Why the US e-commerce Market Continues to Lead the Pack

22 March, 2019
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As a first world country with stable infrastructure and long-established trade channels, America’s online shoppers are well seasoned when it comes to digital purchases. E-commerce revenue in 2019 is projected to reach USD 560,747 million, and it’s growing at an annual rate of 7%.

With the most likely online purchasers being millennials (18-34 year-olds) and females, there are many ways for international businesses to target these astute shoppers who have an estimated spending power of USD 3.39 trillion.

In 2018, toys, hobby and DIY sales were valued at USD 152, 912 million – the biggest segments in the market according to Statista.

Why the US is such an important e-commerce market

The US make up the largest economy in the world. It’s a nation of innovators, trendsetters and early adopters: eBay, Amazon and many more of the world's first major e-commerce platforms were established within its borders. America is a critically important market because of its population’s affluence, purchasing power, open-minded approach to trade, cross-border e-commerce, and growth.

With deep-rooted purchasing trends such as the heavy consumption which takes place around the holiday season, businesses can plan and execute their marketing campaigns based on sure-win promotional events such as Black Friday and Cyber Monday, the latter generating around USD 7.7 billion in 2018.

Between 2016 and 2017, online consumer retail purchases saw the most significant increase in five years as numbers grew by 16% from USD 390.99 billion to USD 453.46 billion. By 2018, retailers attributed 76% of non-store sales to e-commerce.

With a vast population of tech-savvy shoppers, the latest penetration figures are at 79.2% and are projected to reach 80.4% by 2023 – a staggering amount when considering the country’s population sits at almost 329 million individuals.

In 2017, the United States had 312.32 million internet users, making it almost five times bigger than the UK market. A great incentive for businesses looking to scale up and expand to territories with a shared language which will make the initial set-up and marketing process considerably easier.

How to export to the USA

When choosing to make cross-border trade with the US, there are many opportunities and advantages to being a UK based business; there are, of course, also going to be challenges. You will have to strategise and keep abreast of important legislation, restriction and market trends to stay ahead of the game.

Top things to consider when exporting to the USA:

  • Consumers exercise great discernment when choosing which brands to support; therefore quality and customer support expectations are considerably elevated. Your business will have to be prepared to handle returns, refunds, deliveries and escalation disputes effectively and quickly.
  • As the market is very well-established, it’s also naturally heavily saturated with competitors. You will have to plan and execute compelling marketing campaigns to get your message out to consumers.
  • There is a significant time difference between the UK and the US, meaning your customer support services will have to operate around the clock to assist clients in any one of America’s six time zones if you choose to export to all of the country’s territories.
  • Set-up costs can be significant with business insurance and expensive, complicated work visas to take into account.

What you need to have in place before reaching out the US market:

  • Your business must have an exceptionally functional website that encourages consumer confidence and trust.
  • You will need to establish a US distribution centre to fulfil orders and accept returns in a way that meets the expectations of local customers.
  • Safe and recognisable payment gateways for American consumers must be available on your website.

There are also certain restrictions to consider when deciding whether selling your products in the US will be feasible. Examples of such restrictions are implemented on:

  • Alcoholic beverages
  • Cigarettes
  • Fruit and vegetables
  • Hazardous materials
  • Nail polish
  • Perfumes
  • Aerosols
  • Perishables

In some cases, you may need a license to sell specific products so you will have to do some research on the best way to set up an e-commerce business in the US and seek legal advice for your particular industry.

Although the US market is historically competitive and cutthroat, there is a lot of scope for innovative, customer-focused business to thrive and expand their customer base across the pond.