January 9, 2020
13 Reasons for Selling in the US — the Ecommerce Goldmine
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So, are you planning to expand your ecommerce business into the USA? Great! America is still the land of opportunity, and the gold rush isn’t over yet.
The U.S. is the world’s second-largest ecommerce market. It has the world’s highest ecommerce growth rate. Our hypothesis here is that an international online retailer can be more successful selling in the U.S. than in any other market. Let’s see if we can find enough reasons to validate the hypothesis.
Last year, US consumers spent over $547 billion on ecommerce. The US ecommerce sales are projected to surpass $740 billion by the year 2023. The market continues to grow at around 15% per year.
The ecommerce share of total retail sales is also growing and is projected to reach 13.7% in 2021, up from 5.8% in 2013. According to the US Census Bureau, the ecommerce sales in the third quarter of 2019 increased 16.9% (±1.4%) from the third quarter of 2018. How does this compare to rest of the world?
According to the Centre of Retail Research, the U.S. ecommerce share of retail is growing at the second-highest rate in the world, only behind the UK.
The US boasts the highest levels of disposable income and consumer spending among all OECD countries. Our average disposable income of $3,258 per person per month is higher than Canada, Germany, France, China, Brazil, and most of the world. At $45,284 a year, the average U.S. household net-adjusted per capita disposable income is the highest in OECD countries.
The US market conditions are excellent for ecommerce growth. Nearly three out of four US consumers use the internet daily. 40% of digital buyers shop online several times a month. The drivers for ecommerce growth in America include vast technology adoption and a large and prosperous middle class.
In 2016, the U.S. Customs and Border Protection (CBP) raised the de minimis value threshold from $200 to $800. It means US consumers can import most goods valued at $800 or less into the U.S. duty-free (value of shipment imported by one person on one day). It’s a great opportunity for international ecommerce retailers as low-value shipments are not delayed by formal entry or customs requirements.
The U.S. is ranked sixth in the World Bank’s ease of doing business index, above countries like UK, Norway and Sweden. You don’t need to incorporate your business in the U.S. to sell online in the country.
There is little in terms of additional regulations that a Canadian or European ecommerce retailer needs to fulfill in order to ship products to any of the 50 states. Your company will have access to 320 million consumers without having to meet stringent regulations.
America, the melting-pot of civilizations, has produced an amazing array of cultures and consumer segments. The large and diverse population presents the perfect opportunity for niche marketers. They can segment and target consumers based on their age, income, geographical location, and ethnicity.
The easy availability of data makes it simple to segment and target your market. You can find dozens of data sets on almost every business topic if you simply search on Google. Ecommerce companies planning to use big data are likely to find the market conditions extremely favorable.
A large and well-established logistics system keeps the whole country within access. There are plenty of logistics and shipping options available for businesses of all sizes. These include small businesses shipping out of home to big companies with third-party logistics partners like DHL, FedEx or UPS. The continental shipping rates are cheaper than inter-city shipping rates in many other countries including Canada.
A 2018 survey by PayPal and Ipsos alleges that one in three US digital buyers had made a cross border purchase in the last 12 months. U.S. online consumers buy mostly from the UK, China, Canada, Hong Kong, and Australia. However, the majority of American online shoppers (66%) find the retailers they need in the country. This means you can find more buyers operating from the U.S. soil than if you were shipping directly from the UK, Canada, or other countries.
Right now, the mobile share of ecommerce retail sales in the U.S. is around 45%. This is the highest in the world except the UK. American consumers use mobile to research, connect with sellers, and buy products. If your ecommerce company has a mobile-first marketing strategy, you’re likely to find it easier and more profitable selling to American consumers. Conversely, companies that don’t care much for mobile selling are in for some hard learning.
Americans are crazy about fashion. Apparel and accessories retail e-commerce in the U.S. is projected to generate over 145.8 billion U.S. dollars in revenue by 2023. It’s a huge opportunity for fashion and apparel brands that would like to expand beyond their stagnating local markets.
The market conditions look favorable for international ecommerce business looking to sell products in the U.S. However, don’t let it think it’s going to be a cakewalk. America is a juicy market, so the competition is intense. Amazon alone gobbles up 49% share of the U.S. ecommerce market. Ebay, Apple, Walmart, and Macy’s claim the best of what is left.
Still, in absolute terms the U.S. ecommerce market is huge for any small or medium retailer that knows how to carve out a small niche from a bigger market. To realize your American dream, you need to precisely know your customers and reach them with highly-targeted cross-channel messaging. Remember that ordinary doesn’t cut it in this extremely competitive market. You’ll need to be extraordinary at marketing if you really want to smash it through the covers.
The art is building the right growth campaign. The science is in the results.
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