What is e-commerce?
E-commerce involves buying or selling products or services over the internet. This can include using a website, online marketplace or social media to sell to customers overseas.
Why sell online
Opportunities for online sales are huge and growing.
By selling online UK companies can:
- do business 24/7
- find new customers in overseas markets
- build brand awareness
- access new markets in a low-cost way
- monitor real time sales and use data to make informed business decisions
Developing an e-commerce strategy
If you think e-commerce is right for your business, you should consider creating an e-commerce strategy to help you succeed and stay competitive.
You may wish to consider the following as part of your strategy.
Clarify your objectives
What do you want your online presence to achieve? Are you looking to sell online, or only to raise awareness of your product or service?
Establishing an online consumer base can take time. What resources will you need to manage until you start to see returns?
Who are your target audience – other businesses; young consumers? And who are your main competitors, and what makes them successful online?
This information will help you tailor your online presence.
Decide what features you want your website to have before consulting a professional web developer for support.
Will it be mobile-friendly? Will you have a separate app?
Choose a channel-mix that’s right for you
There are 4 major e-commerce sales channels. You could consider using one, or a combination, of these:
- your website – use your website to raise awareness of your business or to directly sell your product or service. This can be your UK-based site, or a country-specific site created by your web developer
- online marketplaces – for smaller businesses, online marketplaces offer a useful platform for expanding reach and increasing revenues while minimising risk. Use DIT’s Selling Online Overseas Tool for help with finding the right platform
- third party distributors – you could sell your product or service through third-party websites, using existing in-country sales and marketing networks
- social media – can be useful for increasing your market presence, building brand awareness, or even for selling directly to customers. A local marketing firm can curate a social media presence that is aware of, and sensitive to, local culture
E-commerce in the US
The USA is home to the most sophisticated e-commerce market in the world. With US customers spending £12.5 billion on UK goods and services online every year, e-commerce offers an excellent platform for UK SMEs to grow their sales and revenue through exporting to the USA.
It is essential that you consider marketing, payment, effective fulfilment and tax or other charges as part of your e-commerce strategy.
Marketing your product or service
Have a clear and locally sensitive marketing strategy. When marketing your goods or service to US customers you must provide clear detail on:
- payment and delivery options
- the steps involved in ordering from you
- total delivery costs (or how these will be calculated)
- the conditions of – and minimum period for – any contracts
- you could try using social media sites like Facebook, Twitter or YouTube to promote your products and grow your customer-base in the US
- consider employing the use of coupons, specials and cross-selling promotions – these have real appeal with US customers
- remember to focus on providing reliable customer experience – including offering direct customer service where possible
US consumers mainly use credit cards, debit cards and PayPal to pay online. However, American Express, Discover Cards and local payment cards are also popular. Try to offer the widest range of payment options that you can.
Fulfilment: delivering your goods or service
In fulfilling your order:
- consider using a marketplace that will handle shipping for you (eg fulfilment by Amazon), or use a US third party logistics (3PL) company to reliably manage delivery and returns of your product
- the specific conditions of sale and fulfilment for streaming or digital-download services
Tax, customs fees and charges
Your goods will require proper documentation and will be subject to customs duty and sales tax on arrival.
Refer to the US International Trade Commission database to determine your duty rates.
If you know where your goods will enter the US, you can speak with a customs agent at the port of entry or hire a licensed customs broker. A broker can help you with federal procedures and submit information and payment on your behalf.
The US tax system is complex. While there is no Value Added Tax (VAT) in the US, many states levy their own sales tax – ‘economic nexus’ – payable where out-of-state businesses maintain a physical presence (or in some cases an inventory) in a state.
Consult the relevant state’s revenue agency through the Internal Revenue Service (IRS) for advice.
If you decide that e-commerce is right for you, consider talking to one of DIT’s E-Commerce Advisers or requesting help on building your e-commerce presence with our E-Exporting Programme.
Protecting intellectual property on e-commerce sites
Different e-commerce sites have different rules for protecting IP and enforcing against infringement. Businesses must obtain protection for their patents, trade marks, and designs in countries where they sell and manufacture, including on e-commerce platforms.
US law allows a one-year grace period for an inventor to register a patent from the date of public disclosure. Conversely, in the EU public disclosure could prevent you from being able to obtain a patent. In the US registration is advised but not required for either published or unpublished copyright. Businesses should regularly check that their copyrighted materials and trademarks are not being misused. They should also check that what they are selling does not infringe an existing right in the UK.
Reciprocal online IP toolkits provide more information about protecting your intellectual property in the USA and UK.
The UK IPO also provides a more extensive guide to IP rights in the US.
The General Data Protection Regulation (GDPR) restricts the transfer of personal data to countries outside the European Union, unless the country has been deemed adequate by the European Commission, or appropriate safeguards are in place. These restrictions apply to all transfers, no matter the size or frequency.
At present, Commission restrictions for the USA apply to all transfers other than those covered by the EU-US Privacy Shield framework. The privacy shield places requirements on US companies certified by the scheme to protect personal data and provides redress mechanisms for individuals. US government departments oversee certification for the scheme.
If you want to transfer personal data to a US organisation under the privacy shield, you need to:
- check on the privacy shield list to see whether the organisation has a current certification
- make sure the certification covers the type of data you want to transfer
If the transfer you are considering is not covered by the privacy shield framework, you will need to ensure that other appropriate safeguards are in place.
Find further advice on personal data transfers to the USA and the use of appropriate safeguards on the ICO website.
Be alert to the risks posed by trading online and learn about new threats and ways to protect your business.
Get advice from the UK’s National Cyber Security Centre.
Help and support
Moving into any new market can feel like a leap into the unknown. But with the right help and support you can do it.
DIT’s great.gov.uk is your one-stop-shop for all things trade. Visit here first for advice on how to get started and for details of people who can help your business succeed.
Other resources include:
- DIT’s ‘Selling overseas: a guide for beginners’, a general guide to getting started with exporting
- the Exporting to the USA guide for businesses
- specific guidance on distance-selling regulations
- the joint UK-US publication Doing Business in the US and UK: Resources for Small Businesses