Expanding Your Ecommerce Business Internationally (into the US)

As we trekked our way through New Zealand and Australia these past several months, we've realized that the ecommerce boom that has been increasingly hitting our country for nearly a decade is just now starting to see glimmers of a start in other countries. With the US's huge population, many budding entrepreneurs are keen to take a stab at selling in the US, but nobody quite knows where to start.

Selling Only in the US

If you are a larger, more established business, and your intention is to sell in the US as a key part of a larger strategy, you might consider setting up a separate entity exclusively for the purpose of selling in the US. (See our pros and cons of doing so.)

If you are launching your business to only sell in the US with no other plans to do business in your own country, it's probably best to start clean with a US business entity. Be aware that not all US entity types may be available as an option to you, and we would recommend that you consult with a Chartered Accountant or a Certified Public Accountant who is experienced with US tax laws.

To get started, check out our video, How to Start an Online Retail Business, and then check out our free Ecommerce Startup Guide for even more info.Ecommerce Startup Guide

Expanding into the US with Your Current Business

If you are already selling in your home country but want to expand your current operations into the US, don't worry, you don't have to open a US business entity to start selling and doing business in the United States.

Before you get started, however, you'll want to do your research. Some key areas you should focus in on are:

  • Products - do you think your products will sell well in the US?
  • Competition - how much competition do you see online? Are there lots of companies already offering what you're selling?
  • Pricing - if you have competitors selling similar products, what price point are they using? Do you think you'll be able to turn a profit at a similar price level? Or are you able to distinguish yourself to command a higher price?

Try dipping your toe into the waters with a small, initial shipment. Test to see if selling in the US is even viable for you. Send enough product to get real feedback with maybe two or three months of stock, but don't go all in by sending a year's worth of product if you haven't done real sales and tracked your metrics like sales velocity, profitability, etc. Fail fast and get out quickly, if necessary. If your test is a booming success, you can always send more stock to sell.

Basics for Selling in the US

There are plenty of logistics to nail down when you're starting to sell in the US. Here are some of the key things you should focus on:

Blog _ US FlagWhere to Sell - different marketplaces and shopping carts appeal to different sellers. Etsy, for example, is great for handcrafted or unique goods whereas Amazon helps deliver operational efficiency but at a high ticket price. WooCommerce tends to appeal to sellers who start with a WordPress website and add on a shopping cart when they later begin to sell. 

Do your research, but these are far and away some of the most popular sites our clients sell on: Amazon, Shopify, Walmart.com, and eBay

Fulfillment - it's great that you're selling products, but how do you get them to your customers once they've sold them? For sellers who live outside the US, this can be the most daunting part of selling within the US, but it really doesn't need to be. There are tons of options for fulfillment.

You can use a 3PL (third-party logistics) warehouse who will not only store your stock while waiting for the orders to roll in but will also pick, pack, and ship your products to your customers. You may even consider getting several 3PLs in different parts of the country to help minimize the speed or cost of delivery.

One of the most popular options is to use Amazon FBA (Fulfilled by Amazon). They work just like a 3PL, but they'll also list your products on the Amazon warehouse. The challenge with Amazon FBA is that not only do they come with a hefty price tag, but they also give you physical nexus in 28+ states and growing (see below on sales tax). 

You also have the option of selling via dropship where all placed orders go directly from your supplier to your customers so no storage is even necessary.

Shipping - when you are shipping products from your home country (or another country) into the US, it's good to use a freight company like DHL or a freight forwarder like Flexport or Shapiro.

Accepting Payments - selling online means you'll be accepting payments online, so you'll need to select a couple merchant processors. Some of the most popular ones out there are: Shopify Payments (Stripe), PayPal, Amazon Pay, Stripe, and Authorize.net, but there are literally hundreds to choose from. Check out www.merchantmaverick.com for comparisons and reviews.

The next hurdle with accepting payments is actually having somewhere those funds can be deposited. Since opening up a bank account in the US can be challenging for non-US citizens, consider setting up a virtual bank account using www.payoneer.com (if you're selling on Walmart.com, you'll be required to use Payoneer anyway) or www.ofx.com. Connect your merchant accounts and have online income deposited directly to this account.  

Compliance - align yourself with a reputable Chartered Accountant (CA) or Certified Public Accountant (CPA) who is familiar with international tax and sales tax, and you'll be doing yourself a big favor. 

Income Tax Returns - you'll need to file a return annually, and your accountant can help you navigate the requirements.

Sales Tax Returns - if the idea of sales tax has your head spinning, you're not alone. Even US citizens who have been selling for years can stumble on these requirements, particularly because new rules and regulations have been coming out fast and furiously since the South Dakota vs. Wayfair ruling last summer. Check out this YouTube playlist that'll cover all the basics you need to know.

Form W8-BEN / Form W8-BEN-E - these forms are similar to Form W-9 that US businesses are required to fill out. This information is provided Amazon and other merchant providers who are required to issue Forms 1099-K at year-end. Just complete the tax questionnaire. Form W8-BEN-E is the one required of foreign entities, and it's more complex than the other one. We recommend you work with a tax professional to complete these form.

What Else?

We hope this article was helpful! If you still have more burning questions, you might want to check out this video, Business Expansion | 4 Things to Know as a Non-US Amazon FBA Seller Selling in the US.

 

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