1741 – the E-commerce Gold Rush in Latin America with Ramiro Velasco

0:28Hey there, thoughtful listener. million in revenue. Just head to upmyinfluence.com and watch my free class on how to create endless high-ticket sales appointments. You can even chat with me live and I'll see and reply to your messages. Also, don't forget, the thoughtful entrepreneur is always looking for guests. Go to upmyinfluence.com and click on podcast. We'd love to have you.

0:59with us right now it's ramiro velasco ramiro you are the co-founder of go advance the website is go advance.com g-o-a-v-a-n-c-e ramiro it's great to have you josh thank you so much for having me and honestly that was a great plug thank you right from the top it was beautiful yeah yeah so listen So here's what I know about Thoughtful Entrepreneur listeners is it's kind of like going to a really good event. Like it's cool to learn stuff. It's cool to get inspired. But the best events that I go to are the ones where I make serious connections. So interestingly enough, what we've learned about our audience is a lot of people are researching topics and finding you.

1:42And I'm excited to talk about this topic because here we are in 2023 when we're recording this at the very end here. and what a great space to be in and talk about how the trends have been moving in your direction. You wanna explain what GoAvance does? Totally. So we figured out how to get brands into Mexico and Latin America. And why are we looking at this? Because there's a buzz. There's a buzz, Josh. You and I were talking about it off camera, but there's a buzz around Latin America right now, be it in sourcing, be it in outsourcing, be it in shipping. There's some interesting people doing interesting things with taxes, right?

2:20Holding stuff in special economic zones. There's e-commerce growing like unbelievably fast. You have nearly 700 million people that are potential customers being digitized day over day, right? So no matter what point along the supply chain you are, like no matter what point of e-commerce or in general commerce you're occupying, what we're seeing is there's a buzz, there's movement, and there's excitement. So we figured, hey, let's try to help brands sell in Mexico. There's a ton of roadblocks. We can talk about that later, but there's a ton of roadblocks to get into the country and selling and in consumers' hands.

2:57We said, if we can make that easier, then it is an easy value add for basically everyone involved. And I'll talk about a little bit in a second about what the e-commerce platforms look like for consumers and how we're getting basically scammed every single day with sort of the existing resources we have available. So that's what we're really aiming to tackle with on our end. Yeah. For someone that hasn't been paying attention, Romero, can you maybe talk about some of the trends? Namely, I think that, you know, in over the past decade, there's been a lot when we think about e-com and obviously, again, there are people that are way more involved in this world than I am like yourself.

3:37But I think that, you know, in years past, there's been a lot of interest in doing business in China, right? As both, you know, kind of fulfillment sourcing, that sort of thing. And trends have been from, you know, conversations I've had have been really moving toward the opportunity of nearshoring and, you know, particularly for an audience or someone, business leader that is in the United States, for example, there is a huge opportunity and there have been a lot of incentives to encourage Latin American business. Can you give us a little bit of a higher level overview? I did a pretty poor job of explaining my observation.

4:15Maybe you can kind of fill it in for me. No, that was fantastic. Yeah, absolutely. What we saw, I think, during the pandemic was supply chains be disrupted across the port. And, you know, every single port that was bringing stuff in from China into the US was backed up. And, you know, we all had products that were there, like upwards of like a month, two months, just because like the ship was ready. But there were no appointments to get it off the ship. Right. So that brought into question a lot of the status quo that was already established. It was like, all right, I go on Alibaba, I find a product that I like, I'll bring it in and I'll sell it.

4:47And suddenly we went, wait a second, that's not working anymore. And a lot of these brands that have established supply chains from China just went, wait, I don't want this to happen again. And the sort of the view started broadening and we started looking to either side and went, wait, we have a massive land border with Mexico. right that cannot get backed up by appointments to bring stuff in and when brands started digging in what they found is reliable partners in mexico for example and this is just the manufacturing side of things to go oh wait lead times are much shorter wait freight costs are much lower right or you know what let's call them comparable for the time being manufacturing is comparable and the just the convenience of it became really appealing.

5:35So what we're seeing right now is the biggest northern city in Mexico, Monterrey, freight costs are going up like crazy. Warehousing is going up, of course, still within manageable ranges, but hitting peaks because we're seeing record exports from Mexico to the U.S., obviously in the form of manufactured goods. What we're seeing is Mexico overtaking China as the US's number one trading partner, right? Which is just monumental. Like, I like to joke, like, it should have happened before, we're right here. But what we're seeing is this strong shift towards some legitimacy in the Latin American market as not only consumers, but also as manufacturers, also as like strong pillars for your supply chain.

6:20Now, if I can back up a little bit more, we're also seeing a huge amount. We saw this with the rise of remote work. We're seeing a huge amount of Mexican workforce joining US-based companies for a lot of these remote jobs, right? So that's also what that's doing is that's bringing, basically they're getting paid in US dollars that's coming into the country and that's raising the purchasing power of your middle class, right? So it's a feedback loop where you're seeing on one hand, let's call it a a once in a lifetime event, hopefully. On the other hand, we're seeing sort of this like digitization of work.

6:57And then on the third hand, we're seeing positive business environments being created. Right. So like Tesla just set up a gigafactory here in Monterey. Right. Because it's the same idea. Government is now bidding for these giant corporations to come in and establish themselves as, you know, let's call it legitimizers of the market. So in my personal opinion, over the next five, 10 years, we're going to see a gold rush in Latin America. As, you know, we're seeing brands like sort of hit their cap in the more established markets, as we're seeing borders open up, as we're seeing we're having conversations with people that are saying, hey, I already manufactured in Mexico, but I'm not licensed to sell there.

7:39And it's like, oh, we can help you with that, right? Because there's a lot of flow of capital, information, infrastructure, everything sort of happening at once to where I think this is just the beginning. Yeah. So talk a bit about where GoAvance fits in, who you work with, what that looks like. Totally. If you want to sell in Mexico, you need a Mexican business entity. I think this is quite straightforward. This happens all over the world. If I want to sell in any country, they're going to say, all right, well, I want my taxes. What's going on? Historically, we can get around that, right? Like on Amazon, we have North America and the remote fulfillment program.

8:15Mercado Libre has Mercado Libre global selling. You have Shopify stores shipping to Mexico, and this has been going on for years and years and years, but it's not scalable. And it's not scalable because what you're seeing is if I'm going to buy an$8 product, do I want to pay 16 in shipping? Probably not. We're all used to next day shipping, maximum two-day shipping if I live in the mountains in mexico it's an easier country to get to like i know the u.s is two is two day generally mexico we're also close it's next day for the most part so when we're looking at that it's like do i want to wait six days for delivery so a lot of brands think they're like oh we're selling in mexico and my immediate question is wait how much are you paying in fees what are you you know what are you consumers actually paying because they're paying for delivery on top of that and all these questions come up and then the immediate response is how okay how do i sell in Mexico.

9:05And that's where we come in, right? And we figured it out from a couple of points. Obviously, importing and logistics, you have to get really good at it. You have to know how to import, comply with regulations and all these things. But we actually approached it from a different angle, which is I'm Mexican. I live here and I'm so used to getting ripped off and having to pay 3x the cost of a product because there's some drop shipper that figured out that, You know, like, hey, if I order it, my mom can get it in the States and ship it down and I'll just make that extra commission. And that doesn't feel great.

9:37Right. And that's actively hindering the growth of e-commerce right in Latin America. So what we figured is we can help brands come in. We can be the distributors of the product. Right. And then use Amazon expertise that we've built up over the past eight years to really dominate the market. immediately we're hit with a roadblock, which is sure. What does the Mexican market look like? Yeah. Right. Because you're selling an unproven market and I'm not going to have a good partner. I mean, you know, talk about risk, right? It's exactly even, you know, the way we're doing it, like what you end up looking at is going, I don't know if my inventory is going to sell in one week or a hundred weeks, or, you know, like, what if it's just going to sit there gathering dust?

10:19Like, I have no idea what the market looks like. And for most business owners, that doesn't represent only a capital risk, but it also represents a time investment risk where you're going, how much am I going to break my head over trying to get into a market for it to just never lead to anything? There's only a set amount of hours in a day. Everyone listening to this podcast is infinitely too busy. Right. And then the question is, do I want to dedicate resources? like I said, not only capital, but time and attention and back and forth to land on something that might not work. So what we figured is we got to make it as easy as possible and as headache free as possible, because I think that our philosophy is that is the number one currency.

10:59My number one currency is how many emails can I get through in a day, right? It's hard. So we said, Hey, we'll do importing. We'll do logistics, but we'll also do market management, right like we'll do the seo ad management like all of these things that need to happen um and the way we figured the incentives out on that is we actually work off commission because we need to be incentivized i'm a big believer in win-wins right it doesn't any good system has to work when people don't really want to work is my philosophy on system building and process building so here we we said all right we need to be commissioned only to justify buy, right?

11:37Like the market, because we know it's an unproven market. You know what? Maybe five years from now we can say like, yeah, market's huge. Like we'll charge a time. No, let's try to make this work. Right. And if it works for you, it works for us and we're all happy. So, I mean, after you're an agency for that long, you just try to make win-wins, man. Like you don't want people mad at you. Yeah, for sure. How would someone know that they may be ready for you? Like in terms of like, you know, what's going on in their business, you know, what kind of volume they currently have, what their objectives are?

12:07What would be like a very typical use case for you, just given who they are? That is a great question because it is so variable. And it varies based on market and it varies based on what your competition is doing, which is what a lot of people won't tell you, right? It's very easy to come in and say like, oh, we'll do 15 % of your US sales within the next three months. And it's like, yeah, that is a possibility. But the question is, what's the competition doing? Because we've had cases, we actively have clients right now that are getting demolished in the U.S. game. Just absolutely. They're like, we cannot compete in the U.S., but they looked at Mexico faster.

12:43So they moved to Mexico faster. Right. And here they're actually matching their U.S. sales because in the U.S., they're a small piece of the pie. And in Mexico, they are most of the pie. Right. So the question other than sales, which I will answer in a second, is what's your competition doing? What's the market doing? What price points can we hit? What are your margins like in such a way that they can sustain this? We generally aim to beat North American Remote Fulfillment Program, TNARF. We aim to beat their margins because if you go into your Mexican accounts and you start looking at the fees, you will be surprised.

13:19And sometimes aim to hit the American market margins. Now, in terms of volume, we have to be aware that this is an expansion project. This is somewhere where you're going to go in and actively invest. So you need an advertising budget comparable to the market? No. As Amazon Mexico and Michele Liberia, ACOS, CPC, literally 83 % cheaper? Yes. But still, there needs to be a cost-benefit analysis on that front. But in general, we are mostly aimed at medium to large businesses where obviously multinationals like Coca-Cola has a Mexican entity. We're not for them, for whom it's not worth quite yet to do it all in-house.

14:03Yeah. Ramiro, your website, goavance.com, someone's been listening to our conversation. Where do they go from here? Conversation? Do you have any resources you'd recommend that they take a look at? Absolutely. Honestly, the absolute hubris on my part, my calendar is open and on the website, which as you may imagine is getting me in a little bit of trouble, but I would recommend you book a call because we were really set on making sure that, you know, we're working with people for whom it makes sense. So the first, you know, when we chat, we get to chatting. It's just like, Hey man, what's your product?

14:38What's it look like? What's it look like in the States? What does the competition look like? And we do this all on the call. And then we can be like, you know, we're doing a basically assessments, like a viability assessments to go like, Oh, actually this could work. And this is what your competition is doing in sales. And you know, we can get started within X amount of time, depending on the, on the category, because I mean, I spent a year before launch breaking my head over a ton of these nuances and I wouldn't feel comfortable just telling someone to go out and, you know, like search. You can book a call.

15:08You can send an email. My email is also there. And we have a team of people that are trying really hard to, you know, make sure you get the right information. All right. Ramiro Velasco, co-founder, GoAvance, the website, GoAvance.com, G-O-A-V-A-N-C-E. Ramiro, it's been great having you. Thank you so much for joining us. Josh, thank you so much for having me. And I think, you know, we went really fast. Like we talked really quickly, but I think we got a lot in, which makes me very happy.

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