Last Wednesday, Pentagon hosted a webinar on how to simplify e-exporting to the USA, with our partners leading foreign exchange service, Currencies Direct, and US online marketplace, Newegg.
If you didn’t have chance to catch the webinar, you can view the full recording here.
However, we know you are busy and may not have the chance to watch the recording in full, so we have provided a brief summary of the key points below:
THE US ECOMMERCE LANDSCAPE
- Even though the US is already the second largest ecommerce market globally, there is still phenomenal room for growth, with the market expected to grow by a huge 64% in the next five years, reaching as much as $648 billion. This growth is specifically being driven from mobile commerce, which is expected to account for over a quarter of all online sales in the next three years.
- Unsurprisingly, apparel and consumer electronics are the most popular products in the US, with online shoppers looking out for high quality products at competitive prices.
- US online shoppers are always on the lookout for a good deal, and this extends to delivery. According to UPS’s ‘Pulse of the online shopper’ study, as much as 58% of online shoppers are willing to add more items to their shopping cart in order to qualify for free shipping, and a further 83% are happy to wait an additional two days if delivery is free.
- Don’t underestimate the power of good customer service – 55% of online shoppers are likely to abandon their shopping cart if they can’t find a quick answer to their question.
- As established ecommerce platforms with loyal and highly engaged customer bases, online marketplaces are a fantastic first step into a new market, such as the US. They provide speed-to-market, local knowledge, convenient stock management systems, support with promotional campaigns and are leaders in their field – Amazon, for example, generated around 60% of the total US online sales growth in 2015.
ADDRESSING COMMON PROBLEMS WHEN SELLING IN THE US
- International businesses selling in the US are not required to collect sales tax in a state, unless they have ‘nexus’. Nexus is defined as a connection or physical presence in a state or jurisdiction. If you have nexus in a state, you need to collect and remit sales tax according to their regulation.
- Unlike other marketplaces in the US, Newegg acts as the ‘Merchant of Record’, which means it is responsible for collecting and paying sales taxes in the states where they have nexus (CA, IN, TN, NJ). This means you don’t have to worry about collecting and paying US taxes for any sales from the Newegg marketplace.
- Import duties are not raised in the US for any item up to $800, and after that the average duty rate is around 5%.
- By using a service such as ‘Shipped by Newegg’, you will see your unit shipping costs go down and are likely to see an increase in sales. US customers will see the item is already in the US, so they will know that delivery costs are likely to be lower and the dispatch time will be shorter, making them more likely to complete the sale.
- Last November, Newegg saw monthly homepage traffic surpass 75 million, so by tapping into promotions and deals on the site, you are being given the opportunity to plug directly into Newegg’s loyal and highly engaged shoppers.
- Marketing doesn’t simply end when a buyer navigates away from the site. By working closely with Newegg you can take part in their highly successful email marketing campaigns, which are sent out to 14 million registered users and have an open rate of 40%. You should also make sure you include the correct product identifiers, to enable your products to show up on Newegg’s Google ad campaigns and benefit from Newegg’s significant domain authority.
MAXIMISING YOUR PROFITS
- The currency markets are volatile because of Brexit, which has caused a weakening in the pound against the dollar, resulting in the lowest exchange rates in 30 years. This is good news for those looking to export to the US, since you currently only need $1.25 dollars to make a pound (previously $1.45), making you 14% better off for the same amount of dollars.
- If you are selling on overseas marketplaces, use a specialist international e-tailer bank account to collect your revenue. This will avoid expensive conversion costs and give you more control.
- Forward Contracts can protect you from FX movements by locking in the exchange rates you see today to use in the future. For example, you can sell your future Christmas sales at today’s exchange rate to ensure you are making the most of your profits and avoid negative foreign exchange movements.
- When you are buying stock, ensuring you get the best exchange rate, will lower your input cost and ultimately impact your margin.
If you would like more information on this webinar or you are interested in selling to the USA, please get in touch with Pentagon by calling: +44 (0)20 8940 5392 or emailing: firstname.lastname@example.org