HOW VEGAS COSMETICS FOUND THE PERFECT PARTNER FOR INTERNATIONAL GROWTH
When an entrepreneurial start-up met with DHL Parcel Connect's Europe-wide expertise, the results turned an exciting venture into an International online B2C success.
E-commerce start-ups are often faced with a conundrum. In order to grow, they need to offer customers a high-quality product at a good value price that includes the shipping costs - leaving them sufficient margin to re-invest. However, because they're embryonic, their customer base will usually be smaller than the established players, which makes it tough to generate the same volumes. Without the volume, they can't get favorable shipping costs. And without favorable shipping costs, they can't get the volume. Catch 22.
This was the situation faced by German/Portuguese business, Vegas Cosmetics. The company started life in 2003 when two entrepreneurs, Nelson da Costa and Carlos Fernandes, decided, as many entrepreneurs do, to go it alone. They started with a range of 50 perfumes and cosmetics and, within a few months, they had the company registered, the branding designed, the website built and the labels printed.
Instead of a traditional sales process, they invested in training and supporting an ever-growing team of local partners; resellers who market the products to their own networks of customers. The challenge with this business model is that growth tends to be organic. Rather than targeting new markets and setting up detailed strategies to capture share, the business expands through word-of-mouth. As more partners in new countries join the team, sales grow exponentially - but re-actively.
Initially, Vegas Cosmetics sold in the Portuguese and German markets, but as word spread, they were presented with opportunities to enter new cross-border territories. Italy was the next logical move - but there was a problem. Although they had a small number of highly motivated partners in the country, the cost of shipping small volumes from their distribution center in Portugal was prohibitive. Vegas Cosmetics CEO Nelson explains what happened next.
Back to where we started...without the volume, you can't get the price. Without the price, you can't get the volume. Eventually, Nelson contacted Jose Santos at DHL Parcel in Portugal and Vegas Cosmetics' fortunes began to change. Because something magical happens when people with entrepreneurial vision get together. Instead of looking at all the obstacles, they start looking at the opportunities. And DHL, despite its 50-year history, has always been entrepreneurial at heart. Nelson continues: "In 2017, I presented our problem at a meeting with DHL, and said, 'this is what I need, what do you have so we can grow together?' And Jose had the capacity to see the potential and give us the conditions we needed. You need a contact in the [shipping] company that has the same vision as you and understands your needs and says, 'OK I will be your partner in this project.'
After the meeting, Jose spoke to his colleagues in DHL Parcel to see if DHL Parcel Connect could work for Nelson. In those early days, Vegas Cosmetics mainly needed to ship perfumes. These didn't require overnight transits; three working days delivery was good for all concerned. This meant the parcels could be moved by road instead of air, lowering the unit cost, and providing Vegas Cosmetics' partners with a viable 'landed' cost.
DHL gave us the opportunity. If we had to pay lots of shipments costs or wait two weeks for the package, I would lose the customer." Nelson told us. "Jose saw that with [the right] conditions we will grow and create the numbers. We started with 20 parcels a month and after two or three months we were sending 2000 parcels a month!
DHL's faith in Vegas Cosmetics was rewarded. The company continues to grow with profitable markets now in Italy, Spain, Switzerland, Austria and Luxembourg. That balance between speed and price was key to the company's success and DHL Parcel were able to find the 'sweet spot' that meant everybody wins. But as Vegas Cosmetics expanded their business across Europe, a new shipping dynamic grew in importance: last-mile service. And here, DHL Parcel Connect had the edge again.
DHL Parcel Connect's extensive array of last-mile delivery options, from scheduled and alternative address deliveries to Parcel Lockers and service points, mean Vegas Cosmetics' partners can usually be offered an alternative delivery option that suits their lifestyle. This is important because each partner is a valuable investment for the company.
Today, Vegas Cosmetics offers over 500 products including health supplements, jewelry, home fragrances and cleaning solutions - and a soon-to-be unveiled homestyle range. Customers love the quality, the team of partners is constantly growing and Nelson is already considering ventures into Eastern Europe and South America. Vegas Cosmetics has achieved 'critical mass' volume and now it looks like the only way is up. But it could all have been so different...
Without the team behind DHL Parcel Connect going the extra mile to find a solution that worked for everyone, Vegas Cosmetics may have struggled to develop its international markets. Sometimes it takes a partner who can see the path ahead with the same clarity as you do, who understands the importance trust and vision plays in generating business growth, and who empowers you to take the next step towards international sales.
If you're at that crossroads right now, why not talk to DHL Parcel Connect today? Not so much an 'angel investor' as an 'angel shipper'. And that may be exactly what you need.