US Passport 2015: Cross-border Trading Report

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A report researched & compiled by eCommerce Worldwide
in conjunction with IMRG, supported by
Cross-Border Trading Report
Your guide to international e-trading
US Passport 2016

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The US Cross-Border Trading Passport is our latest
publication in a series of international trading
guides produced and maintained by eCommerce
Worldwide, our sister associations and supporters
for a variety of key territories around the globe.
These passports are designed to operate as comprehensive guides for
cross-border e-Trading, exclusively focusing on the B2C markets in their
subject territories.
The complete set of published Passports are available for download on the
eCommerce Worldwide website at ecommerceworldwide.com/countries
and on the websites of our sister associations.
For more information please visit
www.ecommerceworldwide.com
or you can email
info@ecommerceworldwide.com

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CONTENTS
Foreword 6
Executive summary 8
Territory overview 12
Political & socio-economic environment 19
Online & mobile statistics overview 21
Marketing 34
Optimising customer experience 37
Legal framework & regulation 43
Taxation 55
Logistics & delivery 62
References 68
About eCommerceWorldwide 69
About wnDirect 70
Section supporters 71

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The US has, historically, been an extremely
challenging country to conquer in retail
terms due to its size and diverse culture.
However,technology has made the world a smaller place and globalisation
of consumer culture has resulted in an alignment of desires.Consumers in
the US are also avid cross-border shoppers.
A study by PayPal estimated that the share of cross-border purchases
from the US is 45% making them the first choice for international shopping,
with customers snapping up clothes,shoes,beauty products and jewellery,
FOREWORD
By wnDirect
You can find more information
about wnDirect’s services at:
www.wndirect.com

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US shoppers are happy to spend their money abroad
with the UK being their favoured destination (49%)
followed by China (39%),Canada (34%),Hong Kong
(20%) and Australia (18%).
This appetite for cross-border shopping can be fuelled
by a brand playing to the strengths of their home
nation.This association can be seen for example by
the high regard among US shoppers for British goods
and services.The‘Made in Britain’stamp is a valuable
asset in the US with consumers associating the UK with
innovation and creativity.Topshop,Boohoo,ASOS and
JackWills have paved the way for British brands,
having all achieved success there.
Retailers do need to bear in mind that many
international brands have little or no recognition
there,which is why the national‘card’often features
in marketing campaigns as this enables a positive
perception to be created despite the lack of awareness.
The rise of online retail has also meant that foreign
retailers can embark on a successful and lucrative
international expansion plan without having to lay one
brick.This has not only lessened the risk and enabled
the US to now be seen as a potential expansion target,
it has also meant that smaller retailers can consider
launching there – something that would once have
been far out of their reach.
Despite the challenges of expanding into a country
that spans 3.5 million square miles,those brands that
have cut their teeth on smaller geographies may well
feel more than ready to take on the might of the US.
So should we all follow in Columbus’footsteps and go
and discover America? The reality is that the US comes
with the same challenges and pitfalls seen with other
foreign markets.There are the usual duty and customs
issues to be dealt with,the varied landscape and the
sheer vastness of the country,combined with the need
to tailor your services to the local market.However,
with some informed thinking,a detailed plan,and the
right partners the US could be the perfect place to fly
your international brand.
34%
CANADA
20%
HONG KONG
39%
CHINA
49%
UK
18%
AUSTRALIA

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EXECUTIVE SUMMARY
The United States of America (US) needs very little in the way of introduction.
Representing the largest global economy ($16.77trn per annum), it is a very
attractive market for businesses looking to trade cross-border.
As a global leader in technology and being home to
many of the world’s best known ecommerce brands,
merchants offering a cross-border digital proposition
should find a willing market. However the distances to
cover, population spread and wide variety of cultures
offer challenges as well as opportunities.
76% of US customers who shop online have made a
cross-border purchase, with price and product
selection being the biggest drivers for this behaviour.
There are a number of important aspects to consider
before launching in the US (see following overview).

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POLITICAL & SOCIO-ECONOMIC
Trading into the US is not the same as trading into
one country.The US is made up of 50 states and
governed at the federal level, where three arms
of legislature ensure that there are checks and
balances in government.
Federal government provides a degree of
harmonisation on certain areas but individual states
have their own governance structures, their own laws
and their own taxes. However, it is a stable political
system which suits investment. GDP per capita is good
at $53,000, although there are big regional variations.
ONLINE & MOBILE
STATISTICAL OVERVIEW
As would be expected, there is a high level of internet
penetration at 87%. Retail is a strong sector in this
consumer-driven country and represents total sales
of $3.5trn per annum. Of this, ecommerce accounts
for approximately 10% of sales or $350bn.
Mobile is increasingly important as well with
$19bn worth of sales going through mobile devices;
interestingly, there is almost a 50:50 spilt between
smartphone and tablet making up these sales.
MARKETING
Digital ad-spend exceeded $49bn in 2014. Of this mobile
represented £12.5bn, up 76% on the previous year and showing no
signs of slowing. Email is still an important marketing tool although
its overall performance is slipping.The other marketing tools such
as display, affiliate, behavioural and search are still performing
strongly. Google is by-far the biggest search engine although
social is starting to make serious in-roads into the marketing mix.
Vouchers are playing an important role with 55% of internet users
saying they used coupons online while 93% of all shoppers use
coupons; there is plenty of room for growth.
OPTIMISING CUSTOMER
EXPERIENCE
Overall confidence in the experience of shopping online is
high at 83% satisfaction, compared to 62% for store-based sales.
Privacy is a key concern with 92% of customers worried
about how their data is stored, used and shared. For customer
support, 82% still prefer telephone support with email ranking
second. Marketplaces are playing an important role in the
customer experience with Amazon, eBay and Walmart being
the most popular.

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LEGAL FRAMEWORK & REGULATION
50 states represent a mixed legal picture with most
contract law being set at this level.The Uniform
Commercial Code is an effort to harmonise
requirements across the 50 states, but is not federal
law and it is up to the individual states to adopt.
Data protection is an issue decided at federal level
with the Federal Trade Commission having overall
responsibility for its implementation.
However, the state of California has its own acts
covering data protection which will impact any
business that trades into the state; effectively
making it a compliance requirement for most
website operators aiming at the US market.
Intellectual property rights are well covered in
the US at a federal level and there are a number of
other important elements to take notice of; such as
the PCI DSS payment card rules and those relating
to the provision of credit.
FINANCE & PAYMENTS
Payment cards (credit / debit) represent 45% of all online payments
while PayPal is used in another 15% of cases. Online card fraud runs
at 0.98%, while the recent introduction (phasing in) of ‘chip and pin’
cards is expected to push fraudsters online.
TAXATION
A complex area in any country, but in the US it is
exacerbated by there being over 12,000 sales tax
jurisdictions, with each state having its own rules
over which products sales tax is applied to and at
what rate. Nexus, or the rules which determine
a business’s presence in a certain state, can be
triggered by different activities.
Common examples include a physical presence such
as a warehouse or store. Others might be regularly
attending a trade show or advertising to consumers
in a state.Taxation is a complex but manageable
challenge for a business trading into the US.

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LOGISTICS & DELIVERY
134 million households and an 87% internet
penetration give some idea of the scale of the logistics
element of distance-selling.The geographical spread
of the population centres also adds its own challenges.
Many of the global carriers have big operations in
the US, offering competitive services to importing
businesses and a consumer base that is prepared
to wait six days for a paid-for delivery.While click
& collect services will not be an option for most
importers, using locker boxes or drop-off points
is gaining in popularity.
It will be no surprise that 56% of customers
respond to a ‘free delivery’ offer and there is a
general expectation that delivery costs are clearly
communicated early on in the shopping process.
Carriers offering a ‘fully-landed’ price ensure that
customers know exactly what the cost to them is so
there is no surprise at the door step. Likewise, for
the business, carriers offering ‘wheels-up’ customs
clearance provides surety around cost and process;
the customer will get their order promptly, rather than
it being held up waiting for clearance.
Overall, the US offers an exciting marketplace to trade into and, while the
administrative and logistical challenges can appear daunting, the opportunity
outweighs this. Choosing the right partners to help with the process,
understanding the cultural differences and adopting a proposition to suit
could lead to a rewarding foray into this vast and rapidly-developing market.

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OVERALL
World ecommerce rank: 1
Population: 309 million
Components: 50 States
Official language: None; English is
the language of Government, Spanish
(12.9%) also spoken widely
Gross domestic product : $16.77 trn
Currency: US Dollars (USD/$)
Internet: .us .gov .mil .edu .com
TERRITORY OVERVIEW
Supported by wnDirect

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COUNTRY STATISTICAL PROFILE:
UNITED STATES OF AMERICA
With the largest global economy, a world-leading
technology sector and affluent middle class, the US is
an attractive market to enter. Its population of over 309
million also represents a mixed cultural society and
whilst English is spoken by 72.6% of the population,
12.9% speak Spanish.
The cultural makeup stems from the Americas’ mixed
past, with colonial influences from Britain and France
and South American, Caribbean and African cultures
influencing widely.
Figure 1: Regional map of the US. Source: US Department of Commerce

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The table below (Table 1) lists all of the states, their approved abbreviations and postal codes.The eastern coast is
made up of many smaller states whilst the central belt is made up of fewer, much larger states.
State Abbreviation Postal code State Abbreviation Postal code
Alabama Ala. AL Montana Mont. MT
Alaska Alaska AK Nebraska Nebr. NE
American Samoa AS Nevada Nev. NV
Arizona Ariz. AZ New Hampshire N.H. NH
Arkansas Ark. AR New Jersey N.J. NJ
California Calif. CA New Mexico N.M. NM
Colorado Colo. CO NewYork N.Y. NY
Connecticut Conn. CT North Carolina N.C. NC
Delaware Del. DE North Dakota N.D. ND
Dist. of Columbia D.C. DC Northern Marianas MP
Florida Fla. FL Ohio Ohio OH
Georgia Ga. GA Oklahoma Okla. OK
Guam Guam GU Oregon Ore. OR
Hawaii Hawaii HI Palau PW
Idaho Idaho ID Pennsylvania Pa. PA
Illinois Ill. IL Puerto Rico P.R. PR
Indiana Ind. IN Rhode Island R.I. RI
Iowa Iowa IA South Carolina S.C. SC
Kansas Kans. KS South Dakota S.D. SD
Kentucky Ky. KY Tennessee Tenn. TN
Louisiana La. LA Texas Tex. TX
Maine Maine ME Utah Utah UT
Maryland Md. MD Vermont Vt. VT
Marshall Islands MH Virginia Va. VA
Massachusetts Mass. MA Virgin Islands V.I. VI
Michigan Mich. MI Washington Wash. WA
Micronesia FM West Virginia W.Va. WV
Minnesota Minn. MN Wisconsin Wis. WI
Mississippi Miss. MS Wyoming Wyo. WY
Missouri Mo. MO
Table 1: Approved abbreviations and postal codes for US states. Source: US Postal Service

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To give some sense of the economic substance of each state, the following Economist map (Figure 2) compares the
GDP of each state with a country of similar size.
State
Comparative country based
on GDP ($)
State
Comparative country
based on GDP ($)
Alabama Nigeria Montana Lebanon
Alaska Oman Nebraska Slovakia
Arizona Thailand Nevada Peru
Arkansas Kazakhstan New Hampshire Ecuador
California Italy New Jersey Switzerland
Colorado Thailand New Mexico Angola
Connecticut UAE NewYork Australia
Delaware Libia North Carolina Sweden
Dist. of Columbia Kuwait North Dakota Uruguay
Florida Netherlands Ohio Belgium
Georgia Austria Oklahoma Chile
Hawaii Croatia Oregon Pakistan
Idaho Sudan Pennsylvania Indonesia
Illinois Turkey Rhode Island Bulgaria
Indiana Thailand South Carolina Romania
Iowa Algeria South Dakota Sri Lanka
Kansas New Zealand Tennessee Finland
Kentucky Philippines Texas Russia
Louisiana Israel Utah Ukraine
Maine Luxembourg Vermont Yemen
Maryland South Africa Virginia Poland
Massachusetts Saudi Arabia Washington Greece
Michigan Taiwan West Virginia Iraq
Minnesota Thailand Wisconsin Finland
Mississippi Bangladesh Wyoming Lithuania
Missouri Finland
Figure 2: Map comparing US states with countries of a comparable GDP. Source: economist.com

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ECONOMICAL STATISTICAL OVERVIEW
Country statistical profiles: key tables from OECD - ISSN 2075-2288 - © OECD 2015
Country statistical profile: US 2015
Unit 2010 2011 2012 2013 2014
Production and income
GDP per capita USD current PPPs 48 307 49 732 51 435 52 985 ..
Gross national income (GNI)
per capita
USD current PPPs 48 813 50 645 52 824 54 364 ..
Household disposable
income
Annual growth % 1.3 2.7 3.2 -0.3 ..
Economic growth
Real GDP growth Annual growth % 2.5 1.6 2.3 2.2 2.4 e
Net saving rate in household
disposable income
% 5.8 6.2 7.5 5.0 ..
Gross fixed capital formation % of GDP 1.1 3.7 5.3 2.7 ..
Economic structure:
share of real value added
Agriculture, forestry, fishing % 1.2 1.4 1.3 1.4 ..
Industry % 16.5 16.8 16.7 16.6 ..
Trade, transport, accomm.,
restaurants, communication
% 21.9 21.8 21.9 21.9 ..
Finance, insurance, real
estate, business
% 29.7 29.8 30.1 30.4 ..
Other services (ISIC Rev.4
O - U)
% 26.9 26.6 26.1 25.7 ..
Taxes
Taxes on the average worker % of labour cost 30.5 29.7 29.8 31.4 31.5
Trade
Imports of goods and
services
% of GDP 15.8 17.3 17.1 16.5 ..
Exports of goods and
services
% of GDP 12.4 13.6 13.6 13.5 ..
Goods trade balance: exports
minus imports of goods
Bln USD -689.4 .. -788.2 .. ..
Foreign direct investment
(FDI)
Outward FDI stocks Mln USD 4 273 559 4 663 142 5 077 750 .. ..
Inward FDI stocks Mln USD 2 623 646 2 879 531 3 057 326 3 178 693 ..
Inflows of foreign direct
investment
Mln USD 205 851 230 224 166 411 193 361 ..
Outflows of foreign direct
investment
Mln USD 301 079 409 005 388 293 359 641 ..

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Unit 2010 2011 2012 2013 2014
Prices and interest rates
Inflation rate: all items Annual growth % 1.6 3.2 2.1 1.5 1.6
Inflation rate: all items non-
food non-energy
Annual growth % 1.0 1.7 2.1 1.8 1.7
Inflation rate: food Annual growth % 0.3 4.8 2.5 0.9 2.4
Inflation rate: energy Annual growth % 9.5 15.4 0.9 -0.7 -0.3
Producer Price Indices (PPI):
manufacturing
Annual growth % 5.0 7.8 2.1 0.4 0.8
Long-term interest rates % 3.21 2.79 1.80 2.35 2.54
Purchasing power and
exchange rates
Exchange rates USD per USD 1.00 1.00 1.00 1.00 1.00
Labour compensation and
hours worked
Labour compensation per
unit labour input, total
economy
Annual growth % .. .. .. .. ..
Average time worked per
person in employment
Hours per year 1 777 1 786 1 789 1 788 ..
Research and
Development (R&D)
Gross domestic expenditure
on R&D
Mln USD 372 233 382 106 396 711 .. ..
Population
Total population ‘000 persons 309 326 311 583 313 874 316 129 | 318 892
Population growth rates % 0.8 0.7 0.7 0.7 | ..
Total fertility rates Children 1.9 1.9 1.9 .. ..
Youth population aged less
than 15
% of population 19.8 19.6 19.5 19.3 | 19.4
Elderly population aged 65
and over
% of population 13.1 13.3 13.7 14.1 | 14.5
Last updated: 12 May 2015; disclaimer: http://oe.cd/disclaimer
.. Not available
| Break in series
e Estimated value
Source: OECD Factbook statistics.For explanatory notes,see OECD Factbook 2014
(DOI: 10.1787/factbook-2014-en)

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Largest cities:
According to the 2012 US census there are 745 places where more than 50,000 people live. Each state has a capital
city but the following table shows the most populous cities in the US.
Rank City; state 2012 population
1 NewYork City; NewYork 8,336,697
2 Los Angeles; California 3,857,799
3 Chicago; Illinois 2,714,856
4 Houston;Texas 2,160,821
5 Philadelphia; Pennsylvania 1,547,607
6 Phoenix; Arizona 1,488,750
7 San Antonio;Texas 1,382,951
8 San Diego; California 1,338,348
9 Dallas;Texas 1,241,162
10 San Jose; California 982,765
Table 2: Top 10 US cities by population. Source: www.citymayors.com
The population distribution is very much concentrated on the eastern seaboard with vast tracts of the central/
western parts of the country being sparsely populated.There are also population centres on the western coast.
This spread plays to the benefits of the digital economy but also presents some of its greatest challenges –
creating as it does, cultural differences, four time zones and demands on logistics.
Source 1: www.census.gov

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POLITICAL
SOCIO-ECONOMIC ENVIRONMENT
The US consists of 50 states, is governed as a federal constitutional
republic and is the second largest democracy in the world by size
of electorate (after India).
The three branches of government, at the national
level, are designed to balance power between each.
However, being a federation, each individual state has
its own government with the power to set its own laws
and taxation. In the context of this report, the state
system means that any business trading into the US
cannot treat the country as one homogeneous whole.
Generally speaking, US politics is dominated
by two main parties; Republicans and Democrats.
This position creates a stable political system
and environment suitable for investment.
A president is elected every four years and can
serve a maximum of two terms. Senators are
elected every six years and the House of
Representatives every two years. State elections,
with some exceptions, are held at the same time
as the federal presidential or midterm elections.
The next presidential election is due in
November 2016.

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Economically, the US is currently the largest country in the world and whilst not having the biggest population,
is still an attractive marketplace for international business.With an average GDP per capita of over $53,000,
consumers have considerable spending power – but as the table below shows, there is a big discrepancy
between the main states.These regional differences highlight the need for targeted marketing techniques.
Rank State
Median money
income
Rank State
Median money
income
1 Maryland 69,826 11 Washington 60,692
2 New Hampshire 69,453 12 Hawaii 59,882
3 Connecticut 66,905 13 Utah 59,877
4 Virginia 66,015 14 California 56,883
5 New Jersey 64,670 15 Wyoming 56,835
6 Massachusetts 64,373 16 North Dakota 55,946
7 Alaska 61,731 17 Rhode Island 55,159
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District of
Columbia
61,365 18 Vermont 54,982
9 Minnesota 61,162 19 Nebraska 54,777
10 Colorado 60,727 20 Wisconsin 54,342
Table 3: Top 20 US cities by median income Source: www.census.gov
Figure 3: Structure of US government and legislature. Source: www.bbc.co.uk

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Online Mobile Statistical Overview
OVERALL
The technology pedigree of the US needs little introduction. Many of the globally-known, household names,
have originated from the country. Internet penetration at nearly 87% is as high as in most European countries
although geography can make supplying the infrastructure difficult and expensive. Increasing at a rate of 7%,
the total connected population is still showing signs of healthy growth as the same issues with rolling out the
infrastructure also make use of the internet and ecommerce attractive; in some areas it is difficult to physically
visit the stores of the most popular brands.
Year
(July 1)
Internet
users**
User
growth
New users Country
population
Population
change
Penetration
(% of
pop. with
internet)
Country’s
share of
world
population
Country’s
share of
world
internet
users
Global
rank
2014* 279,834,232 7% 17,754,869 322,583,006 0.79% 86.75% 4.45% 9.58% 2
2013* 262,079,363 2% 4,820,086 320,050,716 0.80% 81.89% 4.47% 9.66% 2
2012 257,259,277 5% 12,059,473 317,505,266 0.82% 81.03% 4.48% 10.21% 2
2011 245,199,804 6% 14,136,938 314,911,752 0.85% 77.86% 4.50% 10.74% 2
2010 231,062,866 5% 11,323,622 312,247,116 0.89% 74.00% 4.51% 11.29% 2
2009 219,739,244 -3% -7,187,049 309,491,893 0.92% 71.00% 4.53% 12.44% 2
2008 226,926,293 0% -913,771 306,657,153 0.94% 74.00% 4.54% 14.44% 2
Table 4: Status of internet usage in the US Source: www.internetlivestats.com
* estimate
** Internet User = individual who can access the Internet at home,via any device type and connection.
Source: Internet Live Stats (www.InternetLiveStats.com)
Whilst the number of internet users is demonstrating healthy growth, the World Bank shows that the number
of internet subscribers per 100 people has only grown marginally between 2010 and 2014 whilst the UK has
increased substantially, increasing the gap over the US.
2010 2011 2012 2013 2014
UK 30.86 32.98 34.54 36.49 37.38
US 27.07 28.04 29.14 30.00 30.37
Table 5: World Bank: internet subscribers per 100 people Source: http://data.worldbank.org
Recent analysis by A.T. Kearney has also shown that the US online market is ranked as number one for
attractiveness – being scored particularly strongly in terms of growth potential and with consumer behaviour
indicating an openness to engage more fully in digital channels, the country has infrastructure to support this.

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Rank Change
in rank
Country Online
market
size (40%)
Consumer
behaviour
(20%)
Growth
potential
(20%)
Infrastructure
(20%)
Online market
attractiveness
score
1 +2 United States 100.0 83.2 22.0 91.5 79.3
2 -1 China 100.0 59.4 86.1 43.6 77.8
3 +1 United Kingdom 87.9 98.6 11.3 86.4 74.4
4 -2 Japan 77.6 87.8 10.1 97.7 70.1
5 +1 Germany 63.9 92.6 20.5 83.1 66.6
6 +1 France 51.9 89.5 21.0 82.1 59.3
7 -2 South Korea 44.9 98.4 11.3 95.0 58.9
8 +5 Russia 29.6 66.4 51.8 66.2 48.7
9 +15 Belgium 8.3 82.0 48.3 81.1 45.6
10 -1 Australia 11.9 80.8 28.6 84.8 43.6
11 -1 Canada 10.6 81.4 23.6 88.9 43.1
Web Sales
($ 000,)
Growth
2014 $304,913 15.40%
2013 $264,279 16.50%
2012 $226,878 14.70%
2011 $197,883 17.20%
2010 $168,895 16.60%
2009 $144,908 2.60%
2008 $141,233 3.80%
2007 $136,126 20.50%
2006 $112,994 24.00%
2005 £91,080 26.00%
2004 $72,340
Although estimates of the percentage of total retail sales made
through ecommerce vary between 7-10%, the US Department of
Commerce report total ecommerce sales to the value of $350bn
in 2014, growing at a rate of 15% which is slightly down on the
previous year. See (Table 7).
Overall retail sales, as reported by the US Department of
Commerce, totalled $3.5trn in 2013.
Source: US Commerce Department
Table 6: Top 11 countries for ecommerce. Source: A.T.Kearney analysis,2015
Table 7: US e-Retail Sales. Source: US Department of Commerce

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Estimated annual sales of US retail and food services firms by kind of business: 2013
(Estimates are shown in millions of dollars and are based on data from the Annual Retail Trade Survey.
Estimates have been adjusted using preliminary results of the 2012 Economic Census.)
NAICS Code Kind of business 2013
Retail and food services sales, total 5,011,740
Total (excl. motor vehicle and parts dealers) 4,049,759
Retail sales, total 4,469,022
Retail sales, total (excl. motor vehicle and
parts dealers)
3,507,041
GAFO¹ 1,213,518
442 Furniture and home furnishings stores 94,879
443 Electronics and appliance stores 103,744
444
Building mat. and garden equip. and
supplies dealers
302,150
445 Food and beverage stores 643,520
446 Health and personal care stores 283,761
448 Clothing and clothing access. stores 244,548
451
Sporting goods, hobby, book, and music
stores
84,393
452 General merchandise stores 653,093
453 Miscellaneous store retailers 112,618
454 Non-store retailers 432,759
722 Food services and drinking places 542,718
Footnotes:
1
GAFO represents stores classified in the following NAICS codes: 442,443,448,451,452,and 4532.
NAICS code 4532 includes office supplies,stationery,and gift stores.
Revised Data.
Note: Estimated measures of sample variability can be found at
www2.census.gov/retail/releases/current/arts/salescvs.xls.
Note: Retail and food services total and other subsector totals may include data for kinds
of business not shown. Estimates have not been adjusted for price changes.Additional information
on confidentiality protection,sampling error,nonsampling error,sample design,and definitions can
be found on the Internet at www.census.gov/retail/arts/how_surveys_are_collected.html.
Table 8: Total retail sales for 2013. Source: www.census.gov

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Merchandise Lines
(sales shown in millions of dollars)
Value of retail sales
2013
Total Sales Ecommerce
Total Electronic Shopping and Mail-Order Houses (NAICS 4541) 348,126 219,417
Books and magazines 11,381 10,210
Clothing and clothing accessories (includes footwear) 46,545 40,032
Computer hardware 26,299 14,731
Computer software 8,291 5,410
Drugs, health aids, and beauty aids 90,742 17,026
Electronics and appliances 26,546 22,753
Food, beer, and wine 7,365 5,153
Furniture and home furnishings 23,158 20,030
Music and videos 11,185 10,253
Office equipment and supplies 8,067 N/A
Sporting goods 9,749 7,844
Toys, hobby goods, and games 8,704 N/A
Other merchandise2
47,798 33,981
Non-merchandise receipts3
22,296 18,354
2
Includes other merchandise such as collectibles,souvenirs,auto parts and accessories,hardware,
lawn and garden equipment and supplies,and jewellery.
3
Includes non-merchandise receipts such as auction commissions,customer training,customer support,
advertising,and shipping and handling.
Table 9: Table showing category distance sales; total and those via ecommerce. Source: www.census.gov
In distance-selling, individual categories perform
differently and the latest (2013) figures from the US
Department of Commerce reporting distance sales
(catalogue and ecommerce) show fashion to be one
of the strongest individual sectors online. By way of
contrast, the drugs, health and beauty aids sector is
the largest mail-order retail sector whilst ecommerce
sales are only a small proportion of the total.
Providing a more focused view on the online retail
picture, the following tables highlight the key
product categories and market share of each.
In contrast to other global markets, electronics
(including computing) still outperforms fashion
(apparel and accessories) even when projected
out to 2018.
Other territories have seen this sector slow and
table 8 shows percentage of market share growing
consistently. Electricals and fashion are the two core
categories for online retail although it would not be
unexpected for fashion to take the biggest share in
the not-to-distant future.

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Table 10: Showing US online retail sales by product category Source: www.emarketer.com
2012 2013 2014 2015 2016 2017 2018
Computer
consumer
electronics
$49.0 $57.4 $66.4 $76.4 $86.1 $96.9 $108.4
Apparel
accessories
$38.0 $44.7 $52.0 $59.7 $67.9 $76.6 $86.0
Auto parts $23.3 $27.3 $31.6 $36.2 $41.1 $46.2 $51.6
Books/music/
video
$19.6 $23.2 $27.2 $31.5 $36.0 $41.0 $46.2
Furniture home
furnishings
$15.6 $17.7 $20.3 $23.1 $26.0 $29.1 $32.3
Health personal
care
$12.9 $15.0 $17.3 $19.6 $22.1 $24.7 $27.4
Toys hobby $8.9 $10.5 $12.1 $13.8 $15.6 $17.5 $19.5
Office equipment
supplies
$6.3 $7.3 $8.3 $9.3 $10.4 $11.4 $12.6
Food beverage $5.3 $6.1 $7.0 $7.9 $8.8 $9.7 $10.9
Other $46.7 $54.1 $62.0 $70.1 $78.5 $87.3 $96.6
Total $225.3 $263.3 $304.1 $347.3 $392.5 $440.4 $491.5
2010 2011 2012 2013 2014 2015 2016
Computer
consumer
electronics
21.4% 21.6% 31.7% 21.8% 22.0% 22.1% 22.2%
Apparel
accessories
16.7% 17.6% 18.3% 19.0% 19.5% 19.9% 20.2%
Auto parts 8.6% 8.9% 9;1% 9.3£ 9.4% 9.5% 9.6%
Books/music/
video
9.7% 8.7% 8.2% 7.7% 7.3% 6.9% 6.6%
Furniture home
furnishings
7.1% 7.3% 7.3% 7.3% 7.3% 7.4% 7.4%
Health personal
care
4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.4%
Toys hobby 3.8% 3.6% 3.5% 3.4% 3.2% 3.1% 2.9%
Office equipment
supplies
3.4% 3.4% 3.5% 3.5% 3.6% 3.6% 3.7%
Food beverage 2.2% 2.3% 2.3% 2.3% 2.3% 2.4% 2.4%
Other 22.6% 22.1% 21.7% 21.2% 20.8% 20.6% 20.7%
US Retail Ecommerce Sales,
by Product Category, 2012-2018
billions
US Retail Ecommerce Sales Share,
by Product Category, 2010-2016
% of total
Table 11: US online retail sales share by product category Source: www.emarketer.com

26
The table below illustrates the generally advanced nature of online consumption by US consumers.
Apart from five sectors, US consumers are ahead of the global average of their peers in terms of
having made a category purchase online in the three months prior to the survey being undertaken.
Category Global Average
(%)
United States
(%)
Electronics 77 83
Home appliances 59 46
Home furnishings 53 56
Fashion and apparel 76 87
Sports and outdoor 52 56
Beauty products 57 50
Household items 45 36
Groceries 45 26
Toys, kids and baby 49 48
Tickets 64 74
Music and games 62 74
Books 73 82
Services 76 80
Previous data-points have shown the overall trends for ecommerce growth in the US. It should not come as a
surprise to note that the leading online retailers – with two notable exceptions – are multi-category.
As with other markets, there are peak trading days for retail in the US and these are reflected online.
The main holiday-based shopping days are around Thanksgiving and Christmas.Thanksgiving is
celebrated on the fourth Thursday of November, with the following Friday being Black Friday.
75% have bought category online
50% have bought category online
50 - 75% have bought category online
Table 12: % respondents to A.T. Kearney
Consumer Survey who have bought online
in the past 3 months. Source: A.T Kearney
Connected Consumer Study
164MILLION
92MILLION
57MILLION
55MILLION
40MILLION
27MILLION
21MILLION
20MILLION
20MILLION
19MILLION
TOP 10 US ONLINE RETAILERS BY UNIQUE MONTHLY VISITORS
Figure 4: Top 10 US online retailers by unique monthly visitors Source: mckenzieworldwide.com

27
Figure 6: Mobile commerce as a percentage of total ecommerce Source: Internet Retailer 2015 Mobile 500 Guide
Figure 5 Peak online shopping hours over the festive period. Source: SLI systems 2014
TUE WED THU FRI SAT SUN MON TUE
Thanksgiving
BlackFriday
Cyber
Monday
10PM
11AM
10PM
The following Monday is Cyber Monday,
traditionally the peak online trading day.
Cyber Monday scores strongly as consumers can
do a lot of research over the preceding few days
and then look online to make sure they are getting
the best deal. It was originally a day designed by
pure-play merchants to counteract the peak for in-
store shopping – Black Friday. Recent years have
seen an increase in promotional activity online
for Black Friday.
Other retail days are important but not to the same
extent. According to the National Retail Federation’s
Retail Insight Centre, average spending on back-
to-school items has increased by 31% since 2004 to
$72.5bn (€57.9bn). Mother’s Day and Valentine’s
Day are significantly more popular than Easter,
while Halloween is growing in popularity.The Super
Bowl (final) weekend in February is also a major US
retail event.
Ecommerce, as a percentage of total retail sales,
is growing strongly in the US. However, mobile
commerce is making the biggest gains. Early growth
has been particularly strong and in 2015 Internet
Retailer is expecting nearly 30% of all ecommerce
to be conducted via a mobile device.
29.7%
24.6%
Mobile commerce sales
as % of all U.S. e-commerce
sales 2014
Mobile commerce sales
as % of all U.S. e-commerce
sales 2015

28
Rank Retailer Mobile Unique
Visitors (000)
% Reach
Total Mobile (Smartphone Tablet,
Browser App
176,841 100.0%
Retail 158,355 89.5%
1 Amazon Sites 106,305 60.1%
2 eBay 70,840 40.1%
3 Apple Sites 69,155 39.1%
4 Wal-Mart 44,281 25.0%
5 Netflix 30,913 17.5%
6 Target 30,029 17.0%
7 Ticketmaster 19,905 11.3%
8 Samsung 17,615 10.0%
9 Liberty Interactive (QVC) 16,673 9.4%
10 Nike 16,444 9.3%
11 Best Buy Sites 14,816 8.4%
12 Redbox 12,893 7.3%
13 ShopzillaAisle A Sites 12,602 7.1%
14 Walgreens 12,516 7.1%
15 Etsy 12,405 7.0%
Mobile commerce, as a term, covers two distinct and very different device types – tablet and smartphone.
It is not unusual for a consumer to own both types of device and increasingly retailers are seeing customer
journeys involving both before a purchase is made. Figure 7 shows that the proportion of total ecommerce
spend being made through a tablet is 13%; someway behind the UK at 25%. Smartphone usage is actually
marginally ahead of tablet.
In a similar picture to the popularity of
ecommerce brands, the Top 15 online
retail site visits by mobile unique visitor
in 2014 reflects many of the global
brands known for their online presence.
Similarly, the big US retail brands also
figure highly in the comScore report.
During the month of the survey
(August 2014) over 158 million US
consumers interacted with retail brands
via their mobile apps and websites.
Figure 7 Global comparison of tablet vs smartphone as a proportion of ecommerce spend
Source: Criteo mobile commerce report Q4 2014
Figure 8: Mobile unique visitors to US retail brands via app or mobile browser
Source: comScore Inc.(September 2014)
South Korea
Asia
Western
Markets
Emerging
Markets
Japan
UK
Spain
US
Italy
Germany
Netherlands
France
Russia
Brazil
45%
1%
Smartphone and Tablet share of eCommerce transactions
5%
44%
16%
25%
15%
13%
14%
13%
12%
11%
10%
15%
9%
16%
8%
13%
7%
13%
6%
4%
Smartphones
Tablets
Smartphone shopping is preferred in Asia, while tablets are important in theWest
• Smartphone usage is slightly ahead
of tablet in the US and 4th overall in
terms of usage for shopping.
• Asia leads the way in smartphone
purchases with close to 45%
of eCommerce transactions
happening on smartphones and
very little tablet share.
• In the rest of the world, tablet is
significant, and sometimes still
representing more than half of
mobile transactions.
• UK leads the Western markets in
share of both smartphone and
tablet transactions.
• Brazil and Russia have fairly low
levels of smartphone purchasing.
However, share of tablet
transactions in Russia is high and
similar to most Western markets.

29
158million
With smartphones representing a significant proportion of total ecommerce sales, it is
worth remembering that not all smartphones are created equal.This is not to say that one
is better than another. Rather, it is meant to illustrate that they all require slightly different
technical features in order to work properly. As such, brands need to understand what type
of device their customers are most likely to use and prioritise development of apps and
web presence around those devices.
Towards the end of 2014 comScore reported that the Android smartphone operating
system had a 52.1% market share in the US, slightly above where it was in the middle
of 2014 and gaining versus Apple iOS at 41.7%.
To put these figures into context, smartphone-enabled online retail sales in the US are expected to be nearly
$28bn in 2015 with Statista reporting expectations of circa $60bn during 2019.
2019*
2018*
2017*
2016*
2015*
2014
2013
0 10 20 30 40 50 60 70
Billion (US$)
Smartphone Platform June 2015 Sept 2014
Android 51.9% 52.1%
Apple iOS 42.1% 41.7%
Windows 3.4% 2.6%
Blackberry 2.4% 2.3%
Symbian 0.1% 0.2%
Figure 9: US smartphone market share by operating system
Source: comScore Inc.(November 2014)
Figure 10: Retail mobile commerce sales via smartphone in the US from 2013 to 2019 (in billion US dollars)
Source: Statista (2015)
US consumers interacted
with retail brands via their
mobile apps and websites

30
The Federal Reserve also reports on the wide range of activities that smartphones are being used for.
Tasks include checking availability of funds before making a purchase; looking for vouchers and discount
codes and, increasingly, benefits based on location.This insight on tasks and location provides merchants with
insight for targeting activities and budget. For example, checking for prices gives international merchants the
opportunity to compete with local, multi-channel brands.
Projections for total number of US tablet users show relatively modest levels of growth. However, the total size of
the user group represents significant market opportunities for brands and require the appropriate consideration
when designing the web experience.With nearly 64% of all internet users in the US utilising a tablet as one of
their connected devices, a tablet offering will be key to success in this market.
According to the UPS ‘Pulse of the Online Shopper
(2015)’, one in four smartphone owners are using
their devices to locate a store, 22% are using it to
research purchases and 53% have made purchases
via the device.
Tablets are also an important part of the mobile
commerce story, representing 13% of total ecommerce
retail sales. Research shows that the number of tablet
users is expected to increase.
Figure 11: Examples of tasks carried out by consumers on their mobile phones. Source: www.federalreserve.gov
Figure 12: The number of tablet users in the US and percentage of internet users represented, 2014 – 2018
Source: www.internetretailer.com
Compare prices when shopping
Receive and manage discount offers and coupons
Track your finances, purchases, or expenses
Receive offers and promotions based on your location
Organize, track and store gift cards, memberships,
loyalty and reward points
Share of respondents that already do or would like to use
mobile phones for the following purposes
Note:The number of respondents with mobile phones was 2,603.
I already do
I would like to
19%
13%
24%
29%
26%
23%
24%
30%
18%
13%
200
150
100
50
0
2014 2015 2016 2017 2018
58.5%
147.2
million
155.5
million
161.5
million
166.5
million
171.3
million
60.6% 61.9%
63.0% 63.9%
TABLET USERS % REPRESENTED

31
SOCIAL MEDIA
With over 170 million social media users in the US in 2014 and the
figure projected to exceed 200 million by 2020, social media is as
much a part of the retail landscape as in many other territories.
Facebook is by-far the most dominant US social media platform with a share of over 45% of total visits to
social media during August 2015 in the US market.With such a dominance, Facebook is the place for
shoppers to discover discounts and news.The video sharing website,YouTube, is also an important player
with 21% share. Other platforms are relevant to certain sectors. For example Pinterest works well in the fashion
space. Pinterest has assisted 56% of active female Pinterest users ‘at least once or twice’ with a purchase of hair
care or beauty products.This percentage is 20% higher than for male Pinterest users.
The type of device used to access social media also has an impact. LinkedIn is particularly strong on desktop,
probably a reflection of its use within business. Facebook and Twitter are predominantly accessed via mobile
devices whilst Snapchat is only available via mobile.
2013
50
0
100
150
200
250
2014 2015* 2016* 2017* 2018* 2019*
165.7
173.6
180.3
186 191.2 195.9 200.1
Number of social network users in the United States from 2013 to 2019
(in millions)
Leading social media websites in the United States in August 2015,
share of visits
Facebook
YouTube
Twitter
Reddit
Pinterest
Tumblr
LinkedIn
Instagram
Yahoo! Answers
Google+
45.6%
21.6%
4.77%
4.26%
1.5%
1.43%
1.37%
1.33%
1.22%
1.08%
Figure 13: Number of social network users in the United States from 2013 to 2019 (in millions)
Figure 14: Leading social media websites in the United States in August 2015, share of visits.

32
Social Network Activity: Mobile vs. Desktop
% of time spent on social networks in the United States, by platform*
32%
68%
86% 98%
32%
92%
46%
99%
100%8%
54%
1%
14% 2%
74%
Facebook Twitter Instagram LinkedIn
Pinterest Tumblr Vine Snapchat
The prevalence of mobile devices
is also reflected in social media
interactions within the physical
retail environment.
A recent report by Deloitte Digital showed that shoppers
purchasing baby / toddler and home furnishing categories
were particular likely to engage in social media.This has
obvious implications for marketers in these categories,
both in terms of brands wanting customers to convert
in-store and those pure-plays looking to tempt consumers
with an online purchase.
Figure 15: Mix of social media activity by device Source: TheWall Street Journal
Table 13: Percentage of consumers that use social media during their shopping journey by category
Source: Deloitte Digital
Electronics 31%
Home furnishing 40%
Automotive 32%
Entertainment 18%
Baby / toddler 56%
Apparel 29%
Health / wellness 33%
Food / beverage 21%

33
SEARCH
Google dominates the search landscape in the US with 64% of total
search traffic. However providers such as Bing andYahoo!, whilst not
the majority players in the market, still represent millions of users.
comScore Explicit Core Search Share Report* (Desktop Only)
July 2015 vs. June 2015
Total US – desktop home work locations
Core search entity
Explicit core search share (%)
Jun-15 Jul-15 Point change
Total explicit core search 100.0% 100.0% N/A
Google sites 64.0% 64.0% 0.0
Microsoft sites 20.3% 20.4% 0.1
Yahoo sites 12.7% 12.7% 0.0
Ask network 1.7% 1.8% 0.1
AOL Inc. 1.2% 1.2% 0.0
Table 14: comScore Explicit Core Search Share Report*
*“Explicit Core Search” excludes contextually driven searches that do not reflect specific user intent to interact with
the search results.
From a performance perspective, the same rules
around SEO and advertising apply as they do in
other territories. One important element though is
recognising localisation and terminology. From a
search perspective this includes recognising that
American English can be very different from British
English. For example,‘colour’ vs ‘color’ and ‘pants’
versus ‘trousers’.These are more obvious examples
but serve to highlight the subtleties that could impact
the effectiveness of search marketing.
As with other territories, localisation should include
the URL / domain name.‘.com’ is used as the US top
level domain. If this is available to a business then it
further lends credence to US consumers wishing to
purchase from a merchant, in addition to the positive
impact on SEO.
CROSS-BORDER SHOPPING
According to a study conducted by Forrester Consulting on behalf of FedEx (2014), 76% of US online shoppers
have made a purchase from a merchant outside of their territory.
Figures reported by Paypers.com showed that in 2013, 34.1 million cross-border online shoppers would
buy $40.6bn worth of goods growing to 41.8 million buying $80.2bn by 2018. US online consumers primarily
shopped with the UK (49%), China (39%), Canada (34%), Hong Kong (20%) and Australia (18%).
$40.6
BILLION

34
Typically, choice, price and uniqueness are top of the list as reasons for shoppers purchasing cross-border.
MARKETING
Digital advertising in the US rose 16% in 2014 to $49.5bn according to
the Interactive Advertising Bureau (IAB).
Reflecting the increasing importance of mobile,
the IAB also reported that mobile advertising grew
by 76% on the previous year, now accounting for
$12.5bn and 25% of total spend; a figure that is
sure to increase as mobile becomes more
entrenched in digital interactions.
Social media advertising, still largely an unknown
quantity for many merchants, represented returns
of $7bn in 2014, an increase of 57% over the
previous year.
Search revenues have stabilised, being a more
established advertising channel. However, they still
represented $19bn of revenues in 2014, an increase
of 3% over 2013.
The benefits of display advertising have been
debated but revenues of $13.5bn in 2014 prove
that they are still an important feature of the
digital marketing landscape.
The retail vertical is still the strongest sector for
digital advertising, responsible for 21% of the
total digital ad spend.
FullYear 2013 FullYear 2014
% $ % $
REVENUE (AD FORMATS)
Search 43% $18,365 38% $18,955
Classifieds and Directories 6% $2,597 5% $2,690
Lead Generation 4% $1,749 4% $1,866
Email* 0% $165 n/a
Mobile 17% $7,084 25% $12,453
Reasons to shop from international retailers
49% The price is better internationally
The brands or products I like are not available in the U.S.
I wanted something unique not found in stores in the U.S.
The price is better internationally
43%
35%
20%
11%
10%
Figure 16: Reasons cited by online US consumers for shopping cross-border;
Source: UPS Pulse of the Online Shopper Survey, 2015

35
FullYear 2013 FullYear 2014
% $ % $
DISPLAY-RELATED
Digital video commercials 7% $2,784 7% $3,254
Ad banners/display ads 19% $7,943 16% $8,049
sponsorships 2% $766 2% $774
Rich Media 3% $1,328 3% $1,410
Total display-related 30% $12,821 27% $13,487
REVENUE (PRICING MODELS)
Impression-based 33% $14,297 33% $16,506
Performance Based 65% $27,788 66% $32,434
Hybrid 2% $696 1% $511
EMAIL MARKETING
As part of the marketing mix, email marketing still provides an important tool for driving sales, both online
and offline. As with all marcomms activity, the key to effectiveness is in the offer. US consumers respond
well to free delivery offers, with 54% in a recent UPS survey saying that this would prompt a purchase.
Marginally behind, at 53%, was a discount offer. Interestingly, store events and direct mail still played
an important role for many consumers.
Of all verticals, research shows that retail customers are being the most proactive in adapting to the emergence
of mobile and tablet devices, leading the way in numbers opened on tablet and second only to media and
entrainment on mobile. By contrast, only 41% of emails are opened by retail customers on a desktop.
Likelihood that these promotional vehicles will prompt shopping
54% Emails offering free shipping
53% Emails offering a discount
34% Emails reminding you that you left items in your cart that includes an incentive
31% Store events
28% Direct mail
25% Text messages with promotions
23% Emails with product recommendations based on past purchasing
22% Emails reminding you that you left items in your cart without purchasing
21% Emails with product recommendations based on what others have purchased
19% Posts on social media
18% Ads that seem to follow you around the internet showing you a product you recently viewed
Emails with
promotions
are more
likely to prompt
shoppers to buy
from a retailer
than other formats
Q: How likely are the following forms of retailer advertising to prompt you to shop with a retailer?
Figure 17: Role of promotional tools in prompting a purchase; Source: UPS Pulse of the Online Shopper Survey,2015.
Table 15: IAB.com report on 2014 digital advertising spend

36
78% 33%84%
45%
This mix of contact points and devices means
that there are more opportunities for brands
to have conversations with prospective
customers. US consumers are still using
desktop so whilst mobile is important,
brands should not neglect the ‘traditional’
email experience, but rather adapt and
acknowledge the different requirements
of each device.
According to a study by Listrak, US women are
more likely to respond to ‘on sale’ messaging
than men (84% to 78%) while men are more
drawn to ‘new product’ (45% to 33%) and ‘most
popular’ (36% to 26%) content, versus women.
Men prefer emails with recommendations
based on purchase history (83% to 73%)
while women (72% to 71%) prefer based
on viewing behaviour, but not purchased.
Men also respond better to personalised
email content (71% to 66%)
Overall open rates appear to be slipping
slightly but transaction to click rate is
improving. However, average order value
(AOV) is reducing but this is in-line with AOV
on web. Customers tend to be shopping more
frequently but spending less each time.
Even with these declining trends, email still
provides additional sales in the US market.
The ongoing difficulty for marketers is how
to ensure that any communication retains a
commercial and customer benefit.
Customers respond to the right offer.
Table 16: Email open rates by industry and device
Source: Experian/emarketer.com
Table 17: A selection of performance metrics for email
campaigns in the US market
Desktop Mobile* Tablet
Business products services 72% 22% 6%
Publishers 69% 25% 6%
Travel 49% 35% 16%
Consumer products services 43% 43% 14%
Multichannel retailers 41% 45% 14%
Media entertainment 40% 50% 10%
Total 49% 39% 12%
Q1 2014 Q1 2015 % change
Total open rate 25.9% 25.5% -1.5%
• Unique open rate 17.5% 17.1% -2.3%
• Click-to-open rate 11.4% 11.1% -2.2%
Total click rate 2.8% 2.9% 2.6%
• Unique click rate 2.1% 2.0% -4.1%
Transaction-to-click rate 6.4% 6.6% 2.1%
Transaction rate 0.09% 0.09% -0.9%
Revenue per email $0.12 $0.11 -1.5%
Average order $121.89 $113.75 -6.7%
Bounce rate 3.3% 3.1% -5.8%
Unsubscribe rate 0.16% 0.15% -3.8%
US women respond to
ON SALE
US men respond to
NEW PRODUCT

37
Facebooks dominance in revenue terms
illustrates the value that brands put on this
platform as a tool for building consumer
awareness. Google meanwhile is probably
driving more direct commercial benefit and
being more targeted, could offer a better
ROI. Merchants trading into the US could use
Facebook as the brand awreness tool, whilst
using Google ad-spend to drive direct sales.
DISPLAY ADS
Early use of banner ads did not provide much difference to their offline equivalents. However, as publishers
get better at tracking, placing and relevance, advertisers in the US can get much better impact from their use.
Relevance is still key but US consumers are interacting and purchasing.The following table shows total revenues
from display advertising for the main publishing platforms in the US.
OPTIMISING CUSTOMER EXPERIENCE
Retailing is always about the customer experience and
this should be in-line with a merchant’s proposition.
US consumers are no different in this regard and
generally have high expectations.
US customers are generally happy with the local retail
experience, both online and offline. Figures from
the UPS Pulse of the Online Shopper Survey (2015)
showed that 62% of those questioned were happy
with the in-store experience while 83% said the same
about online. However, the online picture was varied
and satisfaction depended on device.The ‘traditional’
desktop experience was felt satisfactory by 84% of
those surveyed while 75% said the same about
tablet and only 65% about smartphone interactions.
The main issues cited were screen size, size of imagery
and security concerns.
Table 18: Display ad revenues by
company, to date and projected
2013 2014 2015 2016 2017
Facebook $3.28 $5.29 $6.82 $8.50 $10.03
% change 50.5% 61.0% 29.0% 24.6% 18.1%
% of total 18.6% 23.8% 2.52% 26.2% 26.9%
Google $2.54 $3.05 $3.52 $3.81 $4.13
% change 15.4% 20.2% 15.1% 8.3% 8.6%
% of total 14.4% 13.7% 13.0% 11.8% 11.1%
Twitter $0.43 $0.83 $1.34 $1.92 $2.54
% change 95.5% 91.0% 62.1% 43.0% 32.9%
% of total 2.4% 3.7% 5.0% 5.9% 6.8%
Yahoo $1.27 $1.23 $1.24 $1.27 $1.29
% change -6.4% -2.9% 1.0% 2.0% 2.0%
% of total 7.2% 5.5% 4.6% 3.9% 3.5%
AOL $0.76 $0.83 $0.94 $1.07 $1.19
% change 9.5% 8.1% 14.0% 13.2% 11.9%
% of total 4.3% 3.7% 3.5% 3.3% 3.2%
Amazon $0.46 $0.66 $0.82 $0.99 $1.19
% change 73.3% 42.3% 23.4% 21.9% 19.2%
% of total 2.6% 3.0% 3.0% 3.1% 3.2%
Microsoft $0.68 $0.49 $0.46 $0.44 $0.44
% change -21.6% -28.2% -5.6% -4.9% -0.1%
% of total 3.9% 2.2% 1.7% 1.4% 1.2%
LinkedIn $0.21 $0.27 $0.31 $0.37 $0.43
% change 37.2% 29.7% 14.1% 19.7% 14.7%
% of total 1.2% 1.2% 1.1% 1.1% 1.1%
IAC $0.08 $0.11 $0.12 $0.13 $0.14
% change -21.0% 46.8% 6.3% 10.3% 10.1%
% of total 0.4% 0.5% 0.4% 0.4% 0.4%
TOTAL DIGITAL
DISPLAY $17.68 $22.20 $27.05 $32.39 $37.36

38
From a digital perspective, customers are particularly
concerned with the availability of support information.
For example, 66% of the shoppers surveyed said that
they were happy with the availability and clarity of
information relating to returns. Furthermore, 59% of
shoppers were satisfied with the ease of finding a
retailer’s customer service phone or contact option
via the website.
44% were satisfied with the ability to find a retailer’s
live chat option, and 43% were satisfied with access
to live chat within the checkout experience.The last
two points around live chat have some way to go and
the various contact points are even more important
for a foreign business looking to trade into a territory;
they all provide potential consumers with confidence
in the brand.
CONSUMER CONFIDENCE
Consumer confidence in online is affected by many
factors but the main areas of concern are fraud,
delivery, returns, refunds and data protection.
According to a study commissioned by Truste,
92% of US internet users worry about privacy online,
an increase on the 89% of 2013. Along the same
theme, only just over half (55%) of US consumers
trust businesses with their data online and 58%
worry about businesses sharing their information
with other businesses.The more worrying trend is
that 74% of internet users are more worried about
online privacy than a year ago.
Solutions to this are not easy but steps include
clarity of data use, gaining consent and giving
customers the option to change their preferences –
which all provide confidence that the brand is trying
to do the right thing.
There are also a number of trust marks and quality
seals available in the US market that would help
reassure consumers – particularly foreign brands
trading in to the country.
Shopper satisfaction with channels
and devices varies
Physical Store
Online shopping
62%
83%
Figure 18: US shopper satisfaction by channel and device;
Source: UPS Pulse of the Online Shopper Survey 2015
84% Desktop/Laptop
74% Table
65% Smartphone

39
Businesses pay less
attention to providing good
customer service
Businesses have increased
their focus on providing
good customer service
Businesses’ attitudes
towards customer service
have not changed
38%
32%
26%
28%
29%
32%
32%
37%
26%
29%
34%
27%
In this current economy, do you think that...?
2010
2011
2012
2014
FEAR OF FRAUD
The fear of private data being lost by businesses feeds the fear
of fraud; particularly as data loss is most often associated with
payment card details.
57% of American consumers are concerned about
identity theft according to the 2014 Unisys Security
Index. 60% of US consumers also say that they are
unlikely to trade with a business again after there
has been a data breach.
A privacy survey by GFK highlighted 48% of
consumers avoiding at least one type of online
service; with 18% avoiding auctions, 17% online
banking and 16% social networks.
Visa Inc’s 2015 digital commerce study found that
37% of consumers questioned were not making
purchases via a mobile device due to security
concerns. 21% didn’t make a purchase via a mobile
device because they didn’t know if their usual
merchant accepted card payments via mobile.
Clear communciations around processes and
protection will go some way to assuaging
these fears.
CUSTOMER CARE EXPECTATIONS
Customer care is an essential element for any business-to-consumer
retailer and the digital eco-system enables good and bad experiences
to be shared widely and quickly. However, American Express reported
in a 2012 study that 38% felt that businesses were paying less attention
to this important area than in 2010.

40
Customer service begins during the purchase
process. Insight from Forrester shows that 55% of US
online users will abandon their purchase if they cannot
easily find answers to queries. 77% also say that signs
the merchants value their time is the most important
indicator of good customer service. By way of contrast,
89% of consumers have stopped using a merchant
after a poor customer service experience
(RightNow Customer Experience Impact Report).
In the 2015 US State of Multichannel Customer Service
Report by Microsoft, consumers provided insight on
their customer service preferences. For example,
81% regularly used the telephone for customer
service contact followed by email at 78%.
90 90 89 89 88 88 87 87 87 87 87 86 86 86 86
0
20
40
60
80
100
Amazon
LLBean
Apple
Publix
QVC
Shutterfly
Etsy
Keurig
Newegg
Scholastic
Vitacost
BaseProShops
Costco
Nordstrom
Vistaprint
Top 15 Retailers: Holiday Customer Satisfaction
Satisfaction rating on a company level,
on a 100-point scale, among the US,
largest retailers
Customer service channels used on a regular basis
81 78
64 62
51 46
23 18
914
Telephone
Live
C
hatSearch
EngineSupportTickets
O
nline
C
om
m
unity
Em
ail
Telephone
In
Person
SocialM
edia
M
obile
App
Figure 19: US shopper satisfaction by channel and device Source: UPS Pulse of the Online Shopper Study 2015
Support Channel
Interestingly, the interactions reported in this survey
also reflect customer preferences, with telephone being
the preferred contact point for 36% of respondents, live
chat for 33% and email at 25%.The mainstay of early
‘pure-play’ customer support, the self-help online portal,
scored badly at 5% while social media channels were only
preferred by 2% of the multichannel customers surveyed.
Telephone might be the most popular communications
channel for customer support but response times must be
fast. Only 18% of customers are prepared to hold for more
than 10 minutes and 43% were only prepared to wait 1-5
minutes.
Merchants looking to trade into the US could be advised
to look at the types and levels of customer service offered
by incumbents in the market.This chart reporting Foresee
insights shows the top 15 brands by customer satisfaction;
a key bell-weather as to why a business is doing well
locally and what new entrants should emulate or improve
upon.
Foreign merchants could still look at providing email
customer support, as this is still widely accepted.To add
a competitive edge, it could also be worth outsourcing
telephone based customer service.There are a number of
providers who now offer a ‘follow the sun’ service so that
your brand is ready whereever your customer is based.

41
MARKETPLACES
The benefits of online marketplaces are numerous but the biggest for a
merchant looking to trade in to a new territory is the power of its brand.
Even a well-known domestic brand will struggle
against established local brands in foreign territories.
The marketplace provides a degree of legitimacy and
comfort that reduces the barriers to purchase for a
local consumer.Whether they represent a short- or
long-term partner really depends on the merchant’s
plans and brand strategy. In the short-term the
marketplace provides a low-risk method of entering a
new market and learning from the experience.
Many of the globally-known brands are US-based
and for 65% of shoppers, their reviews are major
contributors to a purchase decision (UPS Online
Consumer Pulse survey 2015).
The top US marketplaces are illustrated in the
following table.
Million unique visitors
Amazon 129
eBay 84
Walmart.com 57
BestBuy.com 22
Sears.com 21
Newegg 3.4
Rakuten.com 1.5
Table 19: Top US online marketplaces by unique
monthly visitors. Source: practicalecommerce.com

42
LOYALTY VOUCHERS
Customer acquisition and retention strategies can be very similar globally. However, the American retail market
has long been known to be dominated by vouchers and coupons as a promotional tool. Some consumers are avid
collectors and users of vouchers and according to ilovecouponmonth.com, 37% of surveyed shoppers want all
coupons to be digital.
Digital and mobile coupons Values
Projected number of US smartphone mobile coupon users by 2015 74.1m
Projected number of digital coupon users in the US by 2016 126.9m
Percentage of adult internet users in the US who use digital coupons 55%
Consumer behaviour Values
Share of respondents who use any type of coupon when shopping 93%
People living in households that used coupons for groceries 181.37m
Not only are vouchers / coupons widely available,
93% of shoppers surveyed about their couponing
use said that they use coupons at 93% of their
transactions.To set some context, 55% of US
internet users use coupons.
As a promotional tool they certainly have their place
and distribution can be achieved via a number
of focused voucher websites.The following table
highlights the top 10 by estimated monthly visitors.
Each have their benefits and slightly different way
of operating. Choice will be down to a merchant’s
retail proposition and appetite for discounting or
value differentiation.
Where mobile devices meet digital couponing, women
are more engaged than men when using applications for
‘voucher’ sites. King Retail Solutions report that 14% of US
female smartphone owners use the Groupon app versus
9% of men, 9% use the RetailMeNot app and 4% use the
LivingSocial app. Only 1% of the men surveyed used the
latter two.
Not all vouchers have the same impact and there are regional
differences to take into account. According to the UPS Pulse
of the Online Shopper Study (2015) 61% of respondents in
the US wanted a free product / gift certificate / cashback
offer based on frequent purchases. Product discounts came in
second at 58% and free shipping a close third at 57%.
Table 21 – Most popular voucher / deal websites in the US market
Source: www.ebizmba.com
Table 20: Overview coupon statistics Source: Statista.com
Table 22 – Regional differences in consumer preferences for
voucher benefit Source: eMarketer.com
Rank Website Estimated monthly visitors
1 GroupOn 30,000,000
2 RetailMeNot 24,000,000
3 Zulily 20,000,000
4 Coupons 18,250,000
5 ShopAtHome 18,000,000
6 SlickDeals 17,000,000
7 LivingSocial 12,000,000
8 Woot 10,000,000
9 eBates 7,500,000
10 FatWallet 6,000,000

43
The US constitution establishes a federal system of government.
The constitution gives specific powers to the federal (national)
government. All power not delegated to the federal government
remains with the states. Each of the 50 states has its own state
constitution and governmental structure.
Power in both the state and federal governments is separated into
three branches – the legislative, the executive, and the judicial.
The legislative branch has the power to create laws; and the judicial
branch has the power to interpret and apply these laws in individual
cases and controversies.
LEGAL FRAMEWORK REGULATION
Disclaimer
This section of the eCommerce
Worldwide UK Cross-Border Trading
Passport document is provided for
general information only and does not
constitute legal or other professional
advice.eCommerceWorldwide does
not owe any duty of care to any reader
of this section of the Passport document.
You should consult a suitably qualified
lawyer on any specific legal problem
or matter.

44
Separation of government authority prevents abuse
of power. As a control on the powers of the executive
and legislative branches, the judicial branch has the
power of judicial review. Judicial review provides
the power of a court to declare legislative or executive
acts invalid, if those acts are contrary to the federal or
state constitutions.
As a product of federalism, the US has a dual court
system consisting of the federal and state courts.
The key federal level bodies involved in
consumer facing business include The Federal
Trade Commission who are responsible for
ensuring consumers are treated fairly; the Federal
Communications Commission who regulate
interstate and international communications by radio,
television, wire, satellite and cable; the United States
Copyright Office and the United States Patent
Trademark Office.
Law at the state level is a mixed picture but
there are a number of projects that seek to bring
some harmonisation. For example, the Universal
Commercial Code.
A number of the key acts that would impact a
merchant looking to trade into the US market
are displayed below in this non-exhaustive list.
I. Privacy data protection
Topic Area Relevant Regulations Purpose
Privacy and Data
Protection
The Federal Trade Commission Act (15
U.S.C. §§41-58) (FTC Act)
Regulation of the processing of personal
data
Effects
Federal consumer protection law that prohibits unfair or deceptive practices and has been applied to offline
and online privacy and data security policies.The FTC also issue Behavioural Advertising Principles which
include letting consumers know they can opt-out of such mechanisms.
Privacy and Data
Protection
Children's Online Privacy Protection Act
(COPPA) (15 U.S.C. §§6501-6506)
Applies to the online collection of
information from children, and the Self-
Regulatory Principles for Behavioural
Advertising.
Effects
Requires the FTC to issue and enforce regulations concerning children’s online privacy. An amended Rule
took effect on July 1, 2013.
The aim is to put parents in control of what information is collected from their children who are under 13 years
of age. Operators of websites and Apps that are aimed at this age group, and those operators whose content is
more general but will include the applicable audience, fall under the remit of this Act.
Privacy and Data
Protection
The California Online Privacy Protection
Act (CalOPPA); Cal. BPC §§22575 - 22579
Transparency around data security and
usage practices affecting consumers
residing in California
Effects
Data Protection requirements that any business must enact if their website is available and can be used by
consumers in California. Potentially offering delivery options which enable a foreign business to trade into
the US could open them up to this requirement.

45
Privacy and Data
Protection
California Civil Code Section 1798.82 Notification of breach of data security
Effects
A person or business that conducts business in California, and that owns or licenses computerized data that
includes personal information, shall disclose a breach of the security of the system following discovery or
notification of the breach in the security of the data to a resident of California whose unencrypted personal
information was, or is reasonably believed to have been, acquired by an unauthorized person.The disclosure
shall be made in the most expedient time possible and without unreasonable delay, consistent with the
legitimate needs of law enforcement, as provided in subdivision (c), or any measures necessary to determine
the scope of the breach and restore the reasonable integrity of the data system.
Privacy and data
protection
“Shine the Light” law (Cal. Civil Code.
§§1798.83-1798.84)
Visibility of data disclosure to third
parties
Effects
California Civil Code section 1798.83 imposes a specific disclosure requirement on many businesses
that share their customers’ personal information with other businesses for direct marketing purposes.
This includes mechanisms by which consumers can contact the business to enquire how their data is shared.
Privacy and Data
Protection
Financial Services Modernization Act
(Gramm-Leach-Bliley Act (GLB)) (15
U.S.C. §§6801-6827
Regulates the collection, use and
disclosure of financial information.
Effects
Predominantly aimed at the financial services sector, businesses that accept or process payments or provide
credit facilities might fall under the remit of GLB.The Act also places limitation on what data can be shared,
with whom and security/privacy requirements
Privacy and Data
Protection
Health Insurance Portability and
Accountability Act (HIPAA)
(42 U.S.C. §1301 et seq.)
Act determining the use, storage ,
processing and security of health
related personal information
Effects
Regulates medical information. It can apply broadly to health care providers, data processors,
pharmacies and other entities that come into contact with medical information.

46
Privacy and Data
Protection
Fair Credit Reporting Act (15 U.S.C.
§1681)
Notification of breach of data security
Effects
The Fair Credit Reporting Act (15 U.S.C. §1681) applies to consumer reporting agencies, those who use
consumer reports (such as a lender) and those who provide consumer reporting information (such as a
credit card company). Credit reports are information that is used to evaluate a consumer's eligibility
for credit. For example, offering a line of credit to a retail purchaser might mean that the retailer falls under
the scope of this Act.
Privacy and Data
Protection
Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003
(“CAN-SPAM Act”), 15 U.S.C. 7701-7713
Regulates unsolicited commercial e-mail
Effects
Impacts email content and doesn’t just apply to bulk emails; individual emails can be included.
Mixing transactional and promotional content could cause a communication to be in breach of requirements.
Act also includes messages sent to wireless devices e.g. SMS. Act includes requirements around ‘opt-out’;
sender’s information (physical address) and being clear about purpose of communication.There is also a
‘National do-not-mail database’.
Privacy and Data
Protection
Electronic Communications Privacy Act
of 1986 (ECPA), 18 U.S.C. § 2510-22
Regulates interception of electronic
communications
Effects
Protects wire, oral, and electronic communications while those communications are being made, are in transit,
and when they are stored on computers.The Act applies to email, telephone conversations, and data stored
electronically.
Privacy and Data
Protection
Computer Fraud and Abuse Act (18
U.S.C. §1030)
Provides structure around the use/misuse
of computers
Effects
Builds upon the Comprehensive Crime Control Act of 1984. Clarifying existing law and including
developments to reflect changes in technology. For example, providing possible legal grounds for;
challenging unauthorized access to computers; access to data via a website using scrapping technologies
and using computers to access another without authorisation.

47
II. Consumer protection
Consumer
Protection
The Federal Trade Commission: 16
CFR Part 435 Act;The Mail, Internet, or
Telephone Order Rule
Protect consumers from any “unfair”
trade practice
Effects
Requires a business that advertises availability of a product to be able to deliver the product to the consumer
within 30 Days. If there are reasons for non-compliance with this timeframe then the business can extend the
delivery ‘window’ with the consent of the consumer. Should the consumer decline then a refund should be
made available.
Consumer
Protection
Section 5 of the FTC Act (15 U.S.C. Sec.
45(a)(1))
Protect consumers from “unfair or
deceptive acts or practices in or
affecting commerce”
Effects
Activities that fall under this remit are wide ranging and include how products / services are described;
pricing and advertising. Suggested reading includes the FTC’s publication .Com Disclosures, Information
about online advertising.
III. IP protection
Intellectual
Property Rights
(Patents)
American Inventors Protection Act of
1999 (AIPA),
Specifies the subject matter for which
a patent may be obtained and the
conditions for patentability
Effects
“Securing for limited times to authors and inventors the exclusive right to their respective writings and
discoveries. And administered by the United States Patent and Trademark Office. No U.S. patent can be
obtained if the invention was patented abroad before applying in the United States by the inventor or his or
her legal representatives if the foreign application was filed more than 12 months before filing in the United
States. Six months are allowed in the case of designs. 35 U.S.C. 172. Source: www.uspto.gov
Intellectual
Property Rights
(Patents)
The Copyright Act of 1976 Protect consumers from “unfair or
deceptive acts or practices in or
affecting commerce”
Effects
United States copyright law is contained in chapters 1 through 8 and 10 through 12 of title 17 of the United
States Code.The Copyright Act of 1976, which provides the basic framework for the current copyright law
and covers Patents,Trademarks and Copyright.
This Act give rights owner’s protections under law for differing periods of time. Copyrights need to be
registered with the United States Copyright Office whilst Patents and Trademarks are registered at the
United States Patent Trademark Office.

48
VI. Electronic Signatures and Authentication
Electronic
Signatures
Authentication
UETA: Uniform Electronic Transactions
Act
Remove barriers to electronic commerce
by validating and effectuating electronic
records and signatures whilst also
abiding by other requirements such as
retaining records
Effects
Enables two parties, by agreement, to enter a contract using digital means. Examples might include accepting
a contract via a ‘buy now’ button.
This isn’t a Federal law but rather one developed by the National Conference of Commissioners on Uniform
State Laws
Electronic
Signatures
Authentication
UCITA: Uniform Computer Information
Transactions Act
Provide a uniform State level law around
software licensing which is not covered
under Article 2 of the UCC.
Effects
Proposed by National Conference of Commissioners on Uniform State Laws but only
enacted in Maryland and Virginia
V. Contracts
Contracts UCC: Uniform Commercial Contracts
(Article 2)
Provides comparative laws across 50
states around the sale of goods (only)
Effects
Written and proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and
the American Law Institute (ALI).The Code isn’t law in its own right but sets out suggested laws to be adopted
by the individual States. Once adopted, they can then become law in that State.The UCC creates a framework
for the creation of contracts for the sale of goods.

49
This section is provided to give a broad overview
of some of the key legislative considerations that
businesses could be advised to address before
trading into the US.This text is not given as legal
advice and professional input should be sought
before acting on any of the information provided here.
What is clear is that the two-tier legal system does not
make it easy to comply with all of the states’ individual
requirements. At the national level, the Federal Trade
Commission takes an over-arching view on consumer
protection, particularly focused on making sure that
traders do not misinform customers, protect their
information and trade in a fair manner. At the ‘local’
level, there are a number of initiatives or projects that
provide a degree of harmonisation across different
states. For example, contract law via the UCC.
California often has differing views on legislation and,
once trading in to the US, particular attention should
be paid to where their law differs from other states;
or even federal law.
One example is around data protection where
compliance is based around the possibility of a
Californian resident accessing the website and
making a purchase; a specific approach to the
privacy policy is then required.
There are also a number of other codes or guidelines
that business should / could comply with. For example,
the Payment Card Industry Data Security Scheme
(PCI DSS) and the Direct Marketing Association’s
(DMA) ‘do not mail’ and ‘do not email’ opt-out lists.
Overall, US law should not be a barrier to market entry
and a legitimate business looking to offer a strong
customer proposition will often find compliance a
‘fine-tuning’ exercise rather than a major overhaul.
Sources:
U.S. Courts
www.uscourts.gov
U.S. Federal Trade Commission
www.ftc.gov
U.S. Patents Trademarks Office
www.uspto.gov
U.S. Copyright Office
www.copyright.gov
US Small Business Administration
www.sba.gov
Venable LLP
www.venable.com
State of California Department of Justice Office
of the Attorney General
www.privacy.ca.gov
California Legislative Information
www.leginfo.legislature.ca.gov
www.lexology.com
Reed Smith LLP
www.reedsmith.com
U.S. Government Publishing Office
www.ecfr.gov
Practical Law
www.uk.practicallaw.com

50
The US online payments space is dominated by payment cards. According toVisa,
8% of all consumer retail spending is carried out online.The same report also
showed that 58% of in-store transactions are carried out by card.
In the offline arena, cards are still predominantly magnetic stripe versions without a chip. Chip and
pin or EMV payments are just being rolled out across the US in-store retail estate.The card schemes
(Visa Inc, MasterCard and American Express) had a deadline of 1 October 2015 for businesses to install
point-of-sale equipment that would allow chip and pin transactions. Failure to do so saw the liability for
fraudulent transactions shift from the bank to the retailer
FINANCE PAYMENTS

51
It is expected that the introduction of EMV-enabled cards will see attempted fraud move online. Using ‘Chip-and
Pin’ or EMV enabled cards at point of purchase makes it much easier for the retailer to stop transactions from
stolen cards. Raising this barrier in the physical environment has seen card fraud migrate online.
Implementation
Many payment service providers (PSPs) have a global presence and accepting card payments though these
organisations should not be difficult to organise. Many of these PSPs can also integrate with alternative payment
methods so as to provide a streamlined service.
There are also a number of US-based acquiring banks. For example: First Data, Chase Paymentech,Vantiv,
Elavon, Global Payments, Heartland,WorldPay,TSYS, BA Merchant Services, Citi Merchant Services and
Wells Fargo.
Common payment types
As with the online market in the UK, credit and debit
cards make up the mainstay of online payments in
the US.Whilst these represent 45% of all e-payments,
PayPal has considerable market share at 15%.
The Economist recently reported that in the US there
were 1.2 billion debit, credit and pre-paid cards in
circulation at the end of 2013; equating to an average
of 5 per person.
45%
15%
9%
6%
5%
4%
4%
5%
3%
4%
Credit/Debit Card
PayPal
Cash or cheque
Bank Transfer
Prepaid card
Other money transfer e.g.Western Union
Prepaid Voucher
Other
Secure Vault
Click Buy
45%
15%
9%
6%
5%
4%
4%
5%
3%
4%
Credit/Debit Card
PayPal
Cash or cheque
Bank Transfer
Prepaid card
Other money transfer e.g.Western Union
Prepaid Voucher
Other
Secure Vault
Click Buy
Cash and checks
Card in-store
Online
Mobile in-store
Call center Mobile not-in-store
2%2%
8%
58%
27%
3%
Note: Percent of total annual spending conducted using each payment method among banked consumers, assuming about
$5.3 tillion annualU.S. retail spending
Sources: 2015 Visa Digital Commerce Study, U.S. Census Bureau monthly sales for retail and food services: A.T. Kearney analysis
Digital payments are already 12% of consumer retail spending
Share of recurring and non-recurring retail spending volume
Figure 21: Graph showing online market share of each payment type Source: www.datamonitor.com
Figure 20: Breakdown of overall consumer retail spend Source: www.visa.com and AT Kearney
Digital payments are already 12% of consumer retail spending
Share of recurring and non-recurring retail spending volume
Share of
spending
Total consumer
spending ($ billion)
Cash and checks 27% $1,417
$3,058
$155
$4,630
$420
$113
$107
$640
58%
3%
88%
8%
2%
2%
12%
Card in store
Call Center
Non-digital
Digital
Online
Mobile in-store
Mobile not-in-store

52
Alternative payment methods
As with other markets, there is an ever-expanding
list of payment innovators looking to disrupt the
market.The biggest driver behind these is the rise
of mobile technology and the ‘always-on’ shopping
opportunities that multiple devices bring.There is
also an increasing crossover between digital and
physical channels where ‘pure-play’ digital payment
methods are looking to become more relevant in the
physical retailing world.
Likewise, more traditional payment types, such as
cards, are looking to become more ‘digital’ in their
form factor and avoid the ‘hassle’ of customers having
to add their card details on a small digital device.
The following is a non-exhaustive list of some
examples of alternative payment types with a
presence in the US market:
Amazon Payments
Customers use their Amazon accounts to purchase from other
US-based merchants
PayPal Credit (formerly Bill Me Later)
Marketing payment solution enabling customers to pay by
instalments using their existing credit card facilities but without
having to enter their card details
Google Wallet
Users can store credit, loyalty and gift cards and make payments
through MasterCard PayPass – online and offline
MasterCard MasterPass
Customers can choose which stored payment details
to apply against a purchase
PayItSimple
Spreads the cost of a purchase by instalments taken against
stored credit card details
PayPal
Users can use funds from a payment card, stored in their
account or transfer between accounts
Skrill Digital wallet provider with 36 million account holders
Visa Checkout
Wallet system that stores payment details and allows payment to
be made using username and password: no card details shared
with merchants
As in most markets, these ‘alternatives’ are gaining momentum in the US but choosing which ones to accept should
be based on expected customer usage and insight; dependent on the merchant’s brand, not what the
overall market is doing.

53
Payments fraud
Nielson estimated that, in 2012, the US accounted for 23.5% of the global payment card volume,
but 47.3% of card fraud.The majority of this risk is down to the reliance on mag-stripe cards in the physical
store environment.The introduction in 2015 of chip and pin (EMV) services, will bring down fraud levels in
the cardholder present arena. However, it is expected to increase the pressure on merchants online as
fraudsters look to capitalise on the card information they possess.
Country Attempted fraud rate Country Attempted fraud rate
Luxembourg (1.39%) Netherlands (0.50%)
Australia (1.35%) UK (0.49%)
Brazil (1.22%) Belgium (0.46%)
Mexico (1.21%) Switzerland (0.43%)
China (1.05%) Italy (0.42%)
US (0.94%) Ireland (0.38%)
Canada (0.90%) Germany (0.34%)
Japan (0.88%) Sweden (0.31%)
Turkey (0.68%) Spain (0.26%)
France (0.59%) Saudi Arabia (0.16%)
Figure 22: Attempted fraud rate (EUR) by value, by card-issuing country Source: ACIWorldwide Customer Survey
US-issued cards rank highly in the fraud survey conducted by ACI Worldwide while other research carried
out by the organisation also showed that 41% of US customers had experienced card fraud in the past five years.
This further illustrates why merchants trading into the US need to have the appropriate fraud management tools
in place while also looking at ways to give US consumers confidence in shopping with them.

54
Over 29% of all US ecommerce transactions in 2015
are expected to be conducted via a mobile device.
This growth has not gone unnoticed by fraudsters,
with an article by Bloomberg citing that 21% of all
online fraud is perpetrated via a mobile device.
While this is based on data from a LexisNexis
report using a smaller mobile market share of 14%,
the message still resonates.
In their 2015 Online Fraud Report, CyberSource
report that the overall fraud rate was 0.9% of all
ecommerce transactions. 81% of US merchants
perform manual reviews and 27% of their online
orders undergo this process. After this process of
automated and manual review about 2.3% of orders
are rejected.With mobile in mind, the study also
showed that device finger-printing and geo-location
were among the most effective tools available to
merchants looking to control mobile transaction fraud.
U.A.E
CHINA
INDIA
UNITED STATES
MEXICO
AUSTRALIA
SOUTH AFRICA
BRAZIL
UNITED KINGDOM
SINGAPORE
FRANCE
RUSSIA
INDONESIA
CANADA
ITALY
POLAND
NEW ZEALAND
GERMANY
NETHERLANDS
SWEDEN
44%
42%
41%
41%
33%
31%
30%
30%
28%
28%
26%
23%
22%
21%
20%
18%
17%
16%
13%
10%
Figure 23: Percentage of respondents who have experienced card fraud in the past 5 years
Source: ACIWorldwide Customer Survey

55
TAXATION
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compliance obligations imposed by state, local, and
other taxing authorities in the US and internationally.
Avalara offers hundreds of pre-built connectors
into leading accounting, ERP, ecommerce and other
business applications.The company processes
millions of tax transactions for customers and free
users every day, files hundreds of thousands of
transactional tax returns per year, and manages
millions of exemption certificates and other
compliance related documents.
A privately held company, Avalara’s venture capital
investors include Sageview Capital, Battery Ventures,
Warburg Pincus,Technology Crossover Ventures,
Arthur Ventures and other institutional and individual
investors. Avalara employs more than 1000 people
at its headquarters on Bainbridge Island,WA and in
offices across the U.S. and in London, England and
Pune, India.
For more information please visit www.avalara.co.uk

56
With over 12,000 taxing jurisdictions throughout the US, each empowered
to alter rates and rules with little oversight, the complexity for companies
trading in the US is a major challenge. In addition, 100,000+ rules and
boundary changes annually make keeping up-to-date with the latest
requirements difficult.
Taxable
Shower Caps
Bicycle gloves
Shoulder pads for ladie’s clothing
Walking boots
Sweat bands
Non -Taxable
Swimming Caps
Gardening, ski, tennis, hockey,
and baseball gloves
Shoulder pads in sports gear
Hiking boots
Headbands not designed to absorb sweat
?
What is sales tax?
As an indirect tax (a tax levied on goods and services),
sales tax requires the seller to collect funds from the
consumer at the point of purchase.
• Today, there are over 12,000 state, county and
city jurisdictions in the US charging a sales tax
• 45 states and the District of Columbia now impose a
sales tax on retail sales and some services.The bulk
of their revenue is now generated from sales taxes,
not income taxes. As an indication of the importance
of sales tax to a state, in Texas, sales tax accounted
for 54.3% of all its revenue in 2013
• Five states do not have a state-wide general sales
tax; Alaska, Delaware, Montana, New Hampshire
and Oregon. Alaska and Montana do allow
localities to charge local sales taxes
Sales tax differs from
Value Added Tax (VAT)
VAT is applied every time value is added at each
stage during the supply chain, whereas sales tax is
collected only at the time of the final sale.
If a seller has nexus in a state they must collect sales
tax on all taxable sales regardless of the channel.
Just how complex is sales tax?
Depending on the state in which a customer is based,
different items may be taxed at different rates. In some
states for example, food is not taxed, while in others
the same item may be classified differently.
In NewYork, clothing and footwear costing less than
$110 per item / pair is exempt from state sales tax,
yet it is still subject to local sales tax in some
jurisdictions. Local jurisdictions can change their
tax policy towards clothing once a year.
Exemptions might include “most fabric, thread, yarn,
buttons, snaps, hooks, zippers and similar items that
become a physical component of clothing” or are
used to repair it.
To be compliant, a retailer needs to know the correct classification of an item in each state to ensure it collects
and remits the correct level of tax. Collecting too much in one state will make it uncompetitive, while not
collecting enough increases its exposure to potential fines. Adding to the complexity, in some states the rates
can vary by city, county, or even street.Two adjacent properties can have different tax rates.

57
The risk of audit
In an effort to safeguard sales revenue, each state conducts
audits of businesses, which may result in penalties and interest.
Businesses must keep records of sales in each US city, county and
state in which they sell.
As more businesses sell in the US, auditors are also turning to international sellers to ensure they do not have a
competitive advantage over domestic retailers.The financial importance of collecting sales tax on a state cannot
be underestimated.The more auditors assessing international business, the more revenue a state can make in
penalties and unpaid tax.
Average audits cost as much as €79,000* ($100,000) so compliance is key.
*source: Wakefield Research
Nexus: Do I have to collect US sales tax?
International businesses selling in the US are not required to collect sales tax in a state unless they have ‘nexus.’
Nexus is defined as a connection or business presence in a state or jurisdiction. If a business has nexus in a state,
they need to collect and remit sales tax according to the state regulations. Activities leading to having nexus vary
per state and can include activities such as opening offices, stores or franchises, storing items in warehouses or
even attending meetings or tradeshows.
Once you have determined where nexus exists for your business, you are required to calculate, collect, report
and remit that state’s sales tax. For this reason, sales taxes are remitted based on where your business is actually
located because it is the physical structure of the business that actually creates nexus. However, there are several
other scenarios where nexus can be applied and these should also be considered.
What constitutes a ‘significant physical presence’?
Nexus rules are established
by individual states and every
state defines them uniquely.
Determining exactly how a rule
applies to a business is critical;
the regular presence of a single
sales person is enough to create
tax nexus, therefore requiring the
collection of sales tax.
Recently, in an effort to avoid
losing taxes to companies that
locate themselves in areas with
low or no tax rates, many states
have enacted Amazon laws
to require more national and
international online retailers to
collect sales tax for the first time.
These laws expanded definitions
of nexus to include online-specific
relationships such as affiliate and
web advertising.
Scenarios that could trigger Nexus and sales tax obligations:
Scenario #1
An international business has a
presence in multiple states. It could
take the form of a store, or even a
concession within a larger retail
establishment. In this case, they will
more than likely have sales tax
obligations in each location.
Scenario #2
Nexus can be created by employing
sales people who work in the
states. For example, if employees or
contractors conduct any work for a
customer in the US, this may have
created nexus in that state.
Scenario #3
Regularly attending tradeshows
or advertising in the US can be
considered nexus in certain states.
Additional factors that can create nexus obligations are:
• Property ownership: Owning or leasing any real or personal property in the US
• Product delivery: Having company personnel deliver / install products in the US
• Product storage: Renting or owning storage, warehousing or drop-shipping facilities

58
Top 8 areas to consider in your business plan for selling in the US
1. Keep up-to-date with each state’s tax requirements
Businesses need to keep up-to-speed on all the changes made by states and municipalities each year.
These changes include rate increases / decreases as well as new sales taxes added to jurisdictions
and boundary changes.
2. Establish processes for recordkeeping
The best way to stay compliant is to keep up-to-date on filing sales tax returns and payments (quarterly or
monthly, depending on the state’s requirements) and keep accurate and detailed sales records.
Recordkeeping requirements
3. Understand nexus requirements
Every state has the right to define who has to collect sales tax, what those taxes are and any
allowable exemptions. However, there are limits to how states can define nexus.
Merchants must have a connection to a state in which a customer resides for the merchant to
be liable for sales tax. However, states define nexus in different ways.
The fulfilment method for goods sold can also have an impact on tax obligations. Many European
businesses selling in the US use drop-shippers to deliver goods, creating complicated tax obligations.
Using any third party, whether it is a drop-shipper, supply chain or online affiliate, can trigger nexus
for a business.
• Sales invoices
• Paid bills
• Contracts
• Purchase orders
• Register tapes
• Bank statements
• Cancelled cheques and similar
original documents
• Depreciation schedules and other
fixed asset records
• Documents supporting tax-exempt
sales, such as resale and other
exemption certificates
• Freight bills indicating shipments to
addresses across states
Nexus-triggering events can include:
Travelling salespeople
Agents or distributors
Employees on payroll
Training
Trade show attendance
Inventory/warehousing (owned or 3rd party)
Servicing tangible personal property
Affiliates (e.g. marketing agencies, web hosting,
advertising agencies, etc.)

59
4. Plan to use geolocation over zip codes
While the US Postal Service has established zip codes for mail delivery, tax
jurisdictions do not generally follow zip codes. Going down to street level
is essential to get it right. Businesses relying solely on zip code often find
big discrepancies during audits.Without the use of geospatial technology,
there is limited chance of accurately determining which jurisdiction
applies to a transaction.
5. Set out a returns filing and remittance schedule
Each US state has its own set of rules and regulations for filing and
remitting tax, which may differ from other states. In addition to state rules,
cities and counties may impose and manage sales tax returns on their own.
Responsibility lies with businesses to not only determine if they have to file
with specific cities and counties, but also to register of their own accord.
Moreover, filing frequencies vary by jurisdiction so not all returns are due
on the same day of the month.
Filing methods can vary just as much, even within the same state or
municipality. Some states now require sales tax returns to be filed
electronically; others still require hard-copy submission, while a few states
offer online filing along with an electronic data interchange (EDI) option.
6. Collect and store all exemption certificates
Not everyone is required to pay sales tax. Depending on the rules in the
taxing jurisdiction, certain businesses and individuals may be exempt
from sales tax.The vendor must collect and keep on file a valid exemption
certificate for each business, organisation or individual with an exemption.
Vendors are required to ensure that exemption certificates are valid for
each sales transaction.This requires businesses to keep a copy of each
exemption certificate and ensure that they are renewed when they expire.

60
7. Identify if the ‘Streamlined Sales Use Tax Agreement’ is right for you?
Around half of the states have worked together on an agreement called the Streamlined Sales and
Use Tax Agreement (SST), designed to “simplify and modernise sales and use tax administration in order to
substantially reduce the burden of tax compliance.” Signing up to SST requires only one form to register
across all SST states. Once registered, businesses then have to file returns every month in all SST states.
For companies selling, or looking to sell in the US, or that have affiliate relationships in a number of states,
registering as an SST volunteer can save a lot of time, effort and money.There is no cost for registration and if
a business qualifies, filing is a free service across the SST states. SST volunteers have limited audit exposure
(no negative audits possible). As of early 2015, SST member states include:
Arkansas Nebraska South Dakota
Georgia Nevada Utah
Indiana New Jersey Vermont
Iowa North Carolina Washington
Kansas North Dakota West Virginia
Kentucky Oklahoma Wisconsin
Michigan Ohio Wyoming
Minnesota Rhode Island
8. Plan for sales tax holidays
A number of states can declare sales tax
holidays. Some states offer tax reprieves
for products like school supplies for kids,
while others give consumers a tax break on
hurricane preparedness items, like plywood
and nails. In states where hunting is a big
business, tax holidays might be in place for
firearms, ammunition and hunting supplies.
The holidays are varied, often taking place
over specified dates and limiting the number
of items that can be purchased tax-free.
In Virginia,( http://avlr.co/1F1r9G9) for
example, during the sales tax holiday for
clothing and school supplies, many items
are singled out as exempt. For clothing, this
includes clerical vestments, choir and altar
clothing, corsets, girdles, lingerie, purchased
costumes, steel-toed shoes, suspenders,
formal wear, etc. However, protective gloves,
hard hats and helmets are taxable. School
supplies that are exempt include calculators,
binders, erasers, lunch boxes, highlighters,
notebooks, paintbrushes, scissors etc.

61
To summarise, the top eight areas of tax to consider in a business plan for selling in the US:
Whilst this section highlights some of the challenges that managing taxation exposure in the US involves,
it should not detract from the opportunities that exist in the US market. Selecting a specialist partner,
such as Avalara, can remove the burden and enable the merchant to focus on developing a market presence.
1.
2.
3.
4.
5.
6.
7.
8.
Keep up-to-date with each
state’s tax requirements
Establish processes for
water-tight record keeping
Understand your
nexus requirements
Plan to use geolocation
over zip codes
Set out your returns filing
and remittance schedule
Collect and store all
exemption certificates
Identify if the ‘Streamlined
Sales Use Tax Agreement’
is right for you
Plan for sales tax holidays

US Passport 2015: Cross-border Trading Report

US Passport 2015: Cross-border Trading Report

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