Cross-border e-commerce: resources for exporting to the United States of America
Chapter 2: The US is the biggest, most accessible global e-commerce market
For most Canadian online retail brands, selling cross-border into the US makes good business sense. The US remains the largest, most accessible of all global markets, a familiar neighbor and a proven trading partner. Consumer confidence remains strong in the US, buoyed in part by growing household incomes, high disposable income and growing levels of personal savings. Future confidence in the US economy and rising discretionary spending are driving the growth of consumer and business online spending at home and abroad, especially when compared to other mature e-commerce markets like Western Europe and Japan where consumer confidence and gross domestic product (GDP) lags the US.
Expectations grow for secure online transactions: trust marks and influencers build confidence
In recent years, online security has become even more crucial as fraudulent activities grow in scope and hacking incidents increase. Expect US consumers to demand that e-commerce companies, especially international sites, better protect their personal data.
Prioritize cross-border e-commerce operations
Customer acquisition campaigns promoting the value and selection of Canadian products and security enhancements to build consumer confidence online are core components of a successful overall e-commerce plan targeting US shoppers. But before pushing ahead with acquiring and engaging new prospects in the US, it is important to first get your cross-border operations in order.
Building the business case: US e-commerce market size and growth projections
In 2020, online shoppers spent $US 861billion online with merchants based in the United States; this 44% growth was a huge increase versus 2019's year-to-year growth of 15.1% according to Digital Commerce 360's analysis of U.S. Department of Commerce data. The pandemic of 2020-21 ignited this once-in-a-generation e-commerce growth explosion, but the foundations for strong digital commerce growth were already in place.
Other growth dynamics driving US e-commerce growth
- Digital Holdouts Come Online
- Competition Keeps Online Prices Attractive
- More Payment Options Attract New Segments
- Offers and Promotions Proliferate
- New Product Categories Gain Traction
- Share of Specialty Direct-to-Consumer (DTC) Brands and Niche Marketplaces Grow
Consumer demographics in the US
The US market is known to be a consumer-driven economy — consumer spending comprises a bigger proportion of GDP than any other country. Today this consumption-driven economy is fundamentally shifting towards online retailers; in most cases at the expense of physical stores.
Key US consumer distinctions (versus your Canadian customers)
US and Canadian consumers share many things in common, but to sell into the US market, you should be aware of differences and how that will affect your cross-border sales strategies. While overall demographics are similar, several key distinctions are notable for any consumer products companies.
How digital is driving macro-level transformation of retail
The focus of this guide is to provide insights and checklists for cross-border e-commerce, but the US retail market is undergoing tremendous change on a broader scale. Macro retail trends will affect your US e-commerce strategy and operational decisions. Your business decisions should include an understanding of the following industry segments' digital business models, and potential opportunities or threats to your business. We encourage any company to study the global brands and retailers shaping the future of the industry: they may become your customers, or you may compete directly against them.
Keeping up with US consumer expectations: prioritizing the most impactful digital trends
Accurately investing in key digital trends while avoiding fads that won't deliver long-term returns can be challenging, especially when entering a new geographical market. For instance, voice commerce and augmented reality aren't fads, but neither are they cross-border priorities for Canadian brands entering the US market. On the other hand, mobile commerce and the rise of social media are "mega-trends" that encapsulate other key digital trends. Mobile and social are becoming digital commerce "table stakes;'' if you're only beginning to invest there, you are likely lagging your customer.
Overcoming the challenges of the US retail e-commerce marketplace
Whether challenges are macro-level, digital-specific or more of a competitive nature, most trends encapsulate an industry's attempt to overcome these barriers to growth. This chapter concludes by summarizing responses to key challenges specific to selling in the US market; more specific cross-border challenges will be explored in our next chapter.
Chapter 2 checklist
- Prepare for intense competition (and coopetition) in the US; potential competitors like Amazon may also be one of your more important cross-border e-commerce partners
- Invest first in cross-border operational priorities including fraud prevention, payment options, international checkout and shipping before spending heavily on US customer acquisition
- Resist the temptation to invest in every "shiny object." Mobile, social, logistics & delivery, sustainability and artifical intellegience (AI)/personalization are key digital trends to prioritize
- Prioritize mobile and social commerce strategies to connect with US Millennials and Gen Z shoppers "graduating" into their prime retail consumption years
- Manage delivery expectations by reminding your US shoppers that shipping from Canada may take longer (but will be worth it!)
- Build post-order loyalty with new US customers by providing timely, clear and transparent communications about cross-border delivery and/or returns status
- Design sustainability initiatives that include upstream supply partners and downstream distribution, fulfillment and delivery partners. Many US consumers think Canadians are greener, so highlight your commitment to green initiatives
- Prioritize first-party data and customer data protection. Find partners to navigate the patchwork of US and state privacy laws and regulations. Adopt data capture, analytics and optimization practices from Digital Native online retailers. The best data set wins!
- Invest in user generated content and influencers to boost US consumer confidence, increase conversion and lower the costs of customer acquisition and returns. Use trust marks at checkout to provide additional assurance.
- Be inclusive in your marketing and be mindful of opportunities to embrace cultural differences, especially within relatively larger US Hispanic and African American communities
- Expect US shoppers to be very price-savvy and drawn to promotions. Consider offering "Buy Now Pay Later" installment payments if you sell higher priced goods and/or want to be more inclusive of lower-income customer segments
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