The current landscape has fundamentally changed how people shop. The shift toward e-commerce in the US was happening before COVID-19, but according to new data from IBM, the pandemic has accelerated consumers’ shift toward e-commerce by five years.
U.S. e-commerce is projected to grow by 40% year over year in 2020, over 20% of all retail sales in the U.S. are expected to be generated through e-commerce during 2020 and is expected to nearly double by 2023 to more than 6.5 Billion USD.
Consumer polling indicates that this shift to e-commerce is here to stay. An in-depth customer survey by media company PYMNTS in the middle of 2020 reveals, “More than half of the consumers (52%) who shifted to digital grocery shopping say they won’t go back to their old ways of shopping, as online delivery and curbside pickup are gaining ground. And 60% of the consumers who shifted to digital to shop for things other than grocery items say the same.”
U.S. consumers mainly buy travel, consumer electronics and clothing online, but digital content such as music, TV streaming and e-books are segments that are increasing in importance. The fastest growing product segment online in terms of sales is electronics and media, followed by fashion. These two segments have increased by around 20% per year.
Online food ordering has gotten a particularly large boost due to the COVID-19 pandemic keeping consumers from going to grocery stores and restaurants. Of more than 300 U.S. consumers polled in a recent survey, 78.7% reported shopping online for groceries after the COVID-19 outbreak, up 39% from before the pandemic. What’s more, 56.7% of respondents said they shop for groceries online more often now than before the pandemic.
Nordic companies entering the U.S. needs to have a clearly developed view on how to handle operating in this very different commercial landscape and to thrive in tightening competition. The US e-commerce landscape has a lot of differences compared to the Nordic one and requires that Finnish companies adapt to a more customer centric environment.
Companies need to have a detailed understanding of their target customer, how to reach them, and how to keep them coming back, as the market is much more diverse than in the Nordics. The dominance of Amazon in the US has affected consumer expectations when it comes to ease of shopping, smooth logistics and responsive customer service. Smooth customer experience and effective customer service can make or break any brand, and the financial and personnel requirements to execute on this should not be underestimated.
Companies must also ensure regulatory compliance while minimizing liability risks before selling products to U.S. consumers. The regulatory steps include
In addition to these prerequisites, companies should also have a well-planned market strategy taking into account questions such as whether to set up a U.S. entity, required partners, estimated budgets, marketing strategy, and the overall customer experience well ahead of their U.S. launch.
As opposed to the Nordics, in the US it is often recommended to consult legal counsel regarding regulatory compliance, partner agreements, and company set-up in order to avoid unnecessary, and sometimes expensive, mishaps.
Business Finland has conducted a playbook on US market entry via e-commerce channels, such as D2C, Amazon and other key players. The playbook offers insights into
You can also apply for a one-on-one online coaching session to go over your e-commerce strategy for the US. All participants signed up for the webinar will receive materials after the event, including the webinar recording and information about upcoming events.
The webinar will be followed by additional sessions this Spring going deeper into specific topics, such as 3 Party Logistics (3PL), Amazon Management, E-commerce experience/payment platforms, and Sales tax.