A Merchant of Record (MoR) takes the hassle out of cross-border online growth for brands. Sounds perfect, right? Especially when you hear those horror stories of brands trying to expand online internationally and ending up with a costly mess. There are plenty of foreign companies offering “total care” for cross-border e-commerce, but it’s oddly quiet when we look at who’s active in this niche in the Netherlands.
Do it Yourself
Brands looking to grow their online presence internationally often do it themselves, using the same e-commerce platform that brought them success at home. They set up local webshops and link to various marketplaces. For specific help, they call in specialists: performance marketing agencies, VAT experts, order management software, fulfillment centres, back-office support, or payment service providers.
Arms length
More and more well-known brands want to grow internationally online but lack the knowledge or enough international online sales. Often, these are big brands with outdated systems and sales channels. They need a more integrated outsourcing solution, where they can outsource their cross border e-com proposition with a single integration, without disrupting their existing systems. In other words: keeping things “at arm’s length.”
Different flavors of outsourcing
In our e-commerce projects, we see three main types of integrated outsourcing:
1. E-commerce 4PL
These companies can take over many transactional activities for a brand. For example, Salesupply in the Netherlands offers integrated customer service, marketplace connectivity, and a global network of fulfillment centers and last-mile distribution from one platform. Other Dutch providers like Monta and Active Ants focus on a few countries in Northwest Europe. Foreign players like Byrd (Germany), Shipbob (US), Stord (US), EU-Shipments (Bulgaria), or FulfilmentCrowd (UK) are expanding their networks across Europe, often backed by venture capital.
2. Merchant of Record (MoR)
Less known in the Netherlands, an MoR provides fully integrated services for brands with cross-border online ambitions. This includes an e-commerce platform, PIM, order management, marketplace integration, marketing (SEO/SEA), VAT and other tax administration, payment services, fraud detection and prevention, and transactional services like local customer service, fulfillment, distribution, and returns handling. An MoR can even buy the brand’s stock, almost acting like a distributor and importer. Foreign players like Luzern (Ireland), Pattern (US), and the listed giants Global-E (US) and THG (UK) with its services division Ingenuity are well-known MoRs. MoRs often start from a specific specialty like online marketing or payments and grow into an integrated platform driven by specific customer requirements.
Examples of partnerships between Global Brands and their Merchant of Record are:
3. Marketplace Aggregators
An odd category are the Aggregators. These companies buy up small brands and make them successful on BOL, Amazon, or other marketplaces. Think of Dwarfs, which was acquired by the British Olsam at the end of 2023, or foreign players like Berlin Brands Group, Razor, or the struggling Thrasio from the US. This model is less relevant for larger brands that want to grow independently but was very successful during the pandemic when smaller brands couldn’t keep up with the volatile market on their own.
Cross-border E-commerce can be an expensive lesson
Among the providers of these integrated e-commerce services, there are surprisingly few Dutch companies. And that’s despite many larger SMEs in the Netherlands still struggling to scale internationally. Stories of frustrated entrepreneurs throwing in the towel show that cross-border e-commerce is still a costly learning curve:
- Complicated local laws and regulations, despite European guidelines;
- Expensive, complex, and time-consuming system integrations;
- Too much or the wrong stock, scattered across various marketplaces;
- Language and cultural barriers;
- Costly return flows;
- Channel conflicts (1P, 3P);
- Fraud and privacy issues;
- Problems with international payments;
- Quality of master data;
- Etc.
Asking the right questions
It’s wise to critically review your cross-border e-commerce plans: what system integrations are needed for our cross-border online growth, and do the costs of integration and maintenance outweigh the expected revenue in the first three years? What does holding stock at multiple marketplaces do to cash flow, and can we finance the growth? How can we compete with local players in each country (language, delivery time, payments) while revenue is still building? How do we maintain brand loyalty when we’re active on multiple sales channels?
Brands that want to grow cross-border but lack the in-house knowledge or systems to facilitate this growth—or have learned the hard way after a costly foreign adventure—should consider the different options against their desired level of outsourcing.
