You might be an ecommerce merchant, but we’re going to take a wild guess and say you’re not an ecommerce merchant who sells wine at auction.
That, however, doesn’t mean you shouldn’t listen to Victor Castro when he talks about Zachys Wine & Liquor’s push into international markets. See, for all the different types of retailers, for all the different retail verticals, for all the variety of sizes of retailers, there are certain considerations when it comes to going global that are universal.
Castro took a ballroom full of retailers and retail industry types through the story of Zachys expansion into Hong Kong during a workshop session at the 2018 edition of the annual IRCE conference for internet retailers. About 10 years ago, Zachys executives were trying to figure out expansion and how to grow beyond the borders of the United States.
“We are very much a global business now,” Castro said. The idea of getting there seemed, well, daunting.
First, Zachys sells alcohol, a product that is heavily regulated. There are rules even within the United States about shipping wine. Internationally? Who knows?
Wine is heavy. A case weights 40 pounds, Castro said, and people who buy wine at auction don’t usually buy just a case.
Inventory has an additional degree of difficulty when going global
No two bottles of wine are alike — not even from the same wine, same winemaker, same vintage. When people buy a bottle of wine at auction, they want the bottle of wine they bought. By going international, exactly how much more difficult — and expensive — would it be to keep track of who, from where, bought which wine, when?
Oh, and, when people buy a $5,000 bottle of wine (the average at a Zachy auction) they also want it refrigerated during shipping. Not cheap.
Then there was the question of global, where?
“We looked where growth was and saw that Asia was opening up to trade. And there was a lot of money in the market,” Castro explained. So, Hong Kong it was.
Let’s stop here for a minute and think about the lessons from Zachys so far. High level: You’ve got to think through going international. Are there particular things about what you sell that make it particularly difficult or expensive to ship? Do you have inventory insight and control that is up to the task of what you’re taking on?
The Zachys crew realized that Hong Kong is a very different place — culturally, socially, economically and politically — from the United States.
“We needed to understand how our new customers in Hong Kong like to behave,” Castro said.
So, Zachy’s instituted a year-long program of cultural training to coincide with their expansion. But no one thinks of everything.
“We learned a lot from experience the first time,” Castro said.
There were technology-related issues: “Translation. Not just multiple languages, but multiple versions of the same language. And then currency. How do you deal with local currency?” And there were network issues and censorship. China’s internet is highly regulated. Some of Zachys images wouldn’t appear.
The wine seller’s customer relationship management was another issue. It turns out those in China wealthy enough to buy expensive wine at auction were not interested in handling mundane tasks themselves.
“The consumer had an assistant and a logistics person that they wanted us to talk to and a credit card person they wanted us to talk to.”
Keeping all those email addresses and phone numbers straight was a challenge, to say the least. Then there was understanding how Hong Kong consumers like to interact with retailers. Zachys turned to WeChat and developed marketing channels that spoke to Hong Kong audiences.
Your international customers have their own customs
Zachys soon learned that their Hong Kong customers viewed auctions as social events — despite their remote locations. So, Zachys began using satellite events and using live video to create bidding parties, he said.
“The main thing we figured out was, don’t replicate what we did in New York, but find out how customers act locally,” Castro said.
Which, yes, is the universal lesson from this portion of the Zachys story. Don’t literally land and expand. You can’t simply transport your business model, practices and expectations from the United States to a country that is not the United States. An international move requires research, deliberation, some persistence and the ability to learn from mistakes and adjust.
Oh, and, the happy ending? Because you knew there was a happy ending. Castro says Zachys is currently the No. 1 or No. 2 seller in its category in Hong Kong — and the company is contemplating its next country to conquer.
Photo by iStock
Contact Mike Cassidy at m[email protected]; follow him on Twitter at @mikecassidy.