A consumer small kitchen appliance company successfully launched a new product in the United States. Sales were growing at leading retail stores as well as online. The company believed the product would do well Europe and wanted to expand business development and sales there.
The company President, a E78 Executive, traveled to Europe to find a suitable European Director. He determined that the best candidate was a Scandinavian executive with extensive business connections throughout Europe. For tax considerations, the company established the European business as a wholly owned subsidiary. The new Director determined that the best markets to begin with were the U.K., Scandinavia, Belgium, the Netherlands, and Luxembourg.
The E78 Executive and the European Director negotiated with a contract company to establish European warehousing and fulfillment operations for sales and product distribution. The contract company would receive products from the manufacturer in China and ship them both to Internet customers as well as retailers ordering in bulk. The contract company would also be able to handle customer service needs by coordinating with customer service operations in the U.S.
The company decided that their first sales campaign would be via e-commerce, to allow for immediate sales at high margins and a social media marketing campaign to build brand recognition. They contracted with a web development firm in the U.K. to convert their U.S. e-commerce capabilities to work in Europe. This included managing for multiple languages and VAT tax structures. This process was complex and time-consuming, but vital to the success of European online sales.
The e-commerce launch was successful, and as sales increased, the company reached out to leading European retailers to establish retail sales, which in turn led to smaller retailers contacting them to carry their products.
- Total company sales increased from $2 million to over $11 million over a three-year period at excellent gross margins and profits. Approximately 25 percent of this was contributed by the European subsidiary
- The company continued to expand, adding sales in Asia and a strategic partnership with the leading Australian small appliance company