According to the eCommerce wizards at eMarketer, US consumers are forecast to spend $586.92 billion online in 2019. With the 2018 population recorded at 327.2 million, that's almost $2000 spent by each and every man, woman and child in the US.
Those are huge numbers in a market that can seem a lot further away for online retailers than the 9-hour flight would suggest.
So what is stopping more UK eCommerce sellers reaching new customers from Florida to Alaska? Here is a list of the most common/most frustrating things I get asked about. I’ll keep adding to it.
What could be more annoying as a US consumer? Having already paid the shipping cost on that UK-exclusive product, to be hit with customs tax!
I hate surprises. Especially those that impact my wallet.
Now, the US raised its ‘De Minimis’ rate from $200 to $800 in 2016. Any orders heading to the US that are under that threshold, can benefit from an expedited border clearance and enter duty-free. Which is pretty damn good when Canada has a rate of CA$20….
Result: No nasty surprises for the customer.
Important to note: this cannot apply to any PGA (Participating Govt Agency) shipment, which is any commodity that is regulated by a federal agency. As the FDA do for food or cosmetics.
But what if we’re talking higher values. Can you as the seller take care of the charges for your customer? Yep.
By factoring the import tax into your shipping or product cost, the customer only pays once. Thus reducing furious emails, confusion and that feeling of being shafted.
Is it more paperwork and planning? Yes, but that’s what we’re here for. For a modest admin fee, we’ll complete a pre-shipping document check, import tax calculation and payment direct to the destination countries authority.
US Sales Tax
Terrifying right? At face value, the US has a damn complicated tax structure with each state running their own tax policy, rates of sales tax and reporting procedures. But as an eCommerce business based in the UK, does this even matter?
In short - it does now.
As of June 2018, the rules changed. Previous to a ruling by the Supreme Court in South Dakota v. Wayfair, a business would only need to collect tax on sales if they had a physical or tangible presence in a state - a nexus.
However, that ruling has now created an ‘Economic Nexus’, each state now has both an upper revenue and transaction threshold which are based on the previous 12 months of trading.
Our well-informed pals at US firm TaxJar have put together this handy guide with figures listed state by state. They also have useful calculators and integrations to keep your US operation compliant.
Tricky, but not impossible. If you’re unlikely to hit either threshold then there’s not much to think about. If you are, then there are plenty of tools to help along the way.
Making money is one thing and keeping as much of it as you can is another. Most website platforms like Shopify and Squarespace can be configured to accept payments in dollars from while keeping your payouts in pounds or euros.
Whether you use Stripe or Paypal, the payment processor you use will charge a conversion fee and their own exchange rates.
You also can’t open a new Amazon.com account without a US bank account. Something that is close to impossible to open from outside the US.
Alternatives to this are available. Speak to your UK bank about opening a USD account or use currency processors like Transferwise or OFX, direct your payouts to either option and reduce your conversion fees.
As a market, the US has an awful lot to offer. With careful planning, informed advice and the right partners in place, the west needn’t be that wild.
I’d love to hear more about people’s experiences, challenges and advice with online retail in the US. Comment or message me I’d love to hear from you.