couple of months ago he’s going to a conference and he was walking like looking jack dude and he had a picture in 1999 of him looking like a geek. Like a nerd. And now he’s like, this jock dude like a military outfit or something.

Audience: That’s too much power.

Mike: Yeah, I mean they just bought foods and everything. It is a little bit scary. So if you’re doing anything, you decide which, I think I’m got to mostly talk in my talk right now about exporting. But you have to decide which market and then you have to decide which channel. So for my new startup I just started the new Amazon account. I’m spoken in the US, but a lot of people are trying to tell me, coz I’m doing all this live podcast. So people are saying, Mike I don’t think you should do, US is too competitive, you should go into Europe. there’s a lot of people who do Amazon Europe or I think australia is opening up soon. So some people might Singapore, I think have opened already. But you should choose which market you’re selling into, right? Of course the dream for all of us, the dream is to sell globally especially if you’re starting because it cost a lot of money so you have to choose your market first and then the product selection. So I’m currently into the collection right now for the new one. And this is pretty tricky. So there’s tons of software, we have software developer here. Ecommerce software is huge, all these data, its big data really. I think just the Ecommerce seller, you have to be good at data. I know David say right. You are fond of looking at your data all of the time. Too much numbers. So I think Ecommerce sellers have to be analytical, have to look both before you buy, before you decide to buy a product. So there’s tools like you can at Amazon, you can use this data for anywhere. But, it’s might best to use it in the market for what you’re selling. You can use tools like Amazon tracker, Jungle Scout, you know other tools like, which one do you use?

Audience: Jungle Scout.

Mike: You use Jungle Scout. So this tools will kind of do like research of what the volume of sales and history of this product. So before you even start selling something, you kind of get an idea and set the margins. So you kind to be pretty analytical to really do it. And then you got to to the keyword research and the reviews. So I was, about August last year I was in the big Chinese seller conference in Shenzhen like a thousand Amazon sellers, Liza was there too. It was pretty mind boggling. But about that time is when they crack down my reviews coz the way, i don’t want to pick on Chinese sellers, but the way a lot of sellers used to do was to give a lot of free products and then hope. Usually it was like pretty sure you get like top reviews, 5 stars and I would boost your algorithm to rank into Amazon. And it kind of get wide spread. You just kind of give away free stuff. And then you get ranked, you get 5 reviews and you get ranked. But Amazon will crack down on that Jeff Bezos earlier, he’s cracked down on that. There are grayer illegal ways to do this. I don’t want to talk about now. But some people are crazy enough to make like fake buyer account, fake credit cards to buy stuff, or paying people how many WeChat groups right now, I can get free stuff or even paid to review. So it does still happen but, I’m into market, I’ve been selling online since 2004 and I’ve been doing my own websites since 1999. And there’s always kind of like black hat, illegal ways to rank in Google or rank in Taobao. The worst is, I was talking about this in an interview, well I will see him his afternoon. Actually he’s one of my friend, he’s my staff for 4 years, I don’t know if I told you that. He’s one of the biggest sellers in China and he had 30 people surround his office saying that he did a massive black hat negative review attack on web competitors and just destroy all their listings by negative review and all of their listings on Amazon. There are a lot of shady stuff and you got to keep an eye on that. But the point is, the biggest problem, and the reason I maybe go back to e-commerce and do it publicly is because a lot of people are researching data and looking at data and looking at products and they won’t make a move. They don’t do it like we have a lot of people doing meetups, listening to the podcasts and they are still not sure which product. Brian is here, I think maybe selling online, maybe we get them on and he might stuck on which product when in Jungle Scout pay per entry tracker or something and then just not sure. Do I put that, well actually you shouldn’t buy a thousand of piece of MLQ’s from factory right away. Like, I sort on selling online by dropshipping in 2004 in New York City. So you can do something like dropship or something called like retail arbitrage. Or you can buy Walmart and sell at Amazon and make money. Or you just do that honestly and were got to do that in our account which is still getting process like Jeff Bezos. But once it opened, we’ll got to send stuff in Walmart US to Amazon FBA and sell just to get the activity going. Not even about making money but to get the activity going. We’re trying to make it on Christmas sales and we’re talking factories now. But the point is you just want to get activity going. You want to learn how the process works. You might get bad products, right? I’m sure we’ll try to talk some strategies what to do when you get a bad product. You’ll try to get rid of it. You have to sell it right off and lose money but the point is you just get to keep moving forward, you’re a gladiator. So making the product, I mean we’re in China so we have a big advantage. I’m not got to make it Yiwu this time, I was almost got to Yiwu. You guys tried Yiwu market? So that’s a huge market, it’s like a city and there’s also a Taobao city now. I want to go to. I’ve been to, forget the name of the city. But it’s nickname is Taobao city. there’s huge amount of sellers. I mean China is always about clustering, right? I remember when I heard a Harvard business review, about when Joe Lighters. So when Joe, somehow they started selling lighters and one family started selling even like their neighbors started learning and started doing another one and then you get these cities like district focus on this one specific product. So I think that’s an advantage if you can find that specific district or that specific city. I go to the beach in Shenzhen and there’s a beach that’s full of, I think it’s pigeon and like fish, it’s all restaurants lined up in pigeon and fish, I don’t know the exact food. But what happened was one shop started and he started selling a lot and when somebody saw him, they sell a lot of pigeon and fish, they open another pigeon and fish restaurant and it’s a long discussion. I talked a lot on this at podcast and some people gave me this idea like I think its collective the way Chinese are more collective and they learn from each other. And in the west we are independent, we get upset when somebody else copied us and wants to do what we do. But I think it’s almost a common here, I’d love a feedback in an hour later about that. That’s I think why are these clusters of cities of specialties because they involved the community, they involved others either willingly or unwillingly. So basically, we got to following systems and leveraging data as always. Actually it’s kind of my weakness. I am more of a creative person as well as I like podcasts and blogs because I don’t like working on a data. I worked in Wall Street for almost 5 years. But I get sick of Bloomberg and spreadsheets. But even Ecommerce it’s a lot, I mean not Bloomberg, but it’s like Jungle Scout and the spreadsheets. We have some people here that do logistics, right Peter? So the idea, I mean today I’m giving an overview coz this is our first event here and I just want to kind of give a very raw overview of all the major pieces of Ecommerce so this might be academic or very basic for some people. But, I know lots of logistics companies. They don’t know how to deal with Ecommerce or online marketing. But a lot of Ecommerce sellers, even me I’m not as good in logistics because its more traditional, right? But I think Ecommerce is a combination of logistics and like online in bridging taking this into good and get into A and B and then there’s people who know how to do that but they don’t know how to sell. I know some pretty big logistics companies tried to make different departments of e-commerce companies but they don’t have that DNA to do it. Of course it seems like Amazon but logistics is very tricky. I have a call on Friday morning with the company that’s doing vitamins into China. So that’s very tricky, Dominic will help here will send to Dominic. The logistics is the hard part. You get to get that stuff especially into China, if you’re doing, [00:18:11] importing is a nightmare. I’ve got companies that may crash, I know it’s a wine companies we don’t have wine today but there’s tons of wine in China. I have people that contact me and say Mike I got a pile of wine, I got dealer of wine, can you help me get it out? or can you tell somebody out there, I’m giving up its been like a month, just get me out of this. So you got to make sure you have logistics anywhere. We can talk about strategy for logistics, but you might just want B to C instead of B to B into China. so that’s one advantage maybe of selling cross border into China. B to C is you don’t get to worried about so much of logistics. I know Dominic has been talking about Cross Border into China more with free trade zone. It’s a bit tricky on the export side. It’s easier I think on the export side than on import side. But it’s something you should definitely know your product really well and have a good understanding of your supply chain and then cash flow. Again, I think one of the advantages well, Amazon is different now but when selling ebay or your own website, you get the money within a couple of days after it sells. So you’re cash flow is a lot better but when you sell on. Well Amazon pays you twice a month, middle of the month and end of the month. So it’s not nice for you really. And then what I learned a lot about Chinese e-commerce was. I remember when I was here in 2008 and i have a Taobao store for my bar supplies for my Ecommerce business. I couldn’t sell anything. It was Taobao that basically a catalogue, a people to contact me and it was like a manual transaction. People work really buying online in 2008, 2007. I was a little bit cracked. Of course there was some happening but it seems manually sitting in Aliwangwang or whatever chat of Taobao, that’s time was and visiting our office, giving cash and fine. I think they cracked Chinese e-commerce because of the payments, seems that is happening to WeChat right now is the trust. So they hold the money, they held the money until it was delivered. I think that was cracked Chinese e-commerce. And this one has so many cheaters in China selling in EBay because they sell, first they get the money right away. They don’t have to ship it. If you look at the difference between Chinese e-commerce and foreign commerce, it’s pretty fascinating. So I met sellers in China and maybe fortune and they may open about it, that they would open tons of ebay accounts and sells stuff that didn’t deliver, keep the money and close and open another one. I know these people, they changed their name, they used different ID numbers. You can’t do that in Chinese e-commerce because you won’t get the money, its connective. One of the advantages being second or not first to market is you can build on the weaknesses of the first. So America didn’t integrate payments and shipments together. But in China they really did a better job to connect the shipping and the payments. So it’s also because of culture. But it affects your cash flow. That was a beautiful thing for me when I sold, you get the money right upfront. In China they wait it longer they get the money, so it really affects your cash flow especially, in any e-commerce business when it takes inventory. Inventory is the hardest thing. I met some huge sellers and they just use a lot, the bigger you get the more inventory you got to buy. So if you’re selling at Amazon and you’re selling business, you get to find finance inventory. I know there’s more, more solutions for inventory financing, but this is something that I think about. You sell a thousand pieces, you get to buy another thousand sure on your margin, but you get to have this cash flow, you have to pay before you sell that first amount or you run out of stock. So you have to have, it takes money to make money, if you are inventory based in Ecommerce business. But again I can tell my gladiators in rocky balboa but it’s all about, you got to get stuff. You got to get like fraud, your paypal, you get lot of Amazon’s got to send you re-verification of your documents. Taobao might do something, you’re a little bit stuck in a middle here. But the whole point is you get to keep going forward. and then there’s the taxes, slides is actually a presentation that I done and others have done. So of course I can’t, I could go into details about each life. But the tax is very complex with Cross Border E-commerce, we’re also talking about the Hong Kong companies, I’m on a Shenzhen Hong Kong border. There’s a huge pressure, i don’t even know where I should coming from, it might be coming from China, but it’s probably coming more from the US. Have you heard the digital nomads before? Basically, it’s like the guy or the girl on the beach in Bangkok which a lot of people listen in to my podcast making millions of dollars on Amazon. They live in Thailand, they have a Hong Kong company and buying from Chinese company in Guangzhou. Some don’t pay any tax anywhere. But it’s also down, Trump is working on making America great again. There’s a Chinese authorities are working on cracking down a bit coin, cracking down on payments, cracking down on money laundering. I’ve seen people, I mean Chinese you know have done so many events with them. Shenzhen when they came down. He says Xiamen is his name, I might say it wrong, but he says that I’m too scary. But I’ve had payment companies that disappeared. the government’s are really cracking down on payments, because, this is a recorded I might turn it off for a second (laughing). But basically there’s a whole battle of who should get this money. Does America get the money? To Donald Trump? Because you know, the Chinese supplier pay taxes in Chinese government, there’s Hong Kong keep all the money and people buy real estate there. What about Thailand and the guy on the beach? I guess he’s buying stuff there, this coconuts, [00:24:54] or his AirBnB. But maybe AirBnB is not paying taxes there, I don’t know. I think it’s fascinating. I’m a living anarchist, I get in fight on Facebook all the times with my American friends coz they think that I’m an evil person. But taxes and bookkeeping is very complex. So it’s something, again back to the data, and I want to give more time to Donald, he has some great, great content. So when you really boiled it all down, a lot of stuff we talked about is a one time thing. You find the product, you get the logistics set up. You get the listings set up. You get your systems and process but I think the long term job of the seller is always been looking for the next product. Marcy and I were talking about how to protect yourself from FTC Factory to Consumer. You know all these factories in China selling direct. How do you protect yourself? and I think the best way is to know your market, to know your customer, to build the community, to build a brand. That’s all sounds like buzzwords. The real point is always having a new innovative product come out. Doesn’t have to be the most innovative, most brand new. But even the micro innovations. You have to be always coming out with something new based on your feedback of your customer. And that’s how you’re still ahead from the copycats from the Chinese suppliers from the college students, NCLA graduating starting on Amazon. I had a good meeting with the David Lee yesterday. He’s in Germany, he couldn’t come but he’s talking to this college students is called the side hustle. There’s a keyword now, Millennials side hustle. Do you know about that? He says it’s a buzzword now. It’s like a growing trend in california, all these kids they want to make side buzzle money from Amazon selling online. But I think in a way, you got to stay ahead, always find that good product or have a good product or have a good brand. And I had a really amazing conversation with the founder of AMZ Track, while not founder, he bought it. Chinese Amazon bought out this American software company. I had a tea with him on Friday, I think you know Jerry. He will be on the podcast. Jerry Gan. He said 2 ways that you can be a seller. You can be the marketer or you can be the product. And he’s taking the position, hope I will not talk too much about it, but i’m saying it anyway. He wants to be a product business not a marketing business. He wants to have that good product. He has the patterns, he has IPs, he has a brand. He doesn’t want to keep fighting to be marketing to get the customer. He wants to have the good product, just de-list or shut down all the copycats setter, taking all these patents of his brand. So he says he wants his strength that use to be product based not marketing based. It does seemed more tiring, marketing is you always have to be finding new angle, right? You always have to be doing on Instagram, or Snapshots, which you are still doing to your product based. But if you have a good product that’s probably the most important, And then building the brand and just making it happen. So a lot of people, that’s why I loved being public of what I do, whatever thing that I do. But what we’re doing in Amazon, Amazon US we’re picking up new products that we just starting and people are, Mike what about Ebay? What about your website? What about Taobao? I had a meet up, I think that is based in Hong Kong, too. There were some people saying, Oh you’re selling to Asia. I’m like, what’s your market, it’s Asia, Asia is not a market, like China, like Japan or Singapore, they are all huge different markets like you know Hong Kong. I guess in Hong Kong you just have a shop with Octopus pay downstairs, it’s I think Hong Kong Ecommerce. Basically, I’ll pick one market, one channel and dominate that first. I mean I think that’s the big problem for me too. But it’s focusing, you are tempting to do all this different markets and products. And as soon as you bought it, maybe don’t call a factory and buy a thousand pieces. They may sleep on it before you do that. And in the other, I got to pitch him my bigger events on the 27th, that’s a Friday. So, well got to have some top sellers there, born and expert based, seems like South from China is all about export. We got the electronics markets. It will be the first time to take some top Chinese sellers and top western sellers together. I think we’re in a Wechat group. But I haven’t tried to add everybody, if you’re not in our wechat group and you want to be, contact me or most people are in it. But if youre not, make sure you do that. There’s so many wechat QR codes but I think this is our personal account. Probably you talked to Honey Bell. It’s my first time, I used to have a Shenzhen assistant but she left me and moved to Shanghai. I have to meet her but she couldn’t make it tonight. She have another event. But I’m teaching a Filipino on how to do a Wechat. It’s hard. It is hard. So please be patient with her. I know some people have some problems with payments communications and maps. But she’s doing a pretty good job. So I think this will add her, the Global From Asia official account.

Mike: Alright, that’s it for www.globalfromasia.com/episode194 at the, that was our Shanghai Global From Asia meetup. I have another one with Dominic from Tmall. We’ll talk about importing into China with e-commerce and cross border e-commerce, which is a great one too. We’ll be using that in the future podcast so stay tuned for that. Thank you everybody and we’re doing meetups all over the place more and more. We also have a podcast coming up with Lorenzo on Friday. Well, he actually got an exciting news for us and some updates on Paraliving Inc. I’ll save it til Friday, but thanks guys for listening. I’m still on the road. I’m in Hangzhou right now recording this [00:31:14]. Things were moving fast and hope you guys are making moves in your business. Stay motivated. Stay positive and make things happen. Alrighty? Have a great day everybody and cheers.

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