Welcome to Part 2 of our Local Insights series, designed to help you successfully expand your business abroad. Each week we switch the spotlight onto a different country, and this week our focus is on the US. If you’re interested in selling into the German market, check out last week’s blog post.
The US is most certainly the land of opportunity when it comes to e-commerce. It has one of the most established e-commerce markets in the world, with US consumers making $304.91 billion worth of sales online in 2013. And sales are set to soar to an astounding $414 billion by 2018. Plenty of e-commerce businesses from outside the US are already enjoying success in this lucrative market. And there’s no reason why you shouldn’t, too. To ensure a smooth transition, here are some points to bear in mind.
Sell on Marketplaces: According to Forrester, 62% of US online buyers buy from a marketplace, so this is a great way to advertise your products to a broad consumer base. Amazon is, as you would expect, a highly popular US shopping destination, ranking as the top e-tailer in 2014 by Internet Retailer. EBay is a marketplace you can’t afford to ignore either, with more than 82 million US visitors dropping by the site in 2013. While eBay and Amazon are the obvious markets to consider, it’s worth checking out others. Consider looking at other big names such as Best Buy, Newegg, Sears, Shop.com, Rakuten.com and One Stop Plus.
Use Fulfilment Programmes: Many retailers find the prospect of managing fulfilment to the US daunting. Both eBay and Amazon have fulfilment programmes that can help you overcome this fear. EBay’s Global Shipping Programme (GSP) and Amazon’s Fulfilment by Amazon (FBA) service can be a big help when it comes to the logistics of selling into the US. The GSP programme lists all your eligible items for buyers to see and handles all aspects of international delivery for you. It automatically calculates shipping and import charges and displays them. You don’t have to pay any additional fees, and you’re protected against loss or damage during delivery. GSP keeps US buyers happy, too, since they can see the costs of shipping along with estimated delivery dates.
With FBA, retailers send their items to one of Amazon’s 14 US fulfilment centres. When someone orders your product, Amazon picks, packs and ships them out to their final destination. You not only get lower-cost fulfilment to international customers, but Amazon will also cover all aspects of customer service including enquiries, refunds and returns. The number of Amazon sellers using Fulfilment by Amazon (FBA) grew by more than 65% year over year in 2014. Additionally, Fulfilment by Amazon (FBA) is the only way retailers can make products eligible for Amazon’s loyal Prime marketplace users – a highly lucrative market in itself.
Delve Into Delivery: To establish yourself in the US market, it’s essential to offer customers a range of delivery options and great service. You don’t necessarily need to offer free fulfilment in the US, however, the number of online purchases in the US with free delivery did hit a high of 68 percent in the third quarter of 2014, so you will need to consider how to compete with this option. Furthermore, when it comes to returns, 63% will check out the returns policy before buying.
Localise Your Listings: While speaking the same language as American consumers is a great help, you still need to localise your listings when listing directly on US sites. Be aware that products are searched for and listed differently. Think ‘sneakers vs. trainers’ and ‘pants vs. trousers’. Be sure to localise prices to dollars, too.
Under Your Tax Requirements: Unlike VAT sales or use, tax in the US is imposed at the retail level to the end user. Tax rates vary from state to state, ranging from 1 to 10%. If you’re liable, you’ll have to charge the correct rate of tax on these sales and remit this tax to the right authority. With thousands of sales and use tax rates across the US, it’s a challenging business maintaining and applying accurate tax rates to your sales. There’s no one-size-fits-all solution, so check out your individual tax situation with a tax expert.
Focus on Customer Service: Finally, when you’re selling to US consumers, your customer service should be spot on, especially because 86% of US consumers are willing to pay more for great service. How will you cope with the difference in time zones when dealing with queries? Given Americans’ love of social media, it could be a good tool for reaching US consumers. Just note that poor service could quickly get you a bad reputation on social media, too. Social media is also a significant factor in guiding sales in the US, with 40% deciding to buy a product after sharing it on Facebook, Twitter or Pinterest. So get up and running on these platforms if you haven’t already done so to boost listings and help strengthen your new consumer base.
That’s it for the US; make sure to look out for the next instalment of our Local Insights series on Australia and New Zealand.
For quick tips and tactics to help expand your business internationally, download part 1 of our Agile Cross-Border Trade eBook.