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A comprehensive reference for the planned EU version of Melfabco — covering partnership structure, entity formation, market strategy, technology direction, and open decisions.
What we're building and why the EU market is wide open.
Melfabco EU is a planned European version of the Melfabco US e-commerce platform for interior materials — fabrics, carpets, tiles, wall coverings. The EU version will be rebuilt from scratch to fit the European market, with its own codebase, brand, legal entity, and product catalog — completely separate from the US operation.
The core differentiator: an AI-powered design assistant that uses semantic search over a deep product catalog to help designers, architects, and homeowners discover the right materials. This technology is proven in the US version and has zero competition in the European market.
EU interior materials e-commerce is genuinely underserved digitally. The big players (Tarkett/DESSO, Interface, Mohawk) are manufacturers with traditional B2B distribution. Wayfair and Westwing are generalist retailers. Nobody is doing AI-driven semantic search across a curated materials catalog with a design assistant.
The opportunity in one sentence: A €45B+ European interior design market with zero AI-powered e-commerce competition, approaching universal digital inclusion, and a growing preference for online material sourcing among design professionals.
European interior design market (2024)
AI-powered materials e-commerce in EU
European e-commerce YoY growth
Internet penetration across Europe
Equal partners with complementary contributions and defined domains.
Built the entire US Melfabco platform. Will handle all development, marketing, EU compliance, and day-to-day operations. Currently also doing marketing retainer work for the US side.
Owns Melfabco US. Brings textile/interior materials industry expertise, supplier relationships, product knowledge, and operational know-how. Proposed as partner for the EU venture.
First revenue from day one: The existing Melfabco US development work can be routed through the EU entity — becoming the company's first revenue stream before any product sales. See Section 04: How money flows in.
Leaning towards a Polish sp. z o.o. — substance matches jurisdiction.
The EU entity's revenue sources — starting from day one with the US development relationship, scaling into product sales.
Before the EU platform generates a single sale, the entity can have revenue from day one. Melfabco US already pays for ongoing development and marketing work. That work is currently done by Mark personally — but once the EU entity exists, the EU company becomes the service provider that Melfabco US contracts with.
This is structurally clean: the EU entity provides real development and marketing services to Melfabco US, and Melfabco US pays for them. Leeor owns Melfabco US and holds 50% of the EU entity — so in practice, he's routing ~50% of what he pays for US development back to an entity he co-owns. But the services are real, the pricing is arm's-length, and the arrangement is completely standard for cross-border service companies.
Why this matters for entity formation: The US development contract gives the EU entity legitimate revenue and operating history from the start. This isn't just cash flow — it means the company has a financial track record when it comes to opening bank accounts, establishing credit, and demonstrating substance to tax authorities. The entity isn't a shell waiting for a product launch — it's an active services company from day one.
Both partners extract value through methods that reflect their actual contributions:
1. Service fees (pre-tax) — The EU entity pays each partner's company for services actually rendered. Mark: technology and marketing services. Leeor: supplier sourcing, product expertise, industry guidance. These are deductible business expenses, reducing taxable profit. Fees must be arm's-length.
2. Dividends (post-tax) — Standard profit distribution after corporate tax. Under the US-Poland tax treaty, withholding is 15% (or 5% if Leeor holds through a US entity with 10%+ ownership).
3. Management fees — Similar to service fees but for strategic/management role. Can be structured company-to-company.
Transfer pricing note: Because Leeor owns both Melfabco US (the payer) and 50% of the EU entity (the provider), the US development contract is a related-party transaction. The pricing needs to be arm's-length — documented as what you'd reasonably charge a third party. Not complicated at this scale, but get it documented from day one.
16 markets scored across 13 factors. English-first strategy unlocks 232M consumers with just two languages.
All 16 markets scored across 13 factors. Strong fit · Workable · Significant challenge
| Factor | NL | AT | IE | Nord. | BE | UK | DE | CH | PT | PL | Balt. | ES | FR | CZ | IT | HU+ |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AI assistant language | EN | EN | EN | EN | EN* | EN | DE | DE+ | EN? | PL | EN? | ES | FR | CS | IT | HU |
| Interior design market | €3-4B | €2-3B | €1-2B | €4-5B | €2-3B | €12B+ | €8.5B | €2-3B | €1-2B | €2-3B | <€1B | €5-6B | €7B+ | €1-2B | €6B+ | <€1B |
| Willingness to pay | High | High | V.high | Prem. | High | High | Careful | V.high | Med | Lower | Lower | Mixed | Mixed | Med | Mixed | Low |
| Renovation activity | Mod. | Strong | Strong | High | Mod. | V.high | Strong | Strong | Mod. | Grow. | Mod. | Mod. | Grow. | Mod. | Mod. | Mod. |
| Design culture | Dutch | Vienna | Grow. | Iconic | Mixed | Global | Funct. | High | Grow. | Emerg. | Basic | Strong | Paris | Mod. | World+ | Mod. |
| Regulatory ease | EU | EU | EU | NO! | EU | Cust. | Strict | Non-EU | EU | Home | EU | EU | Cmplx | EU | Slow | EU |
| Logistics from PL | 2-3d | 1-2d | 3-4d | 3-5d | 2-3d | Cust. | 1d | 2-3d | 4-5d | Dom. | 2-3d | 4-5d | 3-4d | 1d | 3-5d | 1-2d |
| EN brand name fit | OK | OK | Nat. | OK | OK | Nat. | .de | OK | OK | Trendy | OK | ES pref | FR pref | OK | IT pref | OK |
| AI materials competition | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero | Zero |
| Supplier proximity | BE cl. | Some | Some | Ege | Cluster | Some | Tech t. | Some | Some | Some | Few | Tiles! | Some | Some | World+ | Few |
| Currency | EUR | EUR | EUR | 4 diff | EUR | GBP | EUR | CHF | EUR | PLN | EUR | EUR | EUR | CZK | EUR | HUF |
| E-com maturity | 94% | 78% | 95%+ | 84-91 | ~80% | 91% | ~80% | ~75% | ~56% | ~65% | 60-70 | 70% | 73% | ~73% | ~46% | ~55% |
| Score | 8.6 | 8.3 | 8.1 | 7.9 | 7.4 | 7.4 | 6.8 | 6.5 | 6.3 | 5.8 | 5.5 | 5.5 | 5.2 | 5.2 | 4.8 | 4.3 |
A 36-month phased expansion — two languages cover 232M consumers by Phase 4.
Strategic insight: By Phase 4 (month 24), with just English and German, the platform reaches ~232M consumers across the wealthiest markets in Europe. The entire Tier 1 and Tier 2 expansion requires zero localization investment.
All work in English, all EU + EUR. NL is the anchor market, AT is the closest to Poland (1-2 day shipping), IE is the only native-English EU state. Validate the entire business model without touching localization.
Widen the English-friendly EU footprint. Belgium puts you next to the carpet manufacturing cluster. Nordics bring premium, design-obsessed buyers. Handle Norway's non-EU status as a contained challenge.
Biggest English-speaking prize. Tackle customs border, UK VAT registration, and IOSS setup as a focused project — justified by proven operations and product-market fit.
First major localization push. German AI assistant, German product content, German search. Switzerland folds in with same DE content + CHF pricing. Unlocks the full DACH region.
Polish localization for home market. Baltics can stay EN or get light local touches. Czech locale if warranted by demand signals. Low logistics cost, familiar territory.
Romance language push. FR and ES localizations unlock ~165M consumers. Portugal can piggyback on high English proficiency or get light PT locale. Spain doubles as sourcing market for ceramics.
Longest horizon. Italy needs IT locale but gives access to world-class manufacturing and Milan's design ecosystem. Hungary and Southeast Europe are opportunistic additions.
Considering Medusa over Shopify for the EU build — owning the commerce layer natively.
The US version is already essentially a custom app with Shopify bolted on. For the EU, Mark is considering Medusa (open-source, Node.js/TypeScript headless commerce) to own the entire commerce layer. US and EU catalogs are completely separate — no product or inventory overlap — so running different backends is clean.
Full data model control — no more cramming complex product schemas into Shopify metafields. Custom pricing logic (wholesale tiers) becomes first-class.
Direct query path — pgvector semantic search can query commerce data directly instead of syncing between Shopify and Supabase.
Multi-currency/multi-region — built into Medusa v2. Critical for a pan-European rollout.
No per-transaction fees — significant on B2B large orders. Project board and architect portal can be proper Medusa modules.
Payments — need to wire up Stripe + EU-specific methods (BLIK, iDEAL, Bancontact, etc.) manually.
Plugin ecosystem — Medusa v2 is still young. Some things that are one-click in Shopify will be custom work.
No admin UI out of the box — team and vendors would need to adapt to a custom or Medusa-native admin.
The EU platform will have its own brand — independent from Melfabco.
Extensive naming research has been done. The "materia/terra" namespace was explored exhaustively but found to be extremely crowded with existing businesses and registrations. The search continues.
No final brand decision has been made yet. The name needs to work across English-first launch markets (NL, AT, IE, Nordics, UK) and eventually across the full EU. An English or invented-word name is strongly preferred — markets that lean toward local-language branding (FR, ES, IT) don't come until Phase 6-7.
Tracking where we're leaning, what's open, and what needs more work.
Polish sp. z o.o. — substance matches jurisdiction, competitive tax rate, Dominika can handle legal setup.
50/50 ownership from day one. Both partners as equal co-founders with service agreements for their respective companies.
Netherlands + Austria + Ireland — all English, EU, EUR. Zero localization needed to validate the model.
Completely separate: catalogs, brands, legal entities, codebases. No product or inventory overlap.
Research done, "materia/terra" namespace crowded. No shortlist yet that feels right. Needs continued exploration + domain/trademark checks.
Medusa v2 is the leading candidate over Shopify. Final decision pending deeper technical evaluation.
Hold shares directly as US individual, or through a US LLC/Corp? Depends on his US tax advisor's recommendation.
Routing the existing Melfabco US development work through the EU entity as its first revenue stream. Makes sense structurally — needs arm's-length pricing documented.
Both partners have defined domains (Mark: tech/marketing, Leeor: product/supplier) but need a formal tiebreaker for shared decisions.
Which European suppliers to onboard first. Belgian carpet cluster (Mohawk, Tarkett/DESSO) is the likely starting point. Leeor's existing relationships may extend.