As agreed in the Trade Facilitation and Trade Enforcement Act of 2015, signed by President Barack Obama Feb. 24, U.S. Customs and Border Protection (CBP) announced to increase the U.S. De minimis level on international shipments inbound to the U.S. from $200 per shipment to $800 per shipment. The new law took effect on March 10, 2016.
Shipments valued at $800 or less for the De minimis exemption will be eligible under the same processes and with the same restrictions that currently apply to De minimis shipments of $200 or less. This change will benefit importers by reducing customs procedures required as well as the applicable duties or taxes that would be collected, presenting a significant step in facilitating trade, reducing the costs borne by importers and accelerating the delivery of commodities.
The higher threshold for duties is going to open up more opportunities for vendors around the world to sell in the US. America remained to be one of the most important markets for cross-border e-commerce in 2015. Although the number of American consumers only accounted for 22% of the totals, the total consumption it generated was just second to China, well-deserving the world’s second largest market.
While cross-border shopping still accounts for just a fraction of total global e-commerce spending, it is growing quickly at a rate of more than 25% annually. It is estimated that by 2020, about 943 million people world-wide are expected to shop online for foreign goods, spending an estimated $994 billion. 54% of U.S. Online shoppers have purchased overseas, according to a survey by comScore and UPS.
What is the most popular merchandises for American online buyers?
The new De Minimis threshold has brought a great welfare for American online buyers as well as online merchants around the world. In order to seize this unprecedented opportunity and share a cake of American market for cross-border e-commerce, it is necessary to make a research about the most popular products for American online shoppers.
In the Second Global Cross-border Trade Report jointly published by PayPal and Ipsos, clothes and shoes have been top sellers throughout the world, and it’s no exception to America. Among the Top 5 popular product categories of American market, Apparel and Shoes accounted for 47%, followed by Education & Entertainment with a percentage of 29%. The other three favorite categories by Americans are Toys & Hobbies, Electronic & Consumer products, Tourism & Transportation, sharing an average rate of 27%. If you have a website which targets US buyers it will definitely be worth bringing the most popular product categories to your US customers’ notice.
What affects American online shoppers’ buying decision?
There are many factors that can affect shoppers’ final buying decision. Among all the factors, 42% of American buyers thought that free shipping was the most tempting factor that motivated them to buy, while high shipping cost and long delivery time were the main reasons that they decided to abandon the orders. In addition, secure payment methods and free returns also contribute to a buying decision.
The new rules largely eliminate one of the big headaches for those shopping abroad online: unexpected fees or delays. Americans are allowed to import up to $800 at a time of most foreign goods without having to pay import duties or tax. Also, no formal customs procedures are required which means less paperwork for e-commerce merchants. Thus, unexpected cost can be cut down and delivery efficiency will be improved.
How to share a piece of cake of U.S. overseas online shopping market?
A change in trade rules is making it cheaper and easier for American consumers to buy overseas goods online. However, it brings both opportunities and challenges for cross-border e-commerce merchants. How to share a piece of cake of the market and stand out among thousands of hundreds of competitors? Tips below will be helpful to prevent a buyer from abandoning the purchase.
- Ensure product quality and highlight local features. Some local fulfillment agents provide sourcing service. Applying tactical local sourcing strategies and multiple sourcing resources, they can get you connected and assure product quality.
- Offer free shipping, discount or coupons etc., on the basis of a reasonable cost control.
- Partner with reliable order fulfillment companies or logistics companies to improve the order process and delivery efficiency; mark the estimated delivery time for orders which will take a longer time.
- Notify buyer of the tracking number after the delivery and track the package regularly.
In addition, it is important to choose the appropriate payment method. As a payment company originated from America, there is no doubt that PayPal has become the preferred payment tool for Americans with its powerful function and global business network. 64% of respondents from America pay by PayPal when shopping abroad online because of its high security and personal information protection. Choosing the suitable payment method for American market will expand your potential customer base.
Cross-border e-commerce has been an important platform for small and medium-sized enterprises to grow and integrate into global supply chain while a competitive De Minimis threshold is the key to the success of e-commerce. Since small and medium-seized enterprises lack of resource and capability to respond to the complex border barriers, a new rules to raise the De Minimis threshold for U.S is definitely a great opportunity to turn the tide, at least for American market. So, are you ready to share the cake?