Coming to America is a John Landis-directed 1988 comedy starring Eddie Murphy as the wealthy heir to the throne from the fictional African country of Zamunda who comes to the US in search of a wife, and along the way struggles to deal with the unexpected realities of life in America. I know Eddie Murphy’s. I meet at least one a week. Unlike the ill-equipped Prince Akeem, these are my top three things that every aspiring company considering entry to the American market needs to know.
- Do not underestimate its bigness and the implications of its size. Respect it. No matter how big a CEO thinks the US is, or how well-versed she or he may be in its culture, one should not underestimate the sheer size of the US market system. I often hear the notion of hiring a sales rep, placing them in some state, and then expecting that they will be fishing in a stocked trout pond. Here are some facts worthy of contemplation.
- the US has the world’s largest GDP – almost $16 trillion annually.
- California alone, the largest state economically, equals the combined GDP of Australia, New Zealand and Hungary.
- The US has 52 metropolitan areas with over 1 million people – vastly more urban concentration than any country on earth.
- The US transportation and distribution network is startlingly huge. Worldwide it is #1 in airports, railway miles and roadway miles.
- Americans have choice, and competition is intense. Most offshore companies come from a local environment that, economically, operate as duopolies and oligopolies, i.e. few competitors who share the market among themselves. As a result, the extent of competition, and its corollary – choice – is typically vastly underestimated. A price difference of 1% compared to a competitor can mean the difference between profit and loss. I like to point out this detail:
- Amazon represents 1.3 million sellers who offer 2.8 million SKUs.
- Be prepared to pay the ante at the big gaming table. One does not have to bankroll millions of dollars to enter the US; however, attempting to sell across the entire US on a budget of, say, $100,000 is certain to fail. Firms need to consider these aspects:
- Unless you are selling Scottish salmon having a foreign website, and using foreign terminology, is not likely to fly with Americans
- You don’t have to conquer all 50 sates. Start in one or a few states. The GDP of the Vermont, the smallest US state economically, is still larger than the individual GDPs of 86 countries – almost half the world’s countries.
- Engage a distributor and other channels. They have ready access to markets that could otherwise take you years to develop.
- If you happen to be from Zamunda and want to engage in B2B sales, insisting that your sales contract require any disputes to be settled under the laws of Zamunda might give your local investors warm and fuzzies, but is certain to scare off most Americans.
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