You've Chosen the Hardest Business Model on Earth

Sean Weisbrot: Salim Rennewi is the co-founder and CEO of Sell Abroad, which helps e-commerce brands to expand into the manna region, which is Middle East. And in this episode we talk about. Cultural differences between the Middle East and the West, things that Americans and other Westerners may not know about Middle East products that may not do so well. Products that are gonna do really well, potential gaps in the market. I. Things that they desire and demand and cost differentials and things that would make you excited to move into the Middle Eastern region, especially because of deglobalization and tariffs. So I hope you like this episode. Let's get to it. What made you wanna dedicate yourself to helping brands get into the Middle Eastern region?

Salim Rennewi: It all starts with. What are the brands currently facing right now? Right. Um, and we can talk, start talking about the tariffs that Trump just enforced. This is something that's adding anywhere from 10 to 50% on your cost of goods. So it leaves brands with no option but to try to increase their gross margin. And how can you really increase gross margin? Um, you know, without having to cut your opex, without having to fire people, these are all decisions that are very hard to make. So the easiest thing would be is to just not pay the tariffs, right? And to do that, you would just have to go into markets that are, that give you both, right? There's one that there is no tariffs, and the second is that your CAC is much less, right? So the market in the mena, you have, uh, almost. 50% less CPMs. Your, uh, AOV is much higher. Your LTV is much higher. So just by experiencing all those things and, and talking to brands, I, I think this was one of the biggest, uh, drivers for that.

Sean Weisbrot: You've been doing this for how many years?

Salim Rennewi: I've been in e-comm forthe past 10 years now.

Sean Weisbrot: What's been the craziest thing you've seen in all that time.

Salim Rennewi: When I was at Polonia, I was the head of direct to consumer brands there, and the both CEOs raised $40 million to acquire brands. And it was crazy to me how brands were getting acquired without much diligence. So there wasn't much digital diligence going on. Like, how much are we paying for each customer? Uh, what's the profit contribution on, you know, cogs, cost of sale? How much opex do we really need to operate this model and not consolidating brands into one familiar model. I mean now, now aggregators are buying all jewelry brands, all apparel brands, right? But before it was just, let's see where we can get the best deal. And most of the time it wasn't the best deal. So just wasting that much money. Uh, was probably the craziest thing I've seen.

Sean Weisbrot: Do you think that's a Middle East thing or do you think that's a global issue?

Salim Rennewi: I definitely think it's a global issue. I mean, there's brasio in, uh, north America. They've raised, I believe a hundred million dollars. Uh, it's the same thing, right? They don't have consolidation. Uh, when it comes to categories on their e-commerce brands, all aggregators kind of face the same thing because there was that boom where VCs were throwing money at aggregators. It was the hot topic at the time, so it was just how many brands can I get under my hood to raise more money?

Sean Weisbrot: What is the biggest mistake that you see people making when they come to you for help?

Salim Rennewi: I think the biggest mistake is being very close minded to the region, right? Uh, in North America. I mean, I've lived in North America, right? So I understand how people think about the Middle East and it's. There's, it's kind of quite funny. It's either they think two of the opposite sides of the coin. It's either you are, uh, you have, you know, oil money, or you're riding on a horse, right? But there's, you know, an actual, like middle class people that live here, there's a huge population, huge spending power as well, right? So just having that idea, I mean, in the States it's a little bit more frequent when you see those kind of stereotypes apply to the Middle East. Um, but I believe that's, that's probably one of, one of the best ones, right? But once you start talking to them about how here in the Middle East. CAC is much lower. People spend more money. We also sell more stuff and get away with pricing stuff a little bit higher. Then the numbers start speaking to them and they're like, ah, I get it now.

Sean Weisbrot: I definitely agree that Westerners would have a, a wrong opinion about a lot of the country, a lot of the world. I think Americans in general are very good at not understanding anything about anything outside of America, and I am. As an American, I've been to over 50 countries and I feel like I'm quite well traveled and well understood and, and well read, but people don't know me and so they assume that I have this stereotype that, that I, I'm, I'm, I'm like, thinking about them or their culture in, in this incorrect way, or someone was like. Um, shocked that I could speak more than one language. Like you're American and you speak more than one language. And I'm like, and there's other Americans that speak like Spanish and Hindi and like, yeah, they're not white like me, but like, yeah, you know, the average white American probably only speaks English, you know, maybe Spanish, but there's a lot of stereotypes that everyone has on the other. I think the ones about Americans are probably pretty accurate. Um, but yeah, through exposure we can. We can understand better. So do you have your clients go and tour Middle East so that they better understand what they're getting into before they invest?

Salim Rennewi: No, not necessarily. I mean, this becomes more of a requirement when you're talking to angel investors. Uh, but most of the time when you're to angel investors, these guys have already came to Dubai before. They've been to Riyadh multiple times. They're well versed all around the world when it comes to clients. I mean, you're, we're just a service provider at the end of the point, right? It's, uh, just like they would work with another company that would open up, uh, Europe. They don't necessarily have to go to Europe to understand that they can sell products there, but it, the, the education comes more on the conversation, on the call of, Hey, look at these numbers. This is why they make sense. It's because of these cultural factors. Then they start to kind of wrap their mind around it.

Sean Weisbrot: What are some things that people should understand about Middle Eastern cultures and economies beyond the stereotypes you mentioned earlier that would help them better understand if the Middle East is a good opportunity for their niche or their industry?

Salim Rennewi: You gotta really look into your product. Uh, so for example, I've had a brand come to us where they sell, uh, premium underwear. But they didn't have the color white. And as you know, in Saudi and, uh, you know, U-A-E-G-C-C as a whole, they all wear like the white phobes. So if they wear colored underwear, it's gonna clearly show, right? So that's one thing where we had to do a little bit of, you know, product development, education based on the cultural norms that are available here. And, uh, this one, again, I believe it's gonna really hit here because the product is really great. It's just that they don't have the localization within the product. Right? A lot of people talk about localization on a website when it comes to language, when it comes to local payments, when it comes to shipping times. But when you truly localize within your product development, that's when you really win. Entering a new region.

Sean Weisbrot: What do you think is the most well received kind of product, and what do you think is a kind of product that there's demand that's not being tapped? For in the industry or the region?

Salim Rennewi: I believe lots of the high premium accessory stuff. Uh, for example, like the Ridge Wallet, I'm sure everybody's familiar with this. In North America, it's like a $70, $80 wallet. I personally have one of those. Um, here in the Middle East, there isn't really a market leader that's kind of selling this type of product and this thing goes, it can really do damage here in this market. A good example would be Manscape. So Manscape, it had a basically a copy paste competitor here in, uh, this region called Blue. And all they did was create the same product, right? Um, create the same marketing material, but localized it with some, you know, Arabic comedy style and it blew up. And that company does about 20 million a year. Uh, USD just from Saudi. So I, I believe that's the, the best categories that I'm currently looking at right now. It's high premium accessories, whether that's men's accessories or women's accessories. Uh, but that's what's missing right now. 'cause apparel is worldwide, right? Other niches are worldwide. Uh, you know, Saudi consumes perfume more than any other country in the world. Um, makeup, cosmetics, skincare is, is worldwide. But then there is these specific niches. That this region is not really, uh, you know, uh, aware of. And the brand owners are not really aware that they can sell 'em here. So this creates this kind of void in the market where as soon as you plug that hole, uh, you create a lot of value.

Sean Weisbrot: So if we're focusing on premium. How do Middle Eastern cultures view animals? Because, for example, in the US pets are $150 billion per year industry, just in America alone.

Salim Rennewi: Uh, obviously you've seen the videos where we have, uh, pets here that are, you know, are supposed to be wild animals, but people have them in their house or in their garden. I mean, this is not like a more common thing. I think this is more of the luxury type thing, and those people who can afford it. So I think the acceptance here is a bit wider when it comes to the type of pet that you can have. Um, but when it comes to specific pets, I mean, there's a religious aspect too, right? Like, uh, Muslims are not allowed to have dogs inside their house. They're, they're only allowed to have them outside as, uh, you know, guard dogs. But they're allowed to have cats. So cats are very popular here. So you also see, uh, cat. Supplement brands or cat food brands do really well in this region, but when it comes to dog brands, it doesn't really pick up as much.

Sean Weisbrot: Why is it that Muslims can't have dogs inside their house?

Salim Rennewi: So, I'm not a religious expert, but I believe it's, uh, something around purity where, um, we believe that the saliva that comes from the dog is not as pure as a cat. Um, but I am. I'm not an expert in that matter, so I wouldn't be able to give you a full answer.

Sean Weisbrot: I think one of the weirdest things I've seen with pets is, uh, people in Vietnam putting leashes around cat's necks and then walking cats as if they were dogs. Yeah.

Salim Rennewi: Really?

Sean Weisbrot: And

Salim Rennewi: Okay. I've never seen,

Sean Weisbrot: And it wasin an upper, upper class neighborhood that I was living in. Like there, there's a lot of locals that were upper class and like expats that are like middle class, upper class, and. It was the weirdest thing. We have this giant park next to the, the community. There's like 15 buildings that are like 50 stories tall, massive park, and there's like all these cats with, with leashes and colors and I'm like, what the hell is this? Anyways, it's not related to to business, but still fascinating to see cultural differences like I would've never imagined that dogs can't be inside. I imagine that. Maybe in the Middle East, the demand for dogs wasn't very high and dogs probably wouldn't really like the desert very much because of the heat.

Salim Rennewi: Were they like $20,000 cats or were they just like regular cans?

Sean Weisbrot: They're probably cats they found on the street and just took 'em. Yeah. I don't think there's a market in Vietnam for spending money on animals. I could be wrong. A, a lot of the, like, big money in Vietnam is super hidden. You, it's very hard to find wealthy Vietnamese. They're hiding in plain sight basically.

Salim Rennewi: What are the markets that are kind of popping off in, in, in Vietnam, uh, that, you know, create the most millionaires? Real

Sean Weisbrot: estate banking, manufacturing is a big one. Importing and exporting of rice and coffee, and I believe oil like cooking oil. There was a few wealthy people that had airlines. There's like a woman who, a woman who built an airline company like from scratch by herself and is like a billionaire in Vietnam. Um, so those are the things, but I think we'll see manufacturing become a much larger segment of the economy now that China's tariffs are so ruined or the tariffs are ruining China and. Vietnam is desperate to get to the table and say, Hey, let's just cut our tariffs. Because Trump gave like a 46% tariff, which is insane. So in 2017, when Trump started the tariff war or the trade war with China, a lot of Chinese companies, Japanese companies, basically anyone that was in China that was smart, was moving their their manufacturing over to Vietnam. However, unfortunately Vietnam has not had the time to develop an Alibaba style system for people to be able to communicate with manufacturers in Vietnam. So if you want to start working with the manufacturer in Vietnam, you literally have to go to Vietnam and find the manufacturers and good luck getting them to respond to emails and phone calls. You have to show up at their factory and say hi. I wanna do business with you. Um, it's crazy, very difficult to start doing business in Vietnam. Uh, it's difficult to start doing business. It's start to collab. It's hard to collaborate with them. Um, and so I'm, I'm hoping, 'cause my, my fiance is Vietnamese and my, my kids will be half Vietnamese. Uh, so I'll be spending more time in Vietnam. I mean, I already lived there for several years, but. I hope that someone figures out a solution for that, but it's gonna be extremely difficult to connect the manufacturing sectors between the different industries to the outside world. Um, but I'm hopeful that if Vietnam negotiates a 0% tariff with the US, that Vietnam will very quickly be an extremely interesting destination for businesses to move their manufacturing to.

Salim Rennewi: Somebody will eventually come in. I mean, probably one of those billionaires will come and throw a few million at it and then try to start something up. It will happen. Um, I, I don't think it will, my opinion is it doesn't happen immediately until the tariffs kind of start cutting down because Trump's putting tariffs on almost every single producing country, and it makes it very hard for anybody importing into the us, especially e-commerce brands, to make. Any sort of profit, right? So it it, it puts you really in a situation where it's like, what can I do? I cannot bring product into this country without paying 30, 40, 50% tariffs. The only solution comes is to sell to different mar uh, regions or sell to different markets. And so we, we never used to think like this at cell abroad. We thought that we would help brands expand to new markets. Not because there's tariffs, but because we want them to grow. And new markets like the MENA region, provide them with lower cap, lower AOVs, cheaper CPMs. But now with the tariffs, it becomes a must for these brands, especially if they're producing in Vietnam, uh, Pakistan, India, China, most of the producing countries. So it becomes very crucial right now. And all of these. Countries have to figure out communication with suppliers one way or another, today or tomorrow. It must happen, or else they won't be able to compete with China.

Sean Weisbrot: Hey, just gimme 10 seconds of your time. I really appreciate you listening to the episode so far, and I hope you're loving it. And if you are, I would love to ask you to subscribe to the channel because what we do is a lot of work, and every week we bring you a new guest and a new story, and what we do requires so much love. So that we can bring you something amazing and every week we're trying really hard to get better guests that have better stories and improve our ability to tell their stories. So your subscription lets the algorithm know that what we're doing is fantastic and no commitment. It's free to do. And if you don't like what we're doing later on, you can always unsubscribe. And either way, we would love a, like if you don't feel like subscribing at this time. Thank you very much and we'll take you back. I'm sure the tariffs are great for your business, huh?

Salim Rennewi: Currently? Uh, I'm sure things will change. I mean, you know, how Trump does his business. Uh, it's, it's, it's, I believe he's using it as a negotiation tactic. I don't think it's a long-term strategy. Uh, so currently we are reaping the rewards of the tariffs. Uh, but we are not, you know, forecasting long term on it. We're just trying to capitalize for the current moment.

Sean Weisbrot: That's usually the best way to make the most money as fast as possible is when there's a trend. So how can you be the face of that trend?

Salim Rennewi: This is something that's currently in the works right now. I, I posted something on LinkedIn the other day. Um, you know, trying to support brands, giving them a little bit of, uh, tariff relief. So we've launched a tariff relief, uh, program where we help brands migrate to new markets or source from different markets. To sell in new markets. Uh, this is something where we're able to subsidize the cost of freight forwarding or the cost of the first little batch of orders that you do from a new supplier. Uh, but this will only be available for the next few months until tariffs kind of go away. Uh, and I, I think they will go away within the next, you know, three to six months.

Sean Weisbrot: Do you think e-commerce brands are generally good at managing their expenses? It really

Salim Rennewi: depends on who you talk to, right? In, in general. So if you talk about brands that are doing 5 million and above, or let's say 5 million to 10 million, they are okay at managing their expenses because they've gotten to that stage. Anything over 10 million, it really depends on the operator. I've, I've always seen it that it's hit or miss. Some operators are. Very, very good. And then some operators are running it like a 15% opex, uh, which is very bad. I mean, e-commerce, you should be sub 8% at all times, but anything under 5 million, it's usually very bad. And that's why you see all these small SaaS businesses where it's like profit calculator apps on Shopify, um, you know, forecasting tools. Inventory control tools and things of that nature. It's when these brands haven't built these systems internally,

Sean Weisbrot: what do you think is preventing them from being more aware of how bad they're managing it?

Salim Rennewi: Commerce Entrepreneur is a very unique entrepreneur. Uh, he's picking the, the hardest business model on Earth, right? And sometimes they are picking it because they saw somebody successful online. Sometimes they're picking it because they are in love with the product that they sell. It will require a lot of education, and most of the time it will require learning from your mistakes. I don't think there is a catchall to save, uh, the industry or the knowledge gap that there is, but I definitely think as operators mature, they will learn these mistakes. I mean, just like when I was an operator and I, I've learned it by burning money, losing employees, things of that nature. I think it's a natural progression for any e-commerce brand owner.

Sean Weisbrot: Do you think there's value now in having an expense management tool outside of Shopify for brands that helps them to better understand their finances? Not really the finances, but their expenses specifically so that they can focus on cutting costs so they can survive What's happening right now?

Salim Rennewi: It definitely plays a big role now, so I definitely think somebody can. The tools are already out there, we'll probably see higher revenue. I don't think it's a big thing that you need to have from an external vendor. I think this is something that you can easily build internally. It depends on how much you time you have as an operator or who you have on your team, but there's many tools that pull data from different sources, puts it in an Excel sheet, organizes it, and gives you dashboards. So it's pretty much the software that you're paying for, it just requires a few hours of setup, but it saves you thousands of dollars on the yearly basis. So I think there's definitely a need when it comes to the pain, but the way you solve that pain, I, I think there's better ways to do it.

Sean Weisbrot: I got tired of spreadsheets, so I actually built an expense management tool using lovable, and it took me a week to build it. And I am, I'm looking now to start talking. I'm, I'm not sure whether to target e-commerce brands or startups that are like, you know, B2B SaaS, for example. Um, 'cause both of them, both of these types of companies are absolutely screwed and desperately need to fix their situation because. The tariffs and deglobalization for e for e-com, and because the tariffs, AI and deglobalization for SaaS brands are making it that VCs are not wanting to spend. I spoke with the VC earlier today and he was like, I was like, what's your impression of what's happening right now? He says, uncontrolled panic. I go, so does that mean people aren't spending? He's like, I had four LPs come to me today. I've never even met these people before. They came to me and they asked me how they could get their, uh, get their money back from the money they put into these, uh, funds. He's like, they're not even part of my fund. I don't know these people. He's like, so the the panic is real. We're not gonna be spending on anything. And I was like, interesting. 'cause I wasn't sure whether bootstrap this or, or raise money for it. And I'm like, well, I'm getting the sense that maybe investors aren't gonna wanna put money into something, even if it's meant to help businesses survive this. Um. So I may be forced to bootstrap, but it's, it's interesting nonetheless, uh, that, you know, people are scrambling and sad, but realistic.

Salim Rennewi: Yeah. I, I think now is one of the best times to launch that tool. Right? So now you can probably capitalize on the need of the market. I believe 90% of the market will buy a tool like this. I mean, not all operators think, uh, like you and I, right? Let's build internal systems. It's most of the operators is like, I need to solve my problem. I need to solve it. Now. I don't care if I pay $500 a month for a tool, and that's probably the type of operator that you will see most success with, and that's most operators. So there is definitely a market for it is just that Salim will not buy a tool that has that, we'll probably hire someone that will build it internally, and that's just transparently speaking.

Sean Weisbrot: I think one of the reasons a lot of people wouldn't do that is because if they're an e-commerce brand, chances are they are focused on staying alive. They're, they're focused on selling products, not tech, right? E-commerce brands and tech like don't usually mix, right? A lot of the e-commerce people I've met are non-technical founders, and so they wouldn't even begin to know how to build a product like that, rather. You know, to find people and hire them and to manage them, like it's just completely outside of their wheelhouse.

Salim Rennewi: Yeah, no, I, I definitely agree. And this is how I started. I, I was not a technical person at all. I believe I was kind of forced into being technical. Um, but I, I enjoy it. Like this is a new world for me. I've found now new passion that I can pursue every single day, and I still work in the e-commerce field. Which is probably one of the, my greatest skills. It's probably the one thing that I'm really good at. So, new passion, same skills. Uh, I believe it. It's really working out in my favor, currently in today's market.

Sean Weisbrot: Is there anything I haven't asked you that you feel is really important to add to this conversation?

Salim Rennewi: I think being able to learn as an entrepreneur is probably one of the best skill sets you have because. If you take me as an example, e-commerce was probably the best thing I'm, I'm good at, right? But now I have to learn tech and hire a tech team, find a CTO, and do all of that stuff, right? And it is a very, very challenging task if you've never done it before. So I think when people find themselves at a, you know, hitting a wall, they need to really ask themselves what information or. What do I need to know to solve this problem? Right? What, what is the space that I need to dig myself into to kind of have a better idea or the better skillset, a better knowledge to solve the problem that I'm facing? And I, I think that most of the time, if they spend, you know, three, four hours digging at it, uh, YouTube chat, GBT, all that sort of stuff, um, I, I think that's how you get over most hurdles in, in the entrepreneurial journey.