Executive summary
The United States is a compelling market, so don’t let perceived barriers get in the way of your export potential there.
Familiarise yourself with customs formalities, and look to official sources for any further regulatory information you need.
Make sure both you and your customers are clear on who is responsible for any import taxes.
Charges are based on the declared value and the Harmonised System code you use – which should itself be based on an accurate description of the goods. Discrepancies here can cause customs delays so it’s vital these are accurate.
There are plenty of resources available to help small businesses trade in the United States.
These include trade associations such as the American Chambers of Commerce, which have chapters all over Europe, and business banks to offer financing.
Be sure to get your logistics processes in order before you start.
Bear in mind any additional warehouse capacity you might need and take the need for an effective returns process into account, too.
Whether you’re an experienced exporter or a domestic business looking to expand overseas, the U.S. market could well be an attractive proposition.
It is the largest consumer market in the world, with the highest household spending.1 And what’s more, the United States is ranked sixth on the World Bank’s Ease of Doing Business list,2 which means its regulatory environment is conducive to running a business there.
Yet for some businesses, exporting to the United States could seem challenging. There’s no avoiding the fact that there could be new regulations to comply with and additional paperwork complexities – not to mention high levels of competition. But it’s important to remember that many European businesses ship successfully to the market.
In fact, there are over 164,000 EU companies exporting to the United States, of which around 93,000 are small and medium-sized businesses.3 And there’s no reason why more can’t follow them. So, here are five common obstacles businesses could experience
Navigating customs
Customs and tax formalities can be confusing, and when shipping to a new market – or especially if you are exporting across borders for the first time – understanding the processes can seem challenging.
Start by getting the basics in place, and that means understanding what paperwork you will need to complete. One document you will require is a commercial invoice. The commercial invoice is the primary document used by customs authorities for import control, valuation, and duty determination, so it’s essential to learn how to fill one of these out correctly if you are new to shipping across borders. You will also need to know what an accurate goods description looks like, and make sure you include one on your commercial invoice.
After that, you should check whether your goods require additional documentation to enter the United States, and whether there are any restrictions on your goods. Depending on the goods you are shipping, you may be required to meet certain technical standards or labelling requirements, or obtain a licence or permit. This usually applies to food, apparel, electronics, toys and many other goods. You can learn more about this by visiting the Basic Importing webpage for U.S. Customs and Border Protection.
Understanding import taxes
Another area that can cause confusion and apprehension among businesses is duties and taxes. But there are steps you can take to help reduce this.
Putting some work in up front could be a wise move. First, it’s important to make sure that both you and your customer know who is responsible for paying any import duties at the border, before the goods are shipped. This is normally determined by using Incoterms®, which should be consistent with the terms of sale you agree with the buyer.
Doing this, and including the Incoterms® on your commercial invoice, can save a lot of confusion and is likely to result in a more successful exporting experience for everyone.
In addition, being able to calculate and communicate the costs that will be incurred can save both you and your customer time and effort. Charges will be based on the declared value and the Harmonised System code you use – which should itself be based on an accurate description of the goods. It’s essential that these are correct – inaccurate declared values are one of the most common reasons for customs delays and disputes over duties and taxes.
It’s also worth noting that the United States has a de minimis threshold – the value of qualifying goods that can be imported without attracting import duty and tax – of $800, which is one of the highest in the world. It could make shipping to the United States easier for European businesses because it saves time, cuts paperwork and accelerates the final delivery of the goods.
Meeting the market requirements
In many ways the United States appears very familiar to European businesses, but it can still feel like a challenge to understand what the market requirements are when you are thinking about exporting to consumers there.
For guidance, you could look to professional trade associations such as the various American Chambers of Commerce or BritishAmerican Business, which may be able to provide useful insights on entering the market.
It’s also a good idea to do some research into the market. If you can understand factors such as whether there are similar products to yours available (and the levels of demand for them), what the right pricing strategy is and which marketing techniques are proving successful, it could help ease some of the uncertainties you may have.
Another consideration is to think about how you can offer a competitive level of service. For example, think about localising your website for U.S. customers, with prices displayed in U.S. Dollars (USD). And consider time zones when it comes to scheduling marketing communications or customer service availability. Don’t forget, the U.S. mainland spans four time zones: from GMT-5 in East Coast cities such as New York and Washington D.C., to GMT-8 for West Coast locations such as California.
You could also aim to offer multiple delivery options, with an economy option and a premium service for faster delivery. A reliable logistics provider should be able to deliver goods from Europe to the United States the following day, which can help ensure you are competitive in the market against domestic rivals.
Financing your expansion
The costs associated with expanding to a new market can also be a barrier to some businesses. To help navigate this, it’s a good idea to start by writing a business plan, outlining the costs you are likely to incur and projecting the revenue you stand to make. This will help you to calculate if you will have any additional working capital needs to meet, or if you are likely to come up against any cash flow challenges.
Research what investment may be available to your business to support international growth. For example, UK businesses may be eligible for growth financing from the British Business Bank, while businesses in the EU could apply for support from the European Investment Bank.
Getting to grips with the logistics
For many European businesses, the United States may be the furthest market they export to. But while the logistical considerations may be different to closer markets, they are not insurmountable.
Make sure your business is ready to handle any additional requirements, such as by increasing capacity in your warehousing or storage facilities, or by adapting the packaging you use to make it suitable for international travel or longer transit periods.
You then need to establish an efficient, cost-effective process for transporting your goods. Being able to track shipments could be key, both for your own peace of mind and to offer your customers added visibility over their orders.
Working with an experienced logistics provider can be a big help, not just in delivering the goods but in guiding you on the processes you need to follow and any additional demands there could be on your business.
That includes returns. These are an unavoidable part of doing business, particularly with e-commerce, but they needn’t be a barrier and your logistics provider should be able to help you to simplify the process.
One way is by including a returns label with the shipment that contains all the necessary customs information. You could also provide an editable digital version that would allow customers to amend the information, for example if they ordered several products but only wish to return one.
Whatever approach you take, putting in place an effective plan to deal with returns – before you start exporting to U.S. customers – can help you to manage the practicalities and control the costs in the most efficient way.
Disclaimer: The information provided on this page does not constitute legal, tax, finance, accounting, or trade advice, but is designed to provide general information relating to business and commerce. The FedEx Small Business Hub content, information, and services are not a substitute for obtaining the advice of a competent professional, for example a licensed attorney, law firm, accountant, or financial adviser.
Sources
1. Select USA
2. Doing Business | The World Bank
3. United States | European Commission
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