Why E-Commerce is the Key to Unlocking the U.S. Market

Offering your product online can help you establish a customer base before you make your move into bricks-and-mortar retailers

 
Written by Alexandra Bosanac

If you’re a Canadian entrepreneur eyeing the United States’ consumer product market, there are options for growing your business other than striking deals with major retailers. Innovations in e-commerce are making it easier—and more cost-effective—to sell directly to consumers. In fact, building a business with e-commerce at the heart of your strategy might even give you a leg up on more established competitors.

Shoppers interact with brands differently today, expecting to be able to purchase any item, at any time and on any device, explains Jennifer Lee, national retail leader at Deloitte Canada. And with a wealth of inexpensive tools for collecting and analyzing data, entrepreneurs have the potential to be better placed to adjust to changes in consumer behaviour.

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“Back in the old days, to get into the U.S., you’d have to open hundreds of stores to get a footprint,” says Lee. “I think the interesting thing about this brave new world we’re in is that technology is enabling a lot of small entrepreneurs to act like big companies.”

Because the U.S. market is so much larger and more competitive, it can be tough for Canadians to break in. But it’s not impossible, says Lee, who’s been advising entrepreneurs on how to enter foreign markets via e-commerce for the past four years. “You’re no longer a slave to retail,” she says.

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The first step is to decide whether your brand has enough of an audience to get noticed in the U.S. Do you have a strong following on social media, and have you been able to convert that buzz into actual sales? If not, you may need to focus before considering another market. Niche products with a high value proposition and few competitors are natural candidates for crossing the border, says Becky Reuber, a professor of strategic management at Rotman School of Management. “The more you get into a specialty market, the easier it is,” she says. Products like food don’t export as well, says Reuber, since they require research and honing to suit regional tastes.

Once you’ve built your following, Lee recommends still taking your time. “The people who go up in flames are the people who try to go whole hog,” she says, because costs can get unwieldy. One possibility is to open pop-up stores in cities home to the demographic you want to reach. This way you can pull back or expand as needed with less risk involved.

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“In this new world, you can enter the market very slowly and learn about a particular demographic, in a particular part of the country, and you can use that to make intelligent decisions about how to grow,” says Lee. “That iterative process is empowering for the entrepreneur.” In addition, the right market for your product may not be the usual targets, like border towns and major cities. Let data collected from your website guide you to where your customers are.

Entrepreneurs expanding via e-commerce often neglect to keep operating costs in check, especially airfare and accommodation for those times when you do have to travel stateside. Another looming cost? Companies that ship to litigious countries like the U.S. should anticipate hikes in property and casualty insurance premiums. According to the Canadian Federation of Independent Businesses, there are likely federal, state and municipal income taxes that will apply to a Canadian business in the States—and that paperwork can drain resources. Also, any company with U.S. tax exposure should check to see whether its Canadian accounts (including personal ones) are subject to reporting requirements under American legislation. Non-compliance could result in the loss of banking privileges.

Lastly, although entrepreneurs gravitate toward the U.S., it’s important not to discount other options. If the U.S. market is already crowded with competition for your product, look at emerging economies in Central and South America. (English packaging is said to translate well into Spanish.) Then, use the experience as a launching pad.

This article is from the Summer 2015 issue of Canadian BusinessSubscribe now!

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What did your business do to crack the U.S. market? Share your strategies and experiences using the comments section below.

Originally appeared on PROFITguide.com

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