E-COMMERCE Guide TO

Everywhere you export The Canadian Trade Commissioner Service tradecommissioner.gc.ca E-COMMERCE GUIDE to THE UNITED STAtes Selling via e-commerce in the United States A custom report compiled by Euromonitor International for the Canadian Trade Commissioner Service www.euromonitor.com © Euromonitor International Ltd 2018 All rights reserved. The material contained in this document is the exclusive property of Euromonitor International Ltd and its licensors and is provided without any warranties or representations about accuracy or completeness. Any reliance on such material is made at users’ own risk. This document is confidential and for internal use by Canadian Trade Commissioner Service and its affiliates only. Publication or making available to any third party of all or part of the material contained in this document (or any data or other material derived from it) without Euromonitor’s express written consent is strictly prohibited. Please refer to the applicable terms and conditions with Euromonitor. E-COMMERCE GuIDE To THE UNITEd States | 2 List of Contents and Tables chapter #1 MARKET HIGHLIGHTS 4 chapter #2 THE LIFECYCLE OF AN E-COMMERCE BUSINESS 6 chapter #3 WHY THE U.S. MARKET? 8 chapter #4 ENTERING THE U.S. MARKET 15 chapter #5 UNDERSTANDING THE U.S. MARKET 29 chapter #6 ONGOING CONCERNS 40 chapter #7 RELEVANT E-COMMERCE SERVICE PROVIDERS AND PARTNERS 46 chapter #8 E-COMMERCE CHECKLIST 51 chapter #9 HELPFUL E-COMMERCE DEFINITIONS 53 chapter #10 TRADE COMMISSIONER SERVICE (TCS) RESOURCES 55 E-COMMERCE GuIDE To THE UNITEd States | 3 CHAPTER #1 Market highlights Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 4 Market highlights The role of e-commerce in the global retail landscape cannot be understated. Global Internet retail sales in the U.S. brick-and-mortar retail sales experienced a decline between 2012 and 2017, while are expected to grow at a compound annual growth rate e-commerce more than doubled to reach over US$1.3 trillion in 2017. (CAGR) of 14.8% per year from 2017 to 2022. The United States is a key driver behind the rise of global Third-party marketplaces, social networks, and partners e-commerce, with total e-commerce sales in the U.S. throughout the Internet retailing ecosystem help both exceeding US$360 billion in 2017, second only to China. large and small companies to enter the market with E-commerce sales in the United States exceed Canada’s varying levels of commitment. retailing sales in all channels combined. Despite the size of the U.S. market, there is still room for significant growth: The purpose of this report is to help identify how Internet retail sales in the country are expected to nearly Canadian businesses can take advantage of the U.S. double from 2017 to 2022. e-commerce market. The report will explain the country’s e-commerce industry and its drivers as well as analyse The size of the market, ease of entry, and close proximity opportunities, challenges, and resources for success. to Canada make the United States an appealing target for a Canadian business that is looking to expand. Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 5 CHAPTER #2 The lifecycle of an e-commerce business Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 6 The lifecycle of an e-commerce business If your company is interested in selling in the e-commerce market in the U.S., you likely have a product lined up or already being sold via retail or digital channels in Canada and now need to understand how to expose the product to audiences in the United States. Even if your product fits a consumer need or is “best in The third step is actually marketing and selling your class”, it will still take a significant amount of effort to product to consumers. Understanding how to get succeed in e-commerce channels in the country. There consumers’ eyes on your products and convert them into are four general steps involved with entering this market. customers is particularly challenging today, when consumers are overwhelmed with choices. Developing a The first step is to decide whether to enter the market to strong marketing plan is often an overlooked aspect of begin with. This phase involves researching your product launching your business in a new market but is in fact one and competitors, identifying and analysing your target of most important tasks. audience, and deciding how to reach that audience. You may have already conducted some of this research or Finally, as your business grows and sells higher volumes, even be an expert in your chosen industry. However, there may be new challenges and opportunities that arise. it is still important to conduct systematic market analysis Understanding how to take advantage of and manage specifically for the U.S. in order to decide whether to these scaling issues should be an ongoing concern. enter the market and develop a market entry Business and e-commerce are changing at a faster and plan accordingly. faster pace: You should monitor these changes and revisit your strategies regularly to ensure they continue to The second step involved in entering the U.S. position your company for success. e-commerce market is getting your products in a position to be sold. This phase includes building your inventory This guide will address the entire cycle outlined above. and understanding how to store it, cataloguing items on Its goal is to help you understand how to position your your website or on the Internet marketplace(s) you will business for success in the U.S. e-commerce market be using, arranging for payments to be processed, and should you choose to pursue it. building systems through which to fulfil orders and ship products. Particularly for the U.S. market, you should also ensure you have a reliable returns process. Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 7 CHAPTER #3 Why the U.S. market? 3.1 The United States has a strong economy and well-developed technology landscape 3.2 The United States has a large and unified market 3.3 The United States has a diverse population 3.4 E-commerce in the United States is expected to continue growing Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 8 3.1 The United States has a strong economy and well-developed technology landscape The United States is a well-developed market for Internet-oriented businesses. The country has strong economic fundamentals and a generally healthy consumer economy. The U.S. has also been an early and sustained leader in the creation and adoption of technology. The United States has one of the world’s strongest The integration of Internet-enabled technology into economies, with the largest gross domestic product consumers’ lives is only expected to continue as the (GDP) at US$19.4 trillion in 2017. The U.S. is the largest population increasingly relies on the Internet to access consumer market in the world and the second largest information, make decisions, and, complete daily tasks. e-commerce market. The country also has the highest Mobile devices (smartphones and tablets) have levels of disposable income (US$14.8 trillion) and become especially important facilitators of this consumer expenditure (US$13.1 trillion) across OECD integration process. countries. Furthermore, the U.S. population is increasing and disposable income per capita is expected to grow, Annual per capita disposable income (US$) suggesting that the United States will generally remain an 56 000 attractive market in the coming years. 54 000 The United States has excellent conditions for 52 000 e-commerce growth in particular. The U.S. population is 50 000 highly technology oriented: As of 2017 nearly three out of four U.S. consumers use the Internet daily as part of their 48 000 personal or professional life. Many savvy companies and 46 000 brands use this digital immersion as to build a reputation 44 000 among consumers and create selling opportunities. 42 000 40 000 2017 2018 2019 2020 2021 2022 Return to Table of Contents E-COMMERCE GuIDE To THE UNITEd States | 9 Household possession of smartphone (%) Number of Americans using Internet daily (%) 90 75 80 70 70 65 60 60 50 55 40 50 2012 2013 2014 2015 2016 2017 30 2012 2013 2014 2015 2016 2017 Internet technology has transformed the U.S. retailing savings are partly because e-commerce does not require industry as well as the shopping behaviour of U.S. new products to navigate through the consumers. Approximately 80% of U.S. consumers shop bureaucratic sales processes that are common among online, and 15% of consumers in the U.S. make purchases brick-and-mortar retailers. In addition, the targeted on a weekly basis.1 Internet retailing has become a marketing that is possible online can make it easier to mainstay: The majority of U.S. consumers consider connect directly with your audience while keeping costs multiple channels when making a purchase, and some low and avoiding middlemen. Companies that would consumers visit online stores first.2 These numbers do have mass marketed a product in the past can now tailor not show signs of slowing down, as e-commerce offers campaigns to niche audiences, allowing more unique and consumers benefits such as convenience and a greater custom products to come to market. variety of products and price points. The combination of shifting consumer habits and an Economic prosperity and technology adoption create an enabling business environment has created room for excellent opportunity for businesses to start or expand.

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