Guidance

E-commerce for UK small businesses selling online to the USA

Updated 5 October 2023

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What is e-commerce?

E-commerce involves buying or selling products or services over the internet. This can include using a website, online marketplace or social media to sell to customers overseas.

Digital trade and e-commerce are rapidly becoming the dominant form of trade. Seizing the opportunities in this area is fundamental to growth of businesses.

Why sell online?

Opportunities for online sales are huge and growing.

By selling online UK companies can:

  • do business 24/7
  • find new customers in overseas markets
  • build brand awareness
  • access new markets in a low-cost way
  • monitor real time sales and use data to make informed business decisions

Developing an e-commerce strategy

If you think e-commerce is right for your business, you should consider creating an e-commerce strategy to help you succeed and stay competitive.

You may wish to consider the following as part of your strategy.

Clarify your objectives

  1. What do you want your online presence to achieve?
  2. Are you looking to sell online, or only to raise awareness of your product or service?
  3. How will you reach your customers will you need to get marketing or advertising advice?

Resources

Establishing an online consumer base can take time. What resources will you need to manage until you start to see returns?

To ensure you understand your resourcing needs then you should consider creating an Export Plan.

Market research

Who are your target audience – other businesses; young consumers? And who are your main competitors, and what makes them successful online?

The DBT International Markets Tool can help you get started and get better understanding the market you are looking to enter from the USA to the UAE. This information will help you tailor your online presence to your target market.

Website features

Decide what features you want your website to have before consulting a professional web developer for support.

Will it be mobile-friendly? Will you have a separate app?

Choose a channel-mix that’s right for you

There are 4 major e-commerce sales channels. It is good to do research and understand the best way to raise awareness of your business in the market you are looking to enter.

You could consider using one, or a combination, of the following:

  • your website – use your website to raise awareness of your business or to directly sell your product or service. This can be your UK-based site, or a country-specific site created by your web developer
  • online marketplaces – for smaller businesses, online marketplaces offer a useful platform for expanding reach and increasing revenues while minimising risk. Use the Department for Business and Trade’s (DBT) Selling Online Overseas Tool for help with finding the right platform
  • third party distributors – you could sell your product or service through third-party websites, using existing in-country sales and marketing networks
  • social media – can be useful for increasing your market presence, building brand awareness, or even for selling directly to customers. A local marketing firm can curate a social media presence that is aware of, and sensitive to, local culture

Where to get support?

DBT employ people around the world to identify opportunities for UK businesses. They have a deep understanding of local rules, culture and preferences, so you can make informed decisions.

Whether you’re taking your first e-commerce exporting steps or looking to expand your online presence, we can advise you all the way. We’re here to help.

You can get free support from our UK-based E-Commerce Advisers. Their in-depth knowledge of exporting via e-commerce to international marketplaces means you’ll get tailored advice.

If you have a turnover of £500k+ and an export-ready product or service, you are eligible for the Export Support Service International Markets (ESS-IM) offer.

ESS-IM provides the following, free of charge:

  • one-to-one guidance on exporting and tailored market insight reports
  • a library of complimentary exporting and sector guides
  • introductions to a network of private sector US or Canadian service providers who can help with commercial issues - the network includes local accountants, legal experts, market research firms, sector specialists and more

To take advantage of the full range of DBT services, you should first connect with your UK-based International Trade Adviser (ITA). If you don’t already have one, search find your local trade office. ITAs are global account managers and the first point of contact in your export journey. They will work with you to map out your Export Action Plan, determine which markets are appropriate, discuss access to funding, and direct you to digital resources (such as the Export Academy).

E-commerce in the US

The USA is home to the most sophisticated e-commerce market in the world. With US customers spending tens of billions on UK goods and services online every year, e-commerce offers an excellent platform for UK SMEs to grow their sales and revenue through exporting to the USA.

Practical considerations

It is essential that you consider marketing, payment, effective fulfilment and tax or other charges as part of your e-commerce strategy.

Marketing your product or service

Have a clear and locally sensitive marketing strategy. When marketing your goods or service to US customers you must provide clear detail on:

  • payment and delivery options
  • the steps involved in ordering from you
  • total delivery costs (or how these will be calculated)
  • the conditions of – and minimum period for – any contracts

In addition:

  • you could try using social media sites like Facebook, Instagram, X (formerly known as Twitter) or YouTube to promote your products and grow your customer-base in the US
  • consider employing the use of coupons, specials and cross-selling promotions – these have real appeal with US customers
  • remember to focus on providing reliable customer experience – including offering direct customer service where possible

Payment

US consumers mainly use credit cards, debit cards and PayPal to pay online. However, American Express, Discover Cards and local payment cards are also popular. Try to offer the widest range of payment options that you can.

Fulfilment: delivering your goods or service

In fulfilling your order:

Tax, customs fees and charges

Your goods will require proper documentation and will be subject to customs duty and sales tax on arrival.

Refer to the US International Trade Commission database to determine your duty rates.

If you know where your goods will enter the US, you can speak with a customs agent at the port of entry or hire a licensed customs broker. A broker can help you with federal procedures and submit information and payment on your behalf.

If you want to minimise the risk of issues when dealing with customs it helps to understand US customs rulings. You can use the Customs Rulings Online Search System (CROSS) to understand previous rulings of other businesses goods and services. Furthermore, if no rulings cover your products, you can receive an Advanced Customs Ruling to ensure consistency across ports of entry.

The US tax system is complex. While there is no Value Added Tax (VAT) in the US, many states levy their own sales tax – ‘economic nexus’ – payable where out-of-state businesses maintain a physical presence (or in some cases an inventory) in a state.

Consult the relevant state’s revenue agency through the Internal Revenue Service (IRS) for advice.

Further support

If you decide that e-commerce is right for you, consider talking to one of DBT’s E-Commerce Advisers.

Protecting intellectual property on e-commerce sites

Different e-commerce sites have different rules for protecting IP and enforcing against infringement. However, all must comply with the Digital Millennium Copyright Act, Trade Secret Act, Trademark Modernization Act, and other relevant legislation. Businesses are encouraged to obtain protection for their patents, trademarks, and designs in countries where they sell and manufacture, including on e-commerce platforms. Businesses can’t enforce against counterfeiting or piracy of their products if they haven’t registered their intellectual property.

In the US, registration is advised but not required for copyrighted works. Before registering for trademark protection in any country, businesses should check that what they are selling does not infringe an existing trademark in that country by checking the trademark registry.

Businesses should also regularly check that their copyrighted materials and trademarks are not being misused.

The UK Intellectual Property Office (IPO) has Intellectual Property Attachés around the world who can support UK SMEs wanting to protect their IP in other countries.

UK IPO also has business support resources for UK SMEs and provides a more extensive guide on International IP rights.

We strongly recommend you seek help from an IP attorney or other professional IP adviser if you have complex IP questions.

Reciprocal online IP toolkits provide more information about protecting your intellectual property in the USA and UK.

Consumer privacy

The Data Protection Act 2018 controls how your personal information is used by organisations, businesses or the government.

The Data Protection Act 2018 is the UK’s implementation of the General Data Protection Regulation (GDPR). Everyone responsible for using personal data must follow strict rules called ‘data protection principles.’

The UK GDPR contains rules on the transfer of personal data to receivers located outside the UK, which are separate controllers or processors and legally distinct from you. These rules apply to all transfers, no matter the size of transfer or how often you carry them out.

You may make a restricted transfer if the receiver is located in a third country or territory, or is an international organisation, or in a particular sector in a country or territory, covered by UK ‘adequacy regulations’.

UK adequacy regulations set out in law that the legal framework in that country, territory, or international organisation, or in a particular sector in a country or territory, has been assessed as providing ‘adequate’ protection for people’s rights and freedoms about their personal data.

The UK has adequacy regulations about the following countries and territories:

  • the European Economic Area (EEA) countries.
  • EU or EEA institutions, bodies, offices or agencies.
  • Andorra, Argentina, Faroe Islands, Guernsey, Gibraltar, Isle of Man, Israel, Jersey, New Zealand, The Republic of Korea (South Korea), Switzerland and Uruguay

In addition, the partial findings of adequacy about:

  • Japan – only covers private sector organisations
  • Canada – only covers data that is subject to Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA)

The UK government is working in partnership with a number of priority destinations which may be the subject of adequacy regulations in the future, including Australia, Brazil, Colombia, the Dubai International Financial Centre, India, Indonesia, Kenya, Singapore and the United States of America.

The regulation of consumer privacy and information rights in the UK is handled by Information Commissioners Office (ICO).

Find further advice on personal data transfers outside of the UK and the use of appropriate safeguards on the ICO website.

Cyber security

What is cyber security?

Cyber security is how individuals and organisations reduce the risk of becoming victims of cyber-attack.

Cyber security’s core function is to protect the devices we all use (smartphones, laptops, tablets and computers), and the services we access - both online and at work - from theft or damage. It’s also about preventing unauthorised access to the vast amounts of personal information we store on these devices, and online.

Cyber security is important because smartphones, computers and the internet are now such a fundamental part of modern life for businesses hoping to engage in e-commence. It’s more important than ever to take steps that can prevent cyber criminals getting hold of our accounts, data, and devices.

Where to get support?

The UK’s National Cyber Security Centre has extensive information and guides in order to help you protect your business from cyber security threats.

This includes information tailored for SMEs and their cyber security needs.

Help and support

Moving into any new market can feel like a leap into the unknown. But with the right help and support you can do it.

DBT’s great.gov.uk is your one-stop-shop for all things trade. Visit here first for advice on how to get started and for details of people who can help your business succeed.

Other resources include:

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