With consumers around the world demanding certainty and speed of delivery, operating effective, global eCommerce fulfilment has become essential for many growing brands. This, combined with increasing carriage costs and ongoing supply chain disruption, has necessitated the requirement for businesses to consider opening fulfilment centres in different locations to keep pace with demand and meet customer expectations.
For UK retailers, the US market offers fantastic expansion opportunities but “setting up shop” stateside is not a straightforward process. Businesses should not underestimate the vast amount of preparation and planning behind the scenes that is needed to make a successful launch in the US. Emma Dempsey, CEO, James and James Fulfilment outlines practical steps for retailers.
The appeal of the US market
The UK and USA have a long history of strong trade ties, with the UK Government recently committing to deepening this trading relationship. Its export strategy also positions the US as a ready-to-trade market and says it will continue to promote exporters to the region, among others.
The US market also brings significant financial incentives and Statista forecasts that by 2025, online shopping revenue in the US will exceed 1.3 trillion dollars. Despite this, research by Newable suggests only 27 percent of SMEs have selected it as a preferred market destination. To capitalise on this market and the opportunities it brings, British businesses need to consider five important steps.
1: Register your business foreign for-profit corporation
Any UK eCommerce business embarking on US expansion first needs to register its existing business as a foreign for-profit corporation. This must be completed with the appropriate US governing body, which differs across states. Registration is vital, providing organisations with the licence to do business in the US. In Ohio – where we have a fulfilment centre, for example – businesses can do this by completing a 530A form. Forms typically require the following information:
- Existing business contact details
- A Certificate of Good Standing, available from Companies House
- The details of an “agent” – such as James and James, which can act as a fulfilment partner and centre
- A Notary Public, who should be local to the business, to sign and seal a hard copy of the form
2: Register to collect and remit sales tax
A key difference between the US and UK is that there’s no blanket Value Added Tax (VAT) in the US. Instead, different states have different rules around sales tax. Businesses are usually required to collect sales tax from consumers and pass this on (or remit it) to the state, providing the organisation has a “nexus” or permission to trade.
There are two types of nexus to consider: a ‘Sales tax nexus’ results from having a physical presence in the state, including inventory in a fulfilment centre while an ‘Economic nexus’ results from achieving a certain amount of revenue or orders from a state. So, for example, if retailers hold stock in Columbus, while their biggest markets are Los Angeles and New York, they’ll collect and remit sales tax in Ohio, California and New York.
3: Set up a local fulfilment centre
Next, businesses should set up a fulfilment centre. Due to its size, shipping nationwide in the US isn’t as quick or easy as it is in the UK. Having multiple US fulfilment centres can help, but also brings complex inventory management. The Midwest is a good starting location, enabling 2-3 day shipping across North America (a bar set by Amazon Prime) from one central location.
Managing orders and inventory in another country, coupled with a five-to-eight hour time difference, is a complicated process at the best of times. For this operation to run smoothly, it is essential to have a powerful cloud-based warehouse management system (WMS), order management system (OMS), and a centre that is equipped to manage any customer product returns.
For efficient data management and high-quality insights, companies should ensure that these various systems are connected to their UK HQ or fulfilment centres. This technology can provide real-time updates on stock levels as goods come in and out. It also enables retailers to track any further details about products to inform future purchasing decisions and marketing campaigns in each region.
4: Stock the new fulfilment centre
Once the US fulfilment centre is up and running, it’s time to send stock to it in bulk. Enlisting the help of a freight forwarding company to manage aspects of the logistics and customs processes can remove a lot of hassle here. For example, these companies can handle the transportation of goods to the US, whether from existing UK stock or from a manufacturer in another country. They also provide support in managing customs, and act as the Customs Broker or Importer of Record (IOR); ensuring the correct duties are paid and goods are transported smoothly.
5: Get selling
Once properly set up, businesses can really turn the marketing engine on to maximise sales. This includes localising the website for American customers, with prices in dollars and sizes in US or imperial measurements. With a new local fulfilment centre, businesses can also promote cheaper shipping, faster delivery and simpler returns – important factors for US customers. Beyond measurements and currency, retailers can tune their email and social media campaigns to US culture and capitalise on national holidays and discount days.
Finally, businesses must remember to register and protect trademarks and intellectual property in the US, as well as at home.
Conclusion
Operating in additional markets is complex and to fully take advantage of the US market opportunities, eCommerce businesses must ensure they have the right operations and support teams in place, from setting up the back office to infrastructure and fulfilment centres. Working with proven fulfilment partners can enable companies to deliver goods to customers successfully and grow their brand stateside, tapping into the 1.3 trillion dollars on offer.
