I attended the “Breaking the US Webinar” on Wednesday, 12th May and wanted to write up my thoughts on what was learnt. If you would like to listen in to judge for yourself then the YouTube recording is available here. The theme of the discussion was about expanding your ecommerce sales in the US.
You need to know that the compliance process is very complex because it’s different from state to state, in the US. In North America, a company is subject to corporate tax at the federal level but also to taxes in the state where it has registered and in all states where the company has a “nexus”. The nexus is what characterizes a sufficiently close link with that state. This may result in the holding of an asset or facility, employees, inventory or sales in that state. The notion of nexus is unique to each state and therefore makes the type of activity that can trigger a nexus in a state variable. The Federal Law limits the right of states to impose taxes. Avalara propose an interactive tool to help you evaluate sales tax risk and help you to figure out where your sales may create an obligation to collect sales tax. When you want to sell in the US, you need to upgrade your technology, and focus on what customers are looking for, what are their behaviours, test the market and the products that sell. To sell in the US from the UK, it’s more difficult if the brand is traditional but it’s easier for an innovating brand.
What strategy the brand should adopt?
Make sure products resonate (For example, Burberry, the body shop etc are UK brands which resonate in the US culture). However, you may face to some issues: how to drop ship, returns, stock, warehousing, customer service and clear pricing. All this depends on what the company is selling to an extent. In any case, the company needs to know where to begin, and needs to be proactive. It has to anticipate expectations (where are the customers, their behaviour, sales tax etc.) and take the initiative. The company shouldn’t hesitate to invest in services to help with the issues (talent pool, map working etc.). Localisation and culture is important, for example New York is a centre for many to begin in due to the shopping population and links to the UK.
First, the company should try its best and then use an adapted strategy (language, price etc.)
The physical presence in the US depends on the business, sometimes it’s easier to just sell online. However, the physical presence can simplify the shipment, taxes and stocks.
Intern, Ecommerce Club