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10 things you need to know about cross-border e-commerce in the USA...

10 things you need to know about cross-border e-commerce in the USA

Since we have presented you already with lists about cross-border e-commerce in general and a more localised list about cross-border e-commerce in the EU, we felt that it was time to venture farther into the world and see what is going on across the pond. Like we have seen with our most recent list on the EU, a lot changes when you focus on a different geographic location.

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1. Mobile commerce is rapidly gaining ground

With mobile penetration being as high as 110% (there are more phones than people!), a tablet penetration percentage of 34 and 166 million smartphone users1, this is not a surprising trend. The US appears to be adopting the shift to mobile commerce, or m-commerce, at a faster rate than other countries. M-commerce is projected to represent 27% of total e-commerce sales in the US and 16% of retail e-commerce in 2015.

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2. Hottest mobile retailers

As we have mentioned, mobile commerce is growing quickly. Internetretailers.com has conducted a research and put together a list of the 10 hottest mobile retailers that create the most awesome user experience by deploying technologies and strategies – both on mobile commerce sites and in apps – that make the most of mobile. Take a page out of their book if you want to be a successful mobile retailer.

  • Aerolife.com – “cool use of responsive design”
  • Ebags.com + apps – “fun to shop because of Tinder-like handbag sorting tool”
  • Ebay.com + apps – “is estimated to rake in $34 billion in global m-commerce sales this year”
  • Fanatics.com + apps – “they hired Groupon m-commerce pro David Katz to drive the company to a mobile-first mind-set”
  • Peapod.com + apps – “it’s finishing work on a groundbreaking, mobile-first, responsive design site that uses those APIs as the foundation, so any device can connect to the Peapod hub”
  • Ruelala.com + apps – “merges consumer data from desktop, tablet and smartphone activity and uses that data to run campaigns that target shoppers by device in real-time”
  • Target.com + apps – “is leading the way in using mobile, especially apps, to enhance in-store shopping”
  • Threadless.com + apps – “app-only store available to Apple users that enables customers to spontaneously create custom T-shirts that say (just about) anything”
  • Walmart.com + apps – “the Savings Catcher feature detects lower prices at other retailers and restitutes the difference via e-gift card”
  • Webundies.com – “with responsive design, a single web site adjusts to the size of the screen the visitor is viewing, all from one code base and one set of web content”

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3. Top online retail categories in the US

The same trend that we have noticed both globally and more locally in the EU, is also noticeable in the USA: physical goods dominate the e-commerce market as opposed to non-physical goods like software or plane tickets.

  • Apparel & footwear – $37.2 billion
  • Media products – $24 billion
  • Consumer electronics – $23.5 billion
  • Housewares & home furnishings – $7.2 billion
  • Consumer appliances – $6.7 billion

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4. Biggest online e-retailers

It is quite interesting that Amazon.com, the only retailer that trades exclusively online is almost at the bottom of the list of biggest online retailers. Brick and mortar retailers who found their way on the digital highway, like the almighty Wal-Mart and Kroger, have spectacularly surpassed Amazon.

  1. 1. Wal-Mart           $334.3 billion
  2. 2. Kroger                 $93.6 billion
  3. 3. Costco                 $74.7 billion
  4. 4. Target                 $71.3 billion
  5. 5. The Home Depot     $70 billion
  6. 6. Walgreens               $68 billion
  7. 7. CVS Caremark       $65.6 billion
  8. 8. Lowe’s                 $52.2 billion
  9. 9. Amazon.com           $44 billion
  10. 10. Safeway             $37.5 billion

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5. Location, location, location

A good merchant has great merchandise and services. A good payment service provider knows who is looking to buy that merchandise and those services. According to Traxpay.com online merchants that hail from the USA sell mostly to these countries (percentage of cross-border sales):

  • China – 84%
  • UK – 70%
  • Australia – 69%
  • Germany – 48%
  • Canada – 33%
  • The Nordics – 24.9%
  • France – 10%
  • Spain – 10%

Read our blog on 10 things you need to know about cross-border e-commerce to prepare yourself, your business and your web site for conducting business in other countries.

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6. Canada, eh?

Even though we have mentioned here that sales to Canada “only” accounts for 33% of total cross-border sales, there is great potential in the Great White North. Due to its proximity to the US and the lack of a language barrier, a lot of Canucks travel to the US and are therefore very familiar with American stores and brands. This results in Canadian shoppers not only wanting American goods and services, but also raises the demand for inexpensive shipping and relatively low import costs. If you would like to venture abroad, but stay close to home, Canada is the way to go! This is what you need to know about Canadian shoppers:

  • The vast majority of shoppers are women (85 percent), at a median age of 41.7 years.
  • 45 percent of Canadian online shopping goes to US and international sites (a third to the US), with average annual purchasing approaching nearly $1,100 per shopper.
  • Canadians are night owl shoppers, spending big around 5:00 – 6:00 pm and peaking between 11:00 pm and 1:00 am, especially on Friday nights where spending takes a major spike up at 11:00 pm.

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7. Preferred payment methods in the USA

If you think that Americans like their credit cards, you’re right on the money! An impressive 40% of Americans whip out their credit cards for just about anything. Debit cards are a little less popular, 29% of US citizens use their debit cards for payments. Whereas alternative payment methods are booming in the EU and some parts of the rest of the world, Americans don’t much care for them; only 18% of Americans uses alternative payment methods when shopping online. All the way at the bottom of the list, we find prepaid and gift cards at 8% and store branded credit cards at 5%2.

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8. Major acquirers in the US

An acquiring bank (or acquirer) is a bank or financial institution that processes credit or debit card payments on behalf of a merchant. The term acquirer indicates that the bank accepts or acquires credit card payments from the card-issuing banks within an association. The US’s major acquirers are3:

  • First Data
  • Chase Paymentech
  • Vantiv
  • Elavon
  • Global Payments
  • Heartland
  • WorldPay
  • TSYS
  • BA Merchant Services
  • Citi Merchant Services
  • Wells Fargo

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9. E-commerce law in the USA

A number of federal, state, and international laws now govern e-commerce, which can involve complex contract and tax issues, security, and privacy issues. Because technology changes quickly, the laws regulating it are new and developing.

In the United States, the proposed Uniform Computer Information Transactions Act (UCITA) intends to bring uniformity and certainty to the laws that apply to information technology transactions, just as the Uniform Commercial Code does for the sale of goods. UCITA would create a uniform set of rules to govern such areas of e-commerce as software licensing, online access, and other transactions in computer information, but it has been controversial because of its potential to weaken consumer protections, and instead of becoming federal law, has only been adopted in two states, Virginia and Maryland.

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10. Trade takes time

The complexity of the US trade process can present some significant challenges for global businesses. It involves 47(!) federal agencies and the US Customs and Border Protection (CBP), and has largely relied on manual data entry and paper-based records. This is both time-consuming and costly. In 2014, CBP processed more than $2.4 trillion in trade and approximately 26 million cargo containers . As you can imagine, it takes CBP quite some time to sift through 26 million cargo containers every year. That is why we recommend merchants to observe a realistic delivery time when delivering goods outside the US in order to avoid disappointed customers and the chargebacks and other fees that are associated with them.

Because the current import and export system is so time consuming and costly, the CBP – led by President Obama’s Executive Order for streamlining the export/import process for America’s businesses – is enhancing its import and export processing system and moving from paper-based and legacy system requirements to faster, modernised and more cost-effective electronic submissions. The Automated Commercial Environment, or ACE, will become CBP’s primary system through which the international trade community submits import and export data required by all federal agencies.

That Executive Order set December 31, 2016 as the deadline for completion of a government-wide, automated “Single Window” approach for streamlining the movement of cargo in and out of the United States.

1. UNITED STATES OF AMERICA CROSS-BORDER ECOMMERCE REPORT – Critical facts and insights for international expansion, p.6, The PayPers, 2014.
2. FACTSHEET 2012 USA – E-commerce payments landscape, PayVision, 2012.
3. UNITED STATES OF AMERICA CROSS-BORDER ECOMMERCE REPORT – Critical facts and insights for international expansion, p.21, The PayPers, 2014.