For any Asian online retailer, there is one market that is worth more than all the others combined: the United States. With a population of 300 million, and an online market worth an estimated $200 billion – a figure that is expected to double in the next five years – America is the biggest online retail market by far. Whether it is the sale of a new product from your existing range, the reselling of third party goods or the selling of non-tangibles such as mobile phone apps, cracking the US market may be worth the trouble.
Shipping costs can be the biggest hurdle. Getting products into the United States can be costly, depending on size and weight. Fail to charge the customers enough for shipping of any merchandise, and you could find your profits reduced, or even worse, you could end up selling at a loss.
Size and weight are the two most important factors. Whatever the type of online promotional products you have for sale, you need to establish the exact shipping costs in advance. This is not difficult to do, and is best to visit your local courier service to know the best prices. You may find the big name couriers, such as UPS or FedEx offer the best deals, and both these companies publish their rates online. However, always try to get to one of their offices, and when you go, make sure you take with you examples of your merchandise so you can make a note of the exact cost of shipping to the United States.
Of course, selling virtual goods is one way of avoiding any problems with shipping. Selling apps is now becoming a huge market, and once you have paid for the research and development, the sale of these sorts of virtual retail goods have few additional expenses, outside marketing and promotion, but regardless of the type of item you are trying to sell to the US market, there are other pitfalls to look out for.
While only large and expensive items are subject to import duty to the United States from most Asian countries, it is still worth making enquiries with the US Customs and Border Protection to ensure what you are sending to the State is exempt from duty, as some items, such as perfume, alcohol and tobacco are always chargeable, regardless of their origin. There is, however, one aspect of tax that all online businesses need to be aware of when trading in the United States and that is the policy of income tax withholding.
While most Asian countries have tax treaties with the United States, the way the American IRS handles these slightly differs to other countries. Anybody selling online in the United States will discover that all profits will be subject to a 30 per cent deduction for income tax. This means you end up paying tax in America and tax on any profits at home. However, the good news is, that it is fairly easy to rectify.
When you begin trading in the United States, you need to contact the IRS (Internal Revenue Service) to get a tax number, either an EIN (employer identification number) or an ITIN (Individual Tax Payer Identification Number). This is simple process that can be done over the phone, and once obtained, you fill in a tax form (these are usually available from your online vendor) include this tax number, and the vendor will send this form to the IRS, who will no longer withhold 30 per cent, but of course, you still have to pay income tax in your own country.
Perhaps the biggest hurdle for an Asian business wanting to sell online is getting your product noticed among the millions of others for sale on these vendor sites. What works for one business and product may not work for another, but a few things are universal, especially when selling on third party vendor sites.
Meta data is crucial for online selling. This means you need to anticipate what America customers are going to be searching for to ensure your items are listed in the results pages. This is not always easy and may require a lot of experimentation. In addition, product images and descriptions are also crucial marketing tools for online selling, and care needs to be taken when compiling descriptions and using images with respect to accuracy and intellectual property.
Many online businesses in Asia are making a success of the new world of internet retail, and as long as you are willing to experiment and are aware of the pitfalls, there is no reason why you can’t succeed over time.
Julie Worth enjoys combining her passion for writing from her years in retail and business management with motherhood.