Expanding to North America: market specificity & local payment culture
Business developers struggle to identify “the next big thing”. Companies are constantly looking for new business opportunities to sustain long-term growth in an increasingly competitive environment. And finding ways to boost revenue is at the cornerstone of any successful organisation.
One of the ways to develop a business and increase its revenue is the expansion to new markets. The North American one is on our radar today. This article is intended to help business owners identify potential North American market opportunities and assess how various products and segments will perform in the future.
North American region overview & market trends
Trend #1. D2C sales
D2C or Direct-to-Consumer sales mean selling products directly from manufacturers to consumers. This method replaces the usual B2B and B2C that the Americans and the entire global retail got used to. Brands are increasingly abandoning the “intermediary” of retailers, distributors, and wholesalers. Now they tend to develop their independent sales and distribution channels.
Marketplaces have primarily contributed to the development of D2C sales. But today, more brands refuse to utilise marketplaces as a sales channel. For instance, Nike stopped working with Amazon in November 2019 to develop its own online store, explaining this by the desire for better customer service. Adjusting to the consumers’ behavioural transformations, D2C companies create their own online stores and sometimes even open offline ones.
At the same time, traditional retailers and online stores have advantages that D2C companies often lack. Firstly, retailers generally know their customers better and have more sales experience compared to manufacturers. Secondly, retailers have the infrastructure for acquiring, distributing, and selling a wide range of goods and services. With the rise of the production pace, independent brands will also need warehousing and logistics — the integral parts of retail, requiring a lot of experience to manage them.
Trend #2. Marketplaces are ousting department stores
Amazon dominates the North American market — it holds a 49.1% share of e-commerce sales. The nimble growth of e-commerce has had an almost devastating effect on offline shopping: some commentators have dubbed it a “retail apocalypse”. Analysts believe that the boom resulted from the increasing number of Internet-savvy shoppers, the world’s most extensive base of technical experts, and the coronavirus pandemic restrictions influence.
The retail department store model in the region is considered to be the most accurate barometer of middle-class wealth. In 2019-2020, in the United States, the largest department store chains, including Nordstrom, Macy’s, Kohl’s, and others closed hundreds of their outlets. Department stores fall prey to several processes at once. First of all, their customers, like visitors of other offline stores, are taken away by marketplaces and online stores.
However, the retail format is transforming. Some department stores are beefing up their delivery opportunities and implementing contactless payments, attempting to adapt to digital innovations and trends.
Trend #3. Tech innovations are changing the game
New technologies are the most prominent and substantial influencers on retail. American markets adapt to technological innovations in retail slowlier than the APAC market, for instance. But the need to bring shoppers back to physical stores and the drive to increase business profitability are forcing major market players to turn to innovative solutions. Stores have started implementing innovative digital technologies, including VR & AR, voice search assistants, 3D printing, online preordering, and self-service stores.
North American market payment culture
The popularity of local payment methods in the North American market is growing. Cap Gemini’s 2019 World Payments Report predicted a 5% growth rate for digital transactions in North America over the next five years.
Here’s a brief overview of the current situation.
- The most substantial presence on the e-commerce market still belongs to credit cards (59% share).
- The second popular payment method is e-wallets — they make up 22% market share.
- The rest transactions usually happen via bank transfers — about 8%, cash — 5%, and other minor payment methods 6%.
Why expand to North America?
There is a range of reasons to target your business to the North American audience:
- the largest market in the world;
- the most dynamic and extensive;
- the market is open and receptive to innovation;
- success in the American market is the key to success in the world;
- currency advantage.
What it takes to enter the US market
Product. Having a product that is already on sale and has at least some customer base is good. But possessing a killer value proposition is perfect. If you have not yet started selling your product in any other country, you do not know whether it will be in demand in America. This circumstance also affects the process of obtaining investments needed to enter the market. It will be much harder to receive funds if the project has not yet proven itself. Investors do not give money to unverified projects.
Presence. It is tough to control your business performance remotely. Visiting your local office from time to time is useless and sometimes impossible due to ever-changing pandemic restrictions. You need to actively negotiate with partners, attend events, and study the characteristics of your audience. To enter the North American market, you need to be well versed in it. And for this, you or your authorised representative need to be present in the country all the time. A perfect combination is your company representative, who knows your project inside out and a person who understands the local audience. Cultural proximity and presence in the same time zone will definitely help.
Networking. People should know about your product. Publications about your company should appear in industrial media. A thought-out PR campaign, connections with bloggers, magazines, and events will work in favour of your business. Network-based North American business culture requires creating an information field around your company and gaining brand awareness.
Budget. You will need funds to hire PR and marketing specialists, travel to events, and grow connections. It is almost impossible to unwind without this.
How we can help
As a responsible business owner, you must have weighed all pros and cons before deciding to expand your business. So, you choose to enter the North American market. The main advantage for successful performance is a complex formula: high-quality product, thought-out marketing strategy and brand awareness, top-class customer service, etc. An essential point is the ability of your customers to pay online with the preferred method securely and hassle-freely. And that’s where we get you covered! Corefy allows you to connect all the necessary payment and payout methods in several clicks. Contact us to find out more and choose the most relevant payment strategy for your business.