Why brands born overseas have their sights set on the U.S.

According to one brand's founder, the U.S. is “the best place in the world to be a consumer goods entrepreneur.” How can brands born overseas succeed stateside?

Sarah Drumm

Editor
In January 2021, U.K. beauty brand Bybi launched across 1,800 Target stores in the U.S. (Photo: Bybi)
TREND DIVE

At online flower marketplace Floom, the team is gearing up for May 9th. But this won’t be the brand's first Mother’s Day this year. As a British-headquartered company, it also sees orders flying in from grateful sons and daughters in March, when the U.K. has its annual celebration.

This unique situation is one of the big advantages of serving customers in America, the company’s founder Lana Elie says. Floom has been operating in the U.S. since 2018, when it launched in New York and then Los Angeles, before eventually going nationwide. Elie has been running the business from London, but she will soon relocate to Los Angeles and open a new office.

Floom is not the only British brand pursuing American customers. In its first year, supplement startup The Nue Co relocated from Cambridge in the U.K. to New York, so it could tap into a more lucrative customer base (70% of Americans say they take supplements daily, compared to just 36% of Brits). In December 2013, U.K. subscription snack brand Graze, considered one of the country’s original direct-to-consumer success stories, launched across all 52 states. Within three months, it had gained 100,000 new customers.

To steward the expansion of Ugly Drinks stateside, cofounder Hugh Thomas relocated from London to New York in 2018. He says the Broadway WeWork he uses is occupied by a number of fellow Brits launching brands abroad – with digital bank Revolut, clothing retailer Wolf & Badger, and The Nue Co all on the same floor.

The big deal about America

The U.S., Thomas reckons, is “the best place in the world to be a consumer goods entrepreneur.”

As one big, English-speaking market, the U.S. has advantages over Europe, where brands have to navigate country-by-country language and business culture differences – from France’s extensive labor laws to the tendency for German shoppers to distrust online shopping.

The differences between Ohio, Kentucky and Kansas, say, are not nearly as difficult to navigate. “If you can make it in one state, it’s a replicable model,” Thomas says.

America’s sheer size is also a big draw, with a population of 328 million compared to the U.K.’s 66.7 million. Even securing a little bit of market share can be game-changing for a U.K. brand’s balance sheet.

Ugly Drinks – in stock in America. (Photo: Ugly Drinks)
Setting up stateside

But before a brand can even start thinking about shifting huge volumes of product in America, there is a mountain of paperwork that needs attention. The to-do list includes setting the company up as a U.S. entity, finding local lawyers, sourcing accountants to help you muddle through the complex tax landscape, and opening up a bank account so you can actually pay your suppliers.

Thomas says he also had a lengthy wait for visa approvals. Ugly launched in the U.S. in May 2018, but it wasn’t until October 2018 that he was able to manage its operations in person. It’s an onerous process – and it can be expensive, too. According to the Wall Street Journal, the average cost of setting up a business in America is $65,000.

But, there are ways to cut down on costs. British beauty brand Bybi, for example, dipped its toes in the water by striking a small deal in 2017 with clean beauty retailer Credo, which it was able to fulfill from the U.K. In January 2021, following a $7 million funding round, it launched in 1,800 Target stores across the states and started taking direct-to-consumer orders from U.S. customers.

The brand’s cofounder Dominika Minarovic says the deal with Credo gave Bybi the proof points it needed to convince Target that U.S. customers had an appetite for its serums, and the size of the deal justified the costs associated with setting up abroad.

Minarovic says it took over 18 months from deciding to pursue a proper U.S. launch to actually landing on Target’s shelves. “The scale of the U.S. distribution we [now] have eclipses anything that we have [in the] rest of the world,” she says, adding that 50% of Bybi’s income now comes from the U.S.

As a tech-driven marketplace, the florists that use Floom fulfill orders themselves. Elie says things have been a bit quicker for her company. It took just “a few months” to get Floom set up in the U.S., and costs were saved by managing everything from sales to its new community of American florists from the U.K.

“It’s been almost three years of us doing [this] remotely,” she shares. “I remember the deck I made for the board that was like, ‘why we should go to the US,’ [and one selling point was that] we are a completely scalable business. As a marketplace, you can rely on a single team to [manage] multiple countries."

However, she says that having a presence on the ground is essential for any brand that wants to achieve hockey-stick growth. “The opportunity is much bigger than in the U.K., but we do see cities [in the U.S.] get stagnant a lot faster,” she says. “You need that localized team to understand partnerships and communications.”

She adds that for other British founders she knows that have launched in the U.S., “until they’re physically there themselves as founders, the growth doesn’t happen as exponentially as expected.”

There are other smaller differences that need to be taken into account as well. In the U.K., soda cans are typically 330ml. In the U.S., it’s 335ml, or 12 fl oz. For Ugly that, along with U.K. to U.S. spelling differences, led to a packaging redesign.

Understanding the American psyche

The U.K. and the U.S. may speak the same language, but that doesn’t mean they always understand each other. Bybi’s Minarovic says brands that rush into market without fine-tuning their legal setup can find their valuations slashed later, as investors struggle to figure out how to get hold of equity, or what a brand’s tax arrangements are.

Brits are also, it seems, a far more modest bunch than their U.S. counterparts. On the topic of how American brands pitch themselves, Minarovic says that from funding rounds to advertising budgets, “it’s like stars in their eyes – everyone’s bigger, better, bolder, more zeros. As a [U.K.] business owner that can be quite intimidating.”

“You have to be quite loud and confident in the way you describe things,” Elie agrees. “Brand can really carry you out there. Whereas here, [consumers are] like ‘what am I paying for? Is it worth it?’”

Thomas says that the U.S. is now Ugly’s biggest market, and it has gotten to the point where retailers and other partners sometimes don’t realize it’s a British brand. “People are surprised when they hear my voice on calls,” he jokes, although comments that the brand is “too British” still come up.

“I do think it’s gone down well here,” he says. “The U.K. probably pushes too hard on the challenger brand thing. It’s such a focus to be David versus Goliath that you lose track of who you are.”

Still, there is no looking back for the Brit brands abroad. Elie even says that if she had to start again from scratch, she perhaps “wouldn’t bother with the U.K.”

“We’ve built a good business here. It’s a hugely valuable part of the company and it will never go anyway,” she explains. “But the time that took... [If I did it again], I would immediately start in the U.S.”

What is Thingtesting?

Thingtesting is a database of internet-born brands. We’re building the un-sponsored corner of the internet where consumers can come together to talk honestly about new things. Read more about Thingtesting.

Create a free account so you can make your own lists, whether that’s because you love them or because you want to try them.

Feedback? Yes, please.