Targeting the United States eCommerce market is clearly an attractive option for many UK retailers – it remains the largest in the world with online sales totalling $305 billion in 2014 – although China is expected to replace it at the top soon. Not forgetting US shoppers have a famous fondness for British brands.

What’s more, US shoppers certainly appear to be comfortable with making cross-border purchases. PayPal estimates the cross-border share in the US is as high as 45%, and the UK ranks as their favoured international destination (49%), with China (39%), Canada (34%), Hong Kong (20%) and Australia (18%) also popular.

However, the US market is highly sophisticated and the competition is fierce – many of the most recognised global brands originate from here, after all – and the 50 states all have specific laws, taxation, cultures and economies that greatly add to the complexity of launching there.

If you are taking the plunge, we have outlined some key considerations when building your strategy for market entry.

Logistics

The domestic home delivery market is dominated by four big players – US Postal Service, UPS, DHL, as well as Fed Ex.

There are some very real logistics challenges associated with launching in the US market, largely due to its scale – 320 million people in 50 states across a geographical area of 3.5 million square miles and coast-to-coast line-haul distances of up to 3,200 miles. There are also four time-zones, creating issues for the definition of same day or next day delivery.

This scale does mean the majority of US shoppers are prepared to wait longer than in other markets – a UPS study found that shoppers regard an average of six days for a ‘paid-for’ delivery and eight days if shipping is free as reasonable, though half do expect to be advised of an accurate delivery window at checkout.

The same study found 52% had added items to their basket to qualify for free shipping and 59% regard it as important that delivery costs are shown early in the process.

Payments

US online payments are dominated by payment cards, with credit and debit cards accounting for a large share of online payments in the country – and 45% of all e-payments.

According to the Economist, there were 1.2 billion debit, credit and pre-paid cards in circulation at the end of 2013 – which is the equivalent of an average of 5 per person.

That said, PayPal has considerable market share at 15% and alternative payment options are becoming more popular, largely driven by the growth in mobile technology and the ‘always connected’ shopper.

Legal framework

The US is governed at the federal level, but most contract law is set at state level. The Uniform Commercial Code was created in an effort to harmonise requirements across the 50 states, but it is not federal law and therefore only adopted by individual states where they choose to do so.

Key federal level bodies you should be aware of include:

  • Federal Trade Commission (FTC) –responsible for ensuring consumers are treated fairly
  • Federal Communications Commission – regulates interstate and international communications by radio, television, wire, satellite and cable
  • US Copyright Office and the US Patent & Trademark Office

Data protection is decided at federal level with the FTC having overall responsibility for its implementation, although California has its own acts covering this area which impact any business trading into the state.

There are a number of other important elements to take note of – including intellectual property rights, PCI DSS payment card rules and those relating to the provision of credit.

Another important concept is that of ‘nexus’ – which is generally defined as having a connection or business presence in a state or jurisdiction, and sets the requirement to collect and remit sales tax where a business is found to have nexus in a state in accordance with regulations there. As ever, having nexus can vary by state and may be triggered by a range of activities including opening offices, stores or franchises, storing items in warehouses or even just attending meetings or tradeshows there.

Free download: To find out more about the US eCommerce market, download your free copy of the US Cross-Border Trading Report 2015, published in association with wnDirect.