The e-commerce market in the USA is enormous, and that makes it an interesting target market for European e-commerce businesses who are looking to expand. This article will familiarize you with the US e-commerce market and the local preferences and shopping behaviors you should be aware of when planning your launch.
The USA in Facts and Numbers
The United States of America, or USA for short, is the third-largest country in the world (after Russia and Canada). It covers 9.8 million km². The federal republic comprises 50 states; the Contiguous United States plus Alaska and Hawaii. The Contiguous United States is made up of the 48 adjoining states and the District of Columbia (also known as Washington, D.C.), which is the capital city of the USA and the seat of the federal government. The entire Contiguous United States, as well as Alaska, are located on the North American continent, while the state of Hawaii (and various other US Island territories) are in the Pacific and Caribbean regions. The 49 states on the North American continent are bordered by Canada in the north and Mexico in the south.
The United States has over 331 million inhabitants, almost as many as the entire European Union. China and India are the only countries with more residents. The major metropolitan centers on the East and West coasts of the country are home to millions of people. New York City is probably the best-known American city, followed by Los Angeles and San Francisco on the west coast. Chicago, Boston, Dallas, Houston, Miami and many others are also familiar names.
The standard of living in the United States is quite high. With a gross domestic product (GDP) of over 20 billion USD, the United States has the largest economy in the world. The country is home to less than 5% of the world’s population, but produces around one-fifth of the world’s economic output. Businesses of all sizes, from global giants to small and mid-sized businesses, can be found here. The USA has a solid economic relationship with most countries in Western Europe, including Germany.
Currency and Time Difference
The US dollar (USD) is the official currency in the United States, as well as in several other countries including Puerto Rico, Guam, the Virgin Islands, Ecuador and more. Moreover, the USD is used as the world’s primary reserve currency due to its stability. The value of 1 USD is typically around that of 1 EUR, give or take a few cents. This has fluctuated over the years, but not drastically.
If you’re considering launching a business in the US, you should keep the time difference between the US and the EU in mind. The US is large enough to cover three time zones: when it is 9:00 in California (west coast), it is 12:00 noon in New York (east coast) and already 18:00 in Berlin. This is an important detail to note when planning your customer service offerings.
Language and Localization
Although it does not have an official language, the United States is a primarily English-speaking country. English is spoken by around 264 million people in the US as their native language.
As a country with a long history of immigration, the United States has many residents who speak other languages as well. In 2021, nearly 68 million people reported speaking a language other than English (LOTE) at home. However, around 60% of those people are also fully proficient in English.
Aside from English, the most common languages spoken in America are Spanish (41.7 Million, or 60% of the LOTE population), Chinese (3.5 million or 5%), Tagalog (1.8 million or 2.6%), Vietnamese (1.7 million or 2.3%) and Arabic (1.3 million or 1.9%).
As with many languages spoken in multiple countries, the English language has different variations in different countries. For the most part, the English variations spoken in the USA, in Canada, Australia, New Zealand and the UK are all mutually intelligible. However, there are differences in spelling, grammar, and — most of all — in slang and marketing language.
Many European e-commerce businesses may already have an English-language website, but this will need to be localized for the US market. Currency and sizing will need to be converted, and the spelling and marketing language should be adapted for US consumers. It’s also worth noting that many English terms for clothing and clothing fasteners vary from country to country and require an expert eye to be localized naturally.
Internet Usage in the USA
In 2022, between 90% and 93% of the US population had internet access — a total of over 312 million users. Because the US is so large, there are some very rural areas where internet coverage may be weak, and the level of internet access varies in rural vs. urban areas. Statista reports that 90% of rural inhabitants use the internet, whereas 94% of suburban residents and 95% of urban residents are internet users. Approximately 282 million US inhabitants are mobile internet users. 302 million US residents, or about 90%, report using social media.
e-commerce accounts for nearly 15% of retail sales in the US. In 2021, the US e-commerce market generated $862 billion (USD) in sales, and this number is expected to increase to $1,705 billion by 2027. This makes it an extremely attractive target market.
The most popular categories are clothing, food, electronics, furniture and media. 51% of respondents reported having purchased clothing online in the past 12 months, making it the most popular category. Food is the fastest-growing category for e-commerce purchases.
The leading online marketplace in the US, in terms of market share and total sales value, is Amazon. It accounts for 37.8% of market share, followed by Walmart with 6.3% and Apple with 3.9%.
Payment and delivery preferences
54% of survey respondents reported that they prefer using debit cards for their online payments. PayPal is also popular. Unlike in some European countries, US consumers do not generally use direct debit or bank transfers to pay for online purchases.
The great majority of e-commerce transactions in the USA are conducted within the United States. Cross-border e-commerce is minimal, but when it does occur, the preferred payment method is PayPal, which accounts for 35% of cross-border payments. Debit cards were used for 32% of cross-border payments.
56% of consumers surveyed list “direct delivery to my home” as their primary reason for buying online, and 65% of respondents report having completed a purchase on their smartphone. Because the country is so large, shoppers are accustomed to slightly longer delivery times than in most European countries. A 2017 survey reported that most shoppers are willing to wait up to four days for a free delivery service. Consumers in Hawaii and Alaska, which are geographically separated from the rest of the US, may have to wait even longer due to the longer distances.
Import and customs regulations in the USA
There are special import regulations in the US for certain product categories, including agricultural products, foods, medications, medical devices, chemical products and vehicles.
In addition, certain types of products are subject to quotas. In the US, there are two types of import quotas, “absolute quotas” and “tariff-rate quotas”. Absolute quotas limit the total quantity of certain goods that may be imported into the United States during a specific period. Tariff rate quotas, on the other hand, offer a reduced customs duty on a limited quantity of a product category. Once the tariff-rate quota limit has been reached, the customs duty increases.
Thanks to the size of its population and its economic strength, the USA is a potentially valuable target market. However, because the country is so large and spread out, there are considerable regional differences. Shopping behavior in the large coastal metropolises may be much different than in centrally located states with lower population densities. Nonetheless, the barrier of entry into the USA is fairly low thanks to the accessibility of the English language and the country’s stable economic relationship with the EU. Imports may be a bit of a hurdle, especially due to the geographical separation from Europe and the different rules and regulations governing certain products. However, overall we think the benefits outweigh the disadvantages.