In an era of profound digitalization, online business has become an indispensable part of the global economy. And among the powerhouses in this field, the United States stands out with its role as a dominant force in the e-commerce market. With its large population, robust economy, and developed consumer culture, the US is not only one of the most promising markets but also an undeniable stronghold for any business aiming to succeed in online retail. In this article, let’s delve deeper into the realm of online business in the US – a juggernaut in the world of e-commerce. Join us at GOL as we explore further into selling online to the US, uncovering its potential and challenges.

The main characteristics of the American market and consumers

The United States, ranking as the third-largest country in the world and spanning an area twice the size of the EU, stands as one of the largest consumer markets globally, boasting high internet penetration rates and pioneering the adoption of the latest technological advancements.

The allure and might of the United States beckon numerous foreign enterprises to venture into this market, despite the anticipated high entry barriers and fierce competition.

Here’s a snapshot of the US e-commerce market through some key figures:

• 282.1 million: Active internet users, reflecting the widespread use of the internet across the nation.
• 87.9%: Internet penetration rate, indicating a vast majority of the population is connected to the internet, making online platforms accessible to a wide audience.
• 209.6 million: Population engaged in online shopping, showcasing a substantial consumer base for e-commerce businesses to tap into.
• 27%: The percentage of online shopping occurring both domestically and internationally, demonstrating the propensity of American consumers to embrace online retail on both local and global scales.

These statistics underscore the immense potential and significance of the US e-commerce market, making it an attractive destination for businesses seeking growth opportunities. However, navigating this landscape requires a keen understanding of the market dynamics, consumer preferences, and regulatory environment.

Online shopping behavior in the United States

In the realm of online shopping behavior, consumers in the United States are often savvy and familiar with making purchases online. Particularly, the Millennial generation and women tend to engage more in digital shopping.

Customer satisfaction and trust levels in the US are typically high, but they also elevate customer expectations. The US market shares many similarities with European markets, and consumer shopping behavior aligns accordingly.

Moreover, don’t overlook cultural differences, especially in communication styles. While you may have an understanding of American lifestyles, if your business approach tends to be more formal, adapting to a more relaxed demeanor could prove beneficial in the business context.

Enhancing awareness of such cultural nuances will help you adapt effectively to any foreign market. By doing so, you’ll increase your chances of success in business, not only in the US but also in other countries.

Peak shopping season in the United States

The peak shopping season in the United States typically occurs during major holidays throughout the year, including Easter, Summer Sales, Independence Day, Black Friday, Cyber Monday, and Christmas. During these times, both retail stores and online shops often launch numerous attractive promotional campaigns with discounts of up to 80% for some items. Consequently, the number of shoppers, both online and offline, in the United States is significantly high during these periods.

What do Americans like to purchase from abroad?

Consumer awareness of international food products is high in the United States. According to a study, more than eight out of ten (82%) consumers are aware of international food products sold in their favorite supermarket or food store online, e-commerce. This awareness is slightly higher among Millennials, with 87% of them being aware. Only 4% of respondents reported that their stores do not offer international food products.

Additionally, a majority of shoppers claim they can identify the country of origin of all the food products, with 73% of Millennials and Gen Zers being aware of the food products’ origin.

Moreover, consumers perceive that the product assortment is expanding, with 46% stating that there are now more international food products available compared to five years ago, and 28% reporting the same number available in their store.

Despite the perception of higher pricing, consumers express a willingness to try international food products. About 54% of respondents are willing to buy an international food product for the first time when shopping, with an additional 33% being somewhat willing. This willingness is particularly pronounced among Millennials and Gen Zers, with 72% and 64%, respectively, willing to try them for the first time. Only 8% of respondents overall stated that they are not willing to try international food products.

Some issues related to logistics, delivery, and shipping

Logistics, delivery, and shipping are crucial aspects of commerce in the United States. With its vast size, the U.S. benefits from a well-established infrastructure, including efficient rail networks, extensive highway connections, and advanced air-traffic systems. The country’s logistics market is highly developed, with strategic centers strategically located for optimal efficiency.

Shipping

In terms of shipping options, UPS and FedEx are the preferred choices for many businesses and consumers alike. Additionally, small businesses often utilize the U.S. Postal Service for their shipping needs.

Free shipping plays a significant role in consumer purchasing decisions, with the vast majority of U.S. consumers more inclined to make a purchase when this option is available. Furthermore, over half of consumers are more willing to buy products when there is the possibility of free returns and exchanges, highlighting the importance of flexible shipping policies.

However, cross-border shipping presents its own set of challenges. These include concerns related to security and counter-terrorism vigilance, the impact of economic fluctuations and recessions, as well as regulations associated with imports and trade.

To navigate these challenges successfully, it’s essential to ensure timely and accurate customs paperwork. U.S. customs authorities conduct thorough due diligence, and providing precise customs data can expedite the delivery process significantly, ensuring prompt delivery to customers.

Payment methods preferred by U.S. online buyers

Payment methods preferred by U.S. online buyers are a crucial aspect of understanding consumer behavior in the e-commerce landscape. A survey conducted by American Express in September 2016 shed light on the prevalent payment preferences among U.S. digital buyers.

Credit cards emerge as the dominant payment method, favored by 73% of U.S. adult digital buyers. This preference for credit cards can be attributed to their widespread acceptance, convenience, and the added layer of security they offer for online transactions. With credit cards, consumers can easily track their purchases, enjoy various rewards and cashback incentives, and benefit from fraud protection measures provided by card issuers.

Following closely behind, debit cards are also widely used for online purchases, with 62% of U.S. digital buyers opting for this payment method. Debit cards offer the advantage of directly accessing funds from the user’s bank account, making them a convenient and straightforward payment option for many consumers. Additionally, debit cards eliminate the risk of accruing debt, as transactions are deducted directly from the user’s available balance.

Interestingly, the survey reveals that many U.S. consumers are multiple cardholders, with nearly five cards per adult on average. This indicates a diversified approach to payment management, allowing consumers to leverage different cards for various purposes such as earning rewards, managing expenses, and accessing credit.

Moreover, beyond traditional card-based payment methods, alternative payment solutions are also gaining traction among U.S. online buyers. These may include digital wallets, such as PayPal, Apple Pay, Google Pay, and other mobile payment platforms. These solutions offer added convenience, security, and speed, allowing users to make seamless transactions using their smartphones or other connected devices.

In conclusion, while credit and debit cards remain the preferred payment methods for U.S. online buyers, the landscape is evolving with the emergence of alternative payment solutions. Understanding and catering to these diverse preferences is essential for businesses looking to succeed in the competitive e-commerce market in the United States.

Mobile ecommerce in the U.S.

Mobile ecommerce in the United States has surged ahead, outpacing many other countries, with mobile devices emerging as the ultimate platform for online shopping. With the ubiquity of smartphones and tablets, consumers increasingly rely on their mobile devices for various aspects of the ecommerce journey, including product research, connecting with sellers, and making purchases. Moreover, the availability of cost-efficient mobile data plans incentivizes users to spend more time online, further driving the growth of mobile commerce.

Statistics highlight the significant impact of mobile on retail ecommerce sales in the U.S., with mobile devices accounting for a substantial 36% share of total ecommerce sales. This figure, though slightly lower than the data reported by Criteo indicating 40% of online purchases made from mobile devices, underscores the undeniable dominance of mobile in the ecommerce landscape. Despite trailing behind the UK, which boasts a remarkable 52% share of mobile retail ecommerce sales, the United States maintains a robust position, reflecting the widespread adoption and integration of mobile technology into the shopping experience.

The rise of mobile ecommerce presents immense opportunities for businesses to reach and engage with consumers on-the-go. By optimizing their online platforms for mobile responsiveness and offering seamless, user-friendly mobile shopping experiences, companies can capitalize on the growing trend of mobile commerce in the U.S. Moreover, as mobile devices continue to evolve and become more ingrained in daily life, the importance of mobile ecommerce is only expected to increase, further shaping the future of retail and commerce in the United States.

Cross-border shopping

Cross-border shopping is thriving, making the U.S. one of the largest cross-border B2C ecommerce markets worldwide, both in terms of exports and imports. The strong trade relationship between the U.S. and the UK is particularly notable, driven by their shared linguistic background, fostering intensive B2C e-commerce activity between the two countries. Additionally, China stands out as a popular destination for online shopping among U.S. consumers.

U.S. online consumers predominantly make purchases from countries such as the UK, China, Canada, Hong Kong, and Australia. Conversely, online merchants in the U.S. primarily sell to China, the UK, Australia, Germany, and Canada, reflecting the dynamic nature of cross-border ecommerce trade routes.

The benefits and challenges:of selling to the U.S.

Benefits

• Linguistic Accessibility: With English being the second most popular language globally and the predominant language online, targeting English-speaking marketplaces, such as the U.S., provides access to millions of potential buyers worldwide. This linguistic accessibility facilitates communication and engagement with American consumers and beyond.
• Market Size and Maturity: The U.S. market is renowned for its vast size and maturity, offering access to a large pool of online shoppers. This expansive market presents significant opportunities for businesses to scale and grow their sales.
• Tech-Savvy Consumers and Infrastructure: American consumers are highly tech-savvy, embracing digital platforms and innovations. Additionally, the well-developed infrastructure in the U.S., including robust logistics networks and advanced payment systems, facilitates seamless transactions and enhances the overall shopping experience.
• Rapid Technology Adoption: The U.S. population demonstrates a propensity for quick adoption of new technologies. This rapid adoption opens up various marketing and communication channels for online sellers, such as social media and mobile apps, enabling effective engagement with target audiences.
• Economic Powerhouse: Recognized as an ecommerce superpower, the U.S. holds significant economic influence globally. Many foreign businesses are drawn to the immense sales potential and leading market position of the U.S., making it a lucrative addition to their international market portfolio.

Challenges

• Competitive Landscape and Market Dynamics: Upon entering the U.S. market, businesses must contend with fierce domestic competition, evolving demographics, rapidly advancing technology, and heightened consumer expectations. Keeping pace with these dynamic market conditions requires adaptability and strategic planning to carve out a niche and thrive amidst the competition.
• Tax Incentive Policy Type 86 for Cross-border Buyers: for direct-to-consumer sellers (without warehousing) in the cross-border e-commerce sector, understanding customs tax policies is crucial. One tax incentive policy that sellers should consider applying is Type 86.

Under this policy, individuals can purchase one package per day valued at less than $800 USD tax-free. This policy brings several benefits for both buyers and sellers:

For buyers:

• Cost savings: Buyers won’t have to pay additional taxes for packages valued under $800 USD.
• Encouragement for shopping: Tax exemptions make shopping more comfortable, especially for low-value items.

For sellers:

• Enhanced competitiveness: Product prices become more competitive when not burdened with taxes.
• Increased sales volume: Tax exemptions attract more buyers, leading to an increase in sales volume.

However, it’s important to note that Type 86 policy only applies to packages valued under $800 USD and purchased by individuals. Sellers need to comply with the regulations of this policy to ensure benefits for both buyers and sellers. Compliance with the regulations of this policy is essential to ensure benefits for both buyers and sellers.

GOL is a reputable consulting company with years of experience in FDA registration and assisting cross-border e-commerce businesses. We have a team of experts well-versed in customs tax policies and ready to support you in efficiently applying the Type 86 policy. Contact GOL today for a free consultation on the Type 86 policy!

• Infrastructure and Logistics: The vast size and diverse geography of the United States present logistical challenges for businesses, particularly smaller and mid-sized merchants. Uneven population distribution and varying landscapes can hinder efficient delivery and distribution networks, impacting both costs and delivery times. Smaller merchants may struggle to compete without the resources or infrastructure of larger distribution organizations, leading to diminished margins and operational constraints.
• Payment Ecosystem and Security: Guaranteeing payment security is of utmost importance in the U.S. market, especially considering the widespread use of online transactions and the potential for fraudulent activities. Sellers should incorporate robust fraud detection mechanisms, including Address Verification System (AVS) checks, to minimize the risks associated with fraudulent transactions. Nevertheless, stringent security protocols might inadvertently hinder genuine international transactions, potentially discouraging buyers from regions with distinct address formats or authentication methods. Achieving a balance between security and accessibility is crucial for instilling trust and enabling smooth transactions in the U.S. market. Embracing trusted payment options such as PayPal, Wise, and Stripe,… can enhance both security and convenience for buyers and sellers alike.
• Regulatory Compliance: Foreign sellers entering the U.S. market must navigate a complex regulatory landscape, including stringent regulations imposed by agencies such as the Food and Drug Administration (FDA) for certain products. Compliance with regulatory requirements, such as product safety standards, labeling regulations, and licensing requirements, adds layers of complexity and administrative burden to the selling process. Failure to adhere to these regulations can result in legal consequences, product recalls, and reputational damage, necessitating thorough due diligence and compliance efforts.
• Product Liability and Consumer Protection: Ensuring product safety and compliance with consumer protection laws is paramount for foreign sellers in the U.S. market. Any defects or safety issues with products can lead to legal liabilities, lawsuits, and damage to brand reputation. Understanding and adhering to product liability laws, warranty requirements, and consumer protection regulations are essential to mitigate risks and uphold consumer trust and safety standards.

Navigating these additional challenges requires thorough research, strategic planning, and proactive measures to ensure compliance, mitigate risks, and foster trust and credibility with U.S. consumers and regulatory authorities. 

Compliance with complex regulations can pose challenges for businesses or sellers, which is why they often utilize FDA registration services when selling food, supplement, cosmetics for human and animal online. GOL is one of the leading providers of comprehensive regulatory compliance solutions tailored to meet the needs of businesses operating in highly regulated markets such as the United States. With extensive expertise in FDA registration and compliance, GOL offers a range of services aimed at streamlining the registration process and ensuring full compliance with legal requirements.

With support from GOL’s services, businesses can expedite the FDA registration process, minimize the risk of legal violations, and maintain a strong reputation for product safety and quality in the competitive U.S. market.

Read more: FDA Import Holds and Detentions

Summary

In summary, the American marketplace offers vast opportunities for savvy and globally-minded online buyers, supported by advanced technology, a sophisticated payment culture, and robust infrastructure. As a leader in cross-border ecommerce both in exports and imports, the U.S. presents significant potential for sales, particularly during key seasonal events like Black Friday and Cyber Monday.

While entering and competing in the U.S. market may pose initial challenges, the potential for revenue growth and business success in one of the world’s strongest economies makes it a lucrative opportunity for businesses willing to invest the effort and resources.