Ever wondered what happens behind the scenes when you click “buy now” on your favorite online store? Or you may be intrigued by the sheer magnitude of e-commerce giants like Amazon and eBay. From the comfort of your couch to the tips of your fingers, the world of e-commerce unfolds endless possibilities. But what exactly is e-commerce? How does it work, and what drives its booming success?
Join us on a journey of e-commerce in the US, where we will explore everything; From the basics of what it entails to the latest trends and key players, we’ll delve into insights, trends, events, and opportunities that shape this dynamic landscape. Whether you’re a nonresident seasoned entrepreneur or just dipping your toes into the digital marketplace, something is captivating about the ever-evolving landscape of online commerce in the US. Right?
So, let’s dive in!
What Is Ecommerce?
E-commerce, or electronic commerce, is the online trading of goods and services. It’s like a digital city center or store, available through computers, tablets, and other smart devices. Globally, around 2.14 billion people shop online, with Amazon Prime members exceeding 200 million. Companies might sell exclusively online or combine e-commerce with physical stores as part of a broader strategy, allowing businesses of all sizes to sell at scale and reach customers worldwide.
What Is an Ecommerce Business?
An e-commerce business is a company/business that makes money by selling goods or services online. This could include selling anything from software and clothes to home goods or web design services. You can operate an e-commerce business through a single website or across various online platforms such as social media and email.
The USA and the UK are leading countries in e-commerce business with an increasing market cap as the year progresses.
Types of Ecommerce
E-commerce operates in various forms, involving transactions between companies and customers, other businesses, or the government, and vice versa. Here are all the types of e-commerce:
- Business to Consumer (B2C): Companies sell directly to consumers. This is the most commonly used e-commerce model.
- Business to Business (B2B): Transactions occur between businesses, such as a company selling software-as-a-service to another business for operational purposes.
- Business-to-Government (B2G): In a B2G e-commerce model, businesses sell products and services directly to government bodies or public administrations, encompassing federal, state, county, and local levels.
- Consumer to Consumer (C2C): Platforms like eBay facilitate consumers selling directly to other consumers.
- Consumer to Business (C2B): Consumers offer products or services to businesses, like a photographer selling images for use in advertisements.
- Consumer-to-Government (C2G): C2G partnerships enable consumers to interact digitally with government entities, not for services but for obligations.
Types of Ecommerce Business Models
In addition to deciding on the type of e-commerce company, businesses must choose their revenue model. E-commerce offers unique ways to manage orders, maintain inventory, and handle shipping.
The revenue models of e-commerce are given below:
- Dropshipping: Dropshipping simplifies e-commerce by letting you sell products without handling inventory. You create a store, make sales, and have suppliers ship orders directly.
- White Labeling: In white labeling, you rebrand and sell existing products, avoiding manufacturing constraints.
- Wholesaling: Wholesaling involves buying and storing large quantities of products to sell in bulk or to individual consumers, requiring significant capital and warehouse space.
- Private Labeling: Private labeling allows you to design products manufactured by others, ideal for businesses without production facilities.
- Subscription: Subscription services collect regular payments for periodic deliveries, popular in the food, fashion, and personal care sectors.
Advantages and Disadvantages of Ecommerce in the US
E-commerce offers a revolutionary way to shop and sell, presenting unique advantages and challenges. Here’s a short briefing on the benefits and challenges of e-commerce in the US:
Advantages
According to the Census Bureau of the Department of Commerce, U.S. retail e-commerce sales for the first quarter of 2024 reached an estimated $289.2 billion. This figure, which has been adjusted for seasonal variations but not price changes, marks a 2.1 percent increase from the last quarter of 2023. There are over 2.1 million E-commerce sellers in the USA, a popular choice due to many benefits, such as:
- Low Start-Up Costs: E-commerce businesses often start with lower initial costs than physical stores. There’s no need for physical space, reducing expenses like rent and inventory. Online platforms may have fees, such as Shopify’s $350 to $3,600 annual “rent,” but these are minimal compared to the $50,000 start-up and up to $40,000 annual rent typical of physical stores.
- Making Sales 24/7: Unlike physical stores with limited operating hours, E-commerce stores can make sales any time of the day without significant additional costs. This around-the-clock operation allows for constant sales without concerns about extended hours increasing labor and utility costs.
- Impulse Buying: In e-commerce, impulse buying is more likely because online shopping enables customers to quickly satisfy their desires. Especially during the holidays, shoppers can indulge themselves by easily buying their favorite items like skincare products or gourmet snacks with just a few clicks. This quick gratification is often harder to achieve in physical stores, where long lines and limited stock can deter purchases.
- Selling Internationally: E-commerce stores easily reach global markets, facilitated by international payment providers like PayPal, Visa, and Square, and the support of third-party logistics for digital fulfillment.
- Offering Customers a Unique Online Experience: While physical stores invest in costly decor and aesthetics, E-commerce sites attract customers with customizable themes that enhance user experience, potentially increasing repeat visits and sales. The maintenance of an E-commerce website is generally more cost-effective than that of a brick-and-mortar store.
Disadvantages
Besides some remarkable benefits, running an e-commerce business in the USA does present some challenges, such as:
- Relying on Your Website for Sales: While an e-commerce website facilitates 24/7 ordering, any downtime, lasting hours or even days, could significantly impact sales, especially during peak seasons like the holidays.
- High Competition: With over 2.1 million e-commerce sellers in the US, even if not all directly compete, product overlap is common, intensifying the competition in an industry that continues to attract new entrepreneurs daily.
- Poor In-Store Engagement With Customers: While brick-and-mortar stores excel in customer engagement, e-commerce stores struggle to replicate this experience, often resorting to less effective methods like banners and pop-ups.
Special Events of Ecommerce in the US
Special events play a significant role in boosting e-commerce in the US:
- Black Friday and Cyber Monday: These post-Thanksgiving events mark the start of the holiday shopping season, featuring massive discounts and exclusive online deals that attract a surge in consumer spending.
- Prime Day: Amazon’s annual sale event offers exclusive deals for Amazon Prime members, significantly driving traffic and sales.
- Holiday Season: From Thanksgiving to New Year, this period sees a continuous uptick in online shopping as consumers buy gifts, decorations, and more.
These events not only increase sales but also offer businesses a chance to expand their customer base and test new marketing strategies.
Beyond these major events, other special occasions can be leveraged for e-commerce success in the US, such as:
- Back-to-School Sales: Targeting students and parents with special deals on school supplies, clothing, and electronics.
- Independence Day: Promotions on outdoor living items, patriotic apparel, and celebratory goods.
- Labor Day Sales: Discounts on furniture, appliances, and home improvement products.
How Many Ecommerce Companies Are There in the US?
As of 2023, the United States hosts approximately 13.98 million e-commerce sites, underscoring its role as a dominant force in the global online marketplace. This vast number of digital storefronts highlights the U.S.’s advanced digital infrastructure and innovative business environment.
The significant year-over-year growth rate of 47.2% further demonstrates the increasing relevance and expansion of e-commerce across the country, signaling ongoing opportunities for new and existing online businesses.
Top US Ecommerce Companies
As earlier we established the fact that the US has almost 14 million e-commerce companies, let’s explore a bit deeper: Which are the top US e-commerce companies? Some of the remarkable e-commerce company names are given below:
Amazon
Last November, Amazon racked up 2.07 billion views, showing just how essential it is to U.S. shoppers—similar to how water is essential to plants. Impressively, about 167 million people in the U.S. are Amazon Prime members, which is nearly half of the country’s total population of around 339 million.
eBay
In second place is ebay.com, a site known for auctioning off items ranging from the quirky, like Justin Timberlake’s half-eaten french toast, to entire towns, along with more typical merchandise. Though it doesn’t reach the heights of our top site, eBay still impressively racked up 543.7 million views in November 2023.
Walmart
Walmart.com took third place with an impressive 492.7 million visits in November, largely thanks to its famous Black Friday sales. While the days of camping out overnight for Black Friday bargains are fading, the allure of online deals remains strong. November saw a 26.9% surge in traffic, adding over 100 million views, as shoppers increasingly prefer clicking ‘Add to cart’ over racing through store aisles for the best deals.
Etsy
Etsy.com saw significant growth with 276.1 million visits in the U.S. in November, marking a 6.34% increase from October. Dominating the creative marketplace, Etsy boasted over 6 million active sellers and 90 million buyers as of November 2023. Although Etsy features mostly small businesses, their impact is substantial. In 2023, a consumer shift towards supporting independent brands was evident, with an American Express survey revealing that 85% of American consumers planned to shop at small businesses during the holiday season. This trend greatly benefited Etsy, significantly boosting its site traffic.
Target
Finally, let’s talk about the American retail heavyweight, target.com, which garnered 217.4 million visits in November. This represents a significant 32.62% jump from October, translating to over 53 million additional visits! Target has been a major player in retail since the early 1900s and has now successfully established itself in the e-commerce market as well. They’ve certainly hit the mark.
Some other mention-worthy names on the list of e-commerce companies in the US are: T-Mobile, Homedepot, att, Best Buy, Apple, Kohl’s, etc.
As a Nonresident, How Can I Do Ecommerce Business from Home?
As a nonresident, starting an e-commerce business from home in the US is quite easy and hassle-free with the right support. Partner with experienced e-commerce service providers like Business Globalizer, offering specialized plans for platforms like Amazon, Walmart, Shopify Plus, eBay, and Etsy.
We provide a streamlined setup process that covers everything from initial setup to compliance with legal standards, ensuring you can manage your e-commerce operations from anywhere. Their tailored services cater to both new and experienced entrepreneurs, making the location a non-issue. Simply meet a few basic requirements, and Business Globalizer will handle the rest, ensuring you comply fully with US regulations.
Requirements for Ecommerce Business for Nonresidents
For nonresidents looking to start an e-commerce business in the US, the requirements are straightforward but important for a successful entry into the market:
- Required Budget: Ensure you have sufficient funds to cover initial expenses such as website development, inventory, marketing, and any applicable legal fees.
- Legal Structure: Decide on an appropriate business entity, such as an LLC or Corporation to provide liability protection and facilitate easier business operations and tax filing.
- US Bank Account: Opening a US bank account simplifies transactions with US customers and enhances credibility.
- EIN (Employer Identification Number): Obtain an EIN from the IRS for tax purposes, necessary for both native and foreign entities operating in the US.
- Compliance with US Laws: Understand and comply with relevant US laws, including consumer protection laws and state-specific e-commerce regulations.
Don’t worry; if you have the required budget for your desired marketplace, the rest will be properly handled by us. If you are confused about the whole thing of how and when to start, book a premium business consultancy with us to get rid of all the confusion.
How to Start an Ecommerce Business on Amazon
As an e-commerce enthusiast, you might be dreaming of transforming your brilliant idea into an Amazon store. Might be pondering product types, target audiences, and customer acquisition strategies.
Don’t stress; focus on these five essential steps to pave the way for your e-commerce success on Amazon:
- Research and validate your business idea to identify sellable products.
- Procure or source products from trustworthy suppliers.
- Select sales channels to link products with buyers.
- Establish your online store and list your products.
- Promote and market your products to increase sales.
Curious to learn more about “How to Start an E-commerce Business on Amazon.”? We got you covered!
Legal Considerations of E-commerce in the US
Operating an e-commerce business in the US requires going through various legal aspects. Here’s a quick rundown:
- Taxes: Understand sales tax collection and filing obligations for your state and those you ship to.
- Data Privacy: Ensure compliance with data security and privacy laws like CCPA and GDPR.
- Intellectual Property: Protect your brand with trademarks and copyrights, while avoiding infringement on others.
- Terms & Disclaimers: Clearly outline terms of sale, return policies, and disclaimers on your website.
- Business Regulations: Adhere to regulations for advertising, product safety, and electronic transactions.
Note: Consulting an attorney or legal expert familiar with e-commerce laws is recommended for in-depth guidance.
Why Start an Ecommerce Business in 2024?
Electronic commerce is booming with every passing day and it’s not too late to join in. According to experts, e-commerce currently accounts for 22% of total sales ($3.3 trillion) and is expected to grow to $5.4 trillion by 2026.
Consider starting an online sales business if you’re interested in:
- Earning passive income.
- Setting your own schedule and being your boss.
- Working from anywhere with an internet connection.
- Benefiting from rapid growth as more consumers shop online.
- Expanding into new products or categories to increase revenue and profits.
FAQ
Q1: Is Ecommerce Legal in the USA?
Answer: E-commerce is legal and thriving in the USA! It’s a major driver of the US economy. However, there are regulations to ensure fair trade and consumer protection. To be on the safe side, always double-check the applicable laws.
Q2: Can a Non-resident Start an E-commerce Business in the US?
Answer: Yes, nonresidents can establish an e-commerce business in the US. They typically need to form a legal entity such as an LLC, obtain an Employer Identification Number (EIN), and set up a US bank account.
Q3: What Is the Top Disadvantage or Limitation for Ecommerce Business?
Answer: A big challenge with e-commerce is keeping your information safe. Even though there are fancy security systems, many folks still worry about giving out their personal and payment info.
Q4: What are the Tax Implications for Non-residents Running an E-commerce Business in the US?
Answer: Non-residents must collect and remit sales tax according to the regulations of the states where their customers are located. They may also need to file US income tax returns, depending on the structure and operations of their business.
Q5: What Advantages Do Nonresidents Have in the US E-commerce Market?
Answer: Non-residents can tap into a large and diverse market with high consumer spending, leverage advanced e-commerce technologies and infrastructure, and benefit from a variety of scalable business models like dropshipping or wholesaling.
Q6: What Challenges Might Non-Residents Face When Entering the US E-Commerce Market?
Answer: Challenges include navigating the complex tax landscape, cultural and market differences, intense competition in popular niches, and staying compliant with US consumer protection laws.
Q7: Can Business Globalizer Help an E-entrepreneur Stay Compliant with the Law and Legal Compliances?
Answer: Yes, Business Globalizer can take care of every legal aspect of your e-commerce business in the US.
Final Words
Diving into the dynamic world of U.S. e-commerce opens up a landscape ripe with opportunity. Whether you’re just starting or looking to expand, the potential for growth and innovation in this sector is boundless.
As we’ve explored the ins and outs of e-commerce in the US, it’s clear that the journey is as exciting as the destination. Embrace the possibilities—your next big success could just be a click away.
Ready to start your e-commerce adventure with us?
