United States-Selling and buying

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Published: 06 Oct 2008 17:39:26 PST

Distributing a product

Distribution network: It is the ultimate test market for exporters. The country is open to all kinds of new products and technologies, but geographically it is very spread out and there is an intense competition. This market is, however, very demanding and requires a considerable amount of preparation, groundwork and long-term consistency.
In 2004, total retail trade was valued at 3,296 billion euros, with a growth of 7.9%, the consumption level being the driving factor behind American retail growth.
Reaching the consumers: Market segmentation is drawn along various lines, including age groups, ethnic groups, even social and religious groups, which has forced distributors to adapt themselves to this situation. One of the most marked consequences of this absence of homogeneity is the emergence in the past few years of Specialty Stores such as (Home Depot, Best Buys etc) which currently represent 11% of retail sales. In fact, the American consumer is unique because of his demanding nature, the importance he attaches to price, and his product disloyalty. It is thus incumbent upon distributors to continuously adapt themselves to the market, and to engage in well-targeted marketing efforts in order to win the loyalty of the consumer. The majority of sales, however, are still achieved by large distribution chains:

- Wall Mart ( 4000 outlets)
- The Kroger Co.
- Sears Roebuck & Co (bought by Kmart).
- Safeway.
Selling to the firms: The American market is divided into economic regions and each region has its own distribution circuit.The market can be divided into 5 large geographical zones:
- The Northeast corridor centered around New York, Boston, Washington and Philadelphia,
- The South-Eastern zone centered around Miami, New Orleans and Atlanta,
- The Mid-West: Chicago, Detroit and Cleveland,
- The State of Texas: Houston and Dallas,
- The West in general and California in particular: Los Angeles and San Francisco.

The choice of a local distributor, be it an importer, a wholesaler, or an agent, is essential.
Distributors generally prefer to concentrate on a limited range of products within a small geographical area and once successful expand their market coverage. It is important to conduct documentary research in order to understand the financial situation, business references, and also the legal background.
Besides the contract that governs the distribution of products in the American market, the distributor must also guard himself against "product liability" risks that cover the responsibility of the manufacturer vis-à-vis the product as well as "trademarks" in order to ensure that its brand is not being used by a third party (see below the chapter on patents and brands).
Participation in professional exhibitions and trade fairs is strongly recommended as a first step towards exporting to this market. These exhibitions are organized according to product sector, and as far as the current trend goes, specialized regional exhibitions are preferred where visitors can personally make contact with their local distribution network.

Market access procedures

Commercial policy

Farm products are subject to both the FDA (Food and Drug Administration) and the USDA (US AGRICULTURAL DEPARTMENT) rules.
- Dairy products require an import license and quotas do exist. Products should conform to the strict sanitary and labeling rules. A description of ingredients is also required.
- Most fruits, vegetables and hazelnuts are subject to import licenses. The APHIS (Animal and Plant Health Inspection Service) analyses the risks of disease.
- Meat-based products can only be imported via ports with checking sanitary installations authorized by the USDA. The APHIS examines all goods.

Nearly 20% of all imports into the US are food and food products. In 2002, Congress passed the Bioterrorism Act as a part of its ongoing effort to fight terrorism. The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act) requires that FDA develops two systems: one to support the registration of facilities that manufacture, process, pack, or hold food products intended for consumption in the United States and one to receive prior notice before food is imported or offered for import into the United States, beginning on December 12, 2003. Prior notice must be submitted electronically at www.access.fda.gov.

Manufactured goods should also conform the American standards, which implies potential additional costs. Electric equipment should be systematically guaranteed by a third part. There are not less than 2,700 municipal or federal authorities able to distribute safety certifications, and they do vary from State to State. As there is no central source of information about the normative aspects, it is imperative to inquire beforehand with the help of an importer.
Whatever the nature of the product is, documentation is important, especially in terms of invoice and certificate of origin. The documentary formalities are notably very heavy for textiles import (above a part of 5 % in the composition of the textile product, all the products should be listed very precisely). The labeling rules can also generate important additional costs.
Finally the USA applies a certain number of embargoes, forbidding the import of products manufactured with components originating from the following countries: Cuba, Iran, Iraq, Libya, Sudan, Angola, Yugoslavia and Afghanistan.

Import procedures and custom duties

The duties for Canada and Mexico, bound by the agreement of the NAFTA, are non-existent, or very reduced and in any case, lower than the general rate. There is also a preferential rate for countries included in the Generalized System of Preference, which is to say most of the developing countries.

Import taxes (excluding consumer taxes)

Import tax (also known as an import duty or import tariff) is collected by US Customs on every import that comes into the US.

Import taxes are a source of income for the US Government and are a way to restrict or facilitate the import of certain commodities.

Identifying a supplier

Business directories: Yellow Pages White Pages
Domestic Trade Agencies and their representations abroad: U.S Chamber of Commerce
US Small Business Administration
National Business Association

Organizing goods transport

By sea: All coasts of the country have important, highly computerised ports, automated for a fast distribution of the goods (especially in containers), some of them offer a direct connection towards waterways. The main ports are Long Beach, New York, Boston, Oakland, Houston, Los Angeles, Miami, New Orleans, Charleston, Seattle, Portland.
By air: The domestic network is considerable. We would like to draw your attention on the fact that safety rules are very strict in the United States. When you check in your luggage, it is important that you answer all questions both precisely and honestly.
By road: The road network was some 6,500,000 million km long in 1999, of which 88,727 km were highways. The network in place for goods transportation is much wider than the one of travellers and concentrates on its own 30% of total goods transport. The future prospects for road investments are very good at the federal level, as well as at the state level. The question remains on hold for big conglomerations.
By rail: The railroad network extends over 315,000 km and transported 1,713 million tons/km in 1998. 40,000 km of railways are used to transport passengers. An important deregulation took place on the American railway freight market in the 80s, and since then, the part of total freight transport increased to more than 40%. Amtrak is the main railroad company. The organisation in charge of controlling the railway transport is the Federal Railroad Administration ( F.R.A).
The United States also shelters 3 million km of pipelines (oil pipelines and gas mainly).
Useful resources: Port of Charleston