1) How to Expand Your eCommerce Store to Sell in the U.S.?
Expanding a business to newer, more lucrative markets is always an objective for many eCommerce entrepreneurs. From having an additional revenue stream to adding a competitive edge to a brand, going global has a multitude of advantages.
So if you too seek to expand your eCommerce store globally, chances are you have considered the United States. This guide presents all the notes you need to know on expanding your eCommerce store into selling in the U.S.
2) Overview of the U.S. eCommerce Market
While there are many countries with booming eCommerce sector growth, like China and South Korea, nothing beats the United States. The U.S. has one of the highest numbers of internet users in the world, with over 200 million people preferring online shopping. eCommerce sales in the U.S. are expected to reach $1.7 trillion by 2027.
Though the U.S. is a mature marketplace with high customer expectations, it is also a cross-border trade-friendly country. Retailers can benefit from its elaborate transportation systems and traffic routes. These make U.S. logistics and shipping a smooth sailing experience compared to other countries.
The defining characteristics of U.S. consumers are their tech-savviness and high consideration for online payments. Both these features are particularly important to eCommerce sellers, especially those who have embraced mobile commerce and digital payment methods.
Merchants can also experiment with social commerce and have recourse to a diverse range of marketing strategies. These were some of the elementary benefits of expanding to the U.S.
Listed below are the considerations you’ll need to know so you can build a U.S. eCommerce portfolio.
3) 4 Things to Consider Before Selling in the U.S.
Needless to say, the U.S. market is steeped in competition, and regulations abound when it comes to foreign entities trying to establish in the U.S. Therefore, it is necessary to exercise mindfulness and caution in these five factors:
3.1) Establishing your Legal Identity
To expand your eCommerce business in the U.S., you must first forge a legal business identity. This means you can either be an eCommerce company registered in the U.S. or sell in the U.S. from your home country.
Typically, there are two legal options: LLC (Limited Legal Corporations) and Corporations. Each situation comes with its perks and pitfalls in terms of liability. Moreover, there are variations in taxation policies for each. Having an expert’s opinion is the best way to structure your U.S. business.
3.2) Determining Your Target Audience
Identifying your target audience ensures that you understand customer purchase triggers and preferences and segregate buyers who won’t benefit your business. With a predefined consumer category, you can create a better strategy for advertising and marketing and make informed decisions on staying competitive.
A good way to start with consumer research is to look at customer surveys conducted by reputed firms and study data on buyer personas. Investigating your competitors would help you understand the consumer mindset attracted to your products.
3.3) Mapping the Essentials of Your Online Business
The essentials of an eCommerce business would include, amongst others, a market overview, product development, marketing, and logistics plan, funding details, and customer analysis.
You can map your essential business need with a business plan. It contains all your business information: products, services, finances, manufacturing or sourcing details, shipping information, etc.
To build an eCommerce company, you require strategic planning such as evaluating your business idea with concrete research, approaching partners for collaboration, investing in capital, and hiring people. At the end of the process, you clearly understand your business concept, product differentiation, and finance requirement.
3.4) Aligning your Finances
Financial needs can be short-term as well as long-term. Therefore, aligning your finances to the stage of business growth should be a priority. The typical sources of finance involve funding, business loans, company assets, and profits.
It is always optimal to estimate your monetary requirements to avoid stockouts, reserve inventory, and fulfill pre-orders. With a pre-determined calculation, you can confidently seek working capital solutions to weather uncertain circumstances.
4) How to Expand your Business to the U.S.?
4.1) Conduct Thorough Market and Product Research
The U.S. eCommerce is saturated with gazillion businesses, so market research is a must to find your niche area and product. Before having a product line ready for the U.S. market, you may want to verify your competition and estimate profit and consumer demand.
For example, the U.S. is a growing market for sustainable and vegan products. This information can help cater to the growing needs of eco-friendly and climate-conscious U.S. consumers.
To start, you can conduct a simple research on SERP results and keyword trends and thoroughly examine competitors' websites. You may also use SEO tools like Google Trends and Ahrefs to understand the product queries pertaining to U.S. eCommerce.
While market research will detail the consumer trends, demand scenarios, and economic variables of the U.S., product research will tell you the product that will sell.
You can either sell a commodity well in demand or cater to a niche category with high conversion potential. In any case, the idea is to create an item that fulfills a function, like an alternative to competitors or a commodity that consumers are passionate about.
4.2) Register Your Business with U.S. Authorities
Irrespective of any business identity, it is absolutely essential to register your eCommerce company with U.S. authorities for legal purposes. Furthermore, registration opens up opportunities to have business loans, public grants, and checking accounts.
The first requirement is to register for an EIN (Employer Identification Number) that allows eCommerce businesses to ship in the U.S. The next is registering your brand name with the USPTO (United States Patent and Trademark Office). Having your brand label in the directory will create a unique identity for your business with customers.
4.3) Create your Brand and website
Your website is the building block of your eCommerce brand. Begin by finding an appropriate domain name and a logo. It’s always best to have your brand name as your domain or one that resembles it.
With your website live, you can customize it to what suits your brand identity. However, two things should always be incorporated: high-quality product images and detailed descriptions. These are the hallmarks of any excellent eCommerce website.
Another must-have website feature for brand growth is to make your website mobile friendly. With more than 60% of traffic coming from mobile devices, you must ensure that your website is frictionless for mobile users.
4.4) Source your Products
Sourcing products is one of the primary considerations for many eCommerce companies since it gravely affects lead time, order fulfillment, and revenue.
Retailers can work with a manufacturer to source inventory and sell them online or create their own supplies. The former option is best suited for mid-level or enterprise-grade companies and generates fewer expenses. The latter option is suitable for hand-made niche products that could sell well on Etsy or Amazon.
You can also opt for dropshipping by consulting online listings or directories for suppliers and products that can be white-labeled. Lately, dropshipping has become a widespread procurement and fulfillment method for many budding eCommerce entrepreneurs.
4.5) Choose your Sales Channels
One of the drivers of brand growth is diversification, i.e., expanding your business to multiple channels for accruing sales and revenue streams. Choosing an eCommerce platform can also heighten customer convenience, especially if they are familiar with it.
The U.S. boasts many eCommerce sales channels such as Amazon, Walmart, Facebook, Pinterest, Etsy, Instagram, eBay, and even TikTok. Each of these has a generous number of monthly visitors, such as 3.45 billion users on Facebook and about 50% of U.S. consumers on Amazon.
Moreover, most of these provide customizations in product cataloging, checkout, and advertising. For example, TikTok has live shopping and quick sales options embedded in retailers' videos. Instagram and Pinterest build brand awareness and recognition with high-quality pictures that streamline purchases from the images provided.
Etsy and eBay are good options for niche, custom-made or handcrafted as well as digital products. For omnichannel fulfillment and shipping, Walmart and Amazon stand out from the crowd.
4.6) Determine your Shipping and Fulfillment Strategy
The key to unlocking business growth in the eCommerce industry is prompt fulfillment and on-time delivery. Hence, the shipping and fulfillment strategy should get your utmost attention if you want to impress U.S. consumers. In this regard, 3PL or 4PL logistics partners can provide you with the utmost assistance.
Normally, 3PLs act as warehouse or fulfillment center agents who store your inventory, pick and pack them and ultimately ship them via courier partners for deliveries. 3PLs such as FedEx and DHL have their own fleet that picks orders from your office or warehouse and delivers them to the customer’s doorstep.
In any case, working with a 3PL is an ideal solution for streamlining your returns and exchanges and cutting down operational costs. They also streamline order fulfillment for fast shipping, such as one-day or same-day deliveries.
They can work as freight forwarders to import inventories from overseas to a distribution center. The added benefit of using a freight forwarder in your shipping strategy is that you can rely on their comprehensive understanding of global trade regulations, customs rules, and logistics costs.
4.7) Sort Out Your Pricing Model
Your pricing model determines your customer conversion and retention capacity. Typically, a pricing model considers your business goals, revenue target, brand positioning, and competitor pricing.
Determining your pricing model can be tricky. For example, fixing a price solely based on competitors can be a fatal mistake without taking into account demand elasticity.
There are various pricing models, such as pricing based on competition, production cost, premium services, A/B testing, and demand forecasting. Consulting with experts like business analysts can give you in-depth insights into a pricing policy that can endure market risks.
4.8) Understand U.S. Taxation, Laws, and Regulations
Some say the U.S. is a land of taxes. In essence, the federal structure of the U.S. makes taxation a complicated process to understand. While we are no experts in U.S. laws and recommend consulting with legal practitioners, here we present the three common U.S. taxation for eCommerce retailers:
Sales Tax: It varies according to the state your business is incorporated in and involves special taxing jurisdictions such as local taxes.
Import duties and tariffs: It is applicable to suppliers importing products, such as dropshippers, and is valued according to the U.S. Free Trade Agreements threshold for taxes.
Ecotaxes: Given the prominence of sustainability, some U.S. states have levied taxes to curb environmental degradation. One such example is the California Redemption Value Act.
4.9) Gather Relevant Certifications and Trademarks
Trademarks and Copyrights allude to a business’s intellectual property and thus protect a business from external theft or third-party interference.
Trademarks are particularly important to safeguard your brand identities, such as logos and business concepts like source code or product design. Similarly, copyrights give you the right over your digital assets.
Therefore, having a trademark or copyright can protect your business from unauthorized infringement. The U.S. Patent and Trademark Office provides all trademarks in the U.S.
4.10) Establish Payment Gateways
Payment gateways can be considered the lifeline of any eCommerce business since maximum customers in the U.S. rely on digital payment gateways for transactions. Therefore establishing a secure payment gateway would give you the leverage to gain a firm foothold in the U.S. eCommerce industry.
There are many payment processors operating in the continent, such as PayPal, Stripe, Google Pay, and Apple Pay. A good way to check their viability is to select a solution with DCI-PSS compliance, SSL certification, and strengthened anti-fraud measures.
Most online shoppers prefer credit cards as a payment method, so consider giving them as an option at your checkout page.
5) 5 Ways to Capture the U.S. eCommerce Audience
5.1) Focus on Multichannel Personalization
Personalization is a propelling force in eCommerce. You can personalize different aspects of your brand, like your tracking page, website search with filters, sizing charts, and product recommendations.
When you treat your customers as an individual, you can naturally gain their appreciation and, in the long run, increase a customer’s lifetime value.
5.2) Localize your Brand
The U.S. has its own demarcating features that differentiate them from consumers in Asia or Europe, such as millennials form a large bracket of consumers in the U.S.
Therefore, adhering to millennial culture in terms of language, image requirements, technology adoption such as augmented reality, and website design can all contribute to localizing your brand. Similarly, there is a growing demand for curbside or free delivery or pop-up shops.
5.3) Take Advantage of Mobile and Social Commerce
A global eCommerce trend on the rise is social commerce or using social media platforms as a sale channel. With Instagram, TikTok, and Facebook as successful examples, retailers who haven’t yet focused on social commerce can lose profits in the future.
You can use social media to let customers discover your products, purchase directly from the source, and have dynamic marketing opportunities. There is already a forecast that predicts the growth of social commerce to reach $2.9 trillion by 2026.
5.4) Center on Marketing
Marketing is the definite way to garner customer attention, encourage up-sells and repeat business. Affiliate marketing, Google Shopping, content, and influencer marketing are all ways to exhibit your brand to customers. Another way of effectively marketing your business is to offer discounts, promotions, free samples, and subscriptions.
5.5) Score Points on Customer Service
There are no two ways about offering the best customer service you can give. Without it, customers are likely to move to competitors instead, so reducing customer worries with a seamless purchase experience can instill their confidence in you.
Excellent customer service entails solving pre-purchase queries and order issues due to technical glitches such as failed payments and streamlining returns and exchanges. It also involves a timely response from representatives and multiple ways to reach them, on call, in-app chat, or emails.
6) Final Words
U.S. eCommerce is one of the fastest-growing and most prominent markets in the world. To expand there, retailers must meticulously plan and execute each component of establishing an eCommerce business.
This includes forging your business identity, procuring products, building your website, and researching customers and the market. It also involves planning your shipping and fulfillment, and pricing.
In this guide, we tried to paint a comprehensive picture of how to expand your eCommerce store into selling in the U.S. We hope it will come in handy when you decide to take that step!
7.1) Will an eCommerce store be profitable in the U.S.?
Yes. With careful planning and meticulous execution, it is possible to succeed in the U.S. Almost 80% of the country’s population shop at least once a month and spend about $4 on average. This is a good pool of consumers you can target.
7.2) How big is drop shipping in the U.S.?
It is estimated that dropshipping will rapidly evolve in the future and surpass $350 billion by 2025. The ease of doing a drop shipping business, escalating mobile commerce, and easy product procurement make dropshipping a popular business choice.