Ecommerce Shopping Habits and Demographics in the United States

The age of online shoppers in America

As is true in many other markets, the most frequent ecommerce consumers in the U.S. are also among the youngest. According to Statista, about 20% of online shoppers in the U.S. are between the ages of 25 and 34. Shoppers between 35 and 44 account for another 17% of the market.

Older Americans do shop online, however:  Americans between 45 and 54 account for 15.5% of the market, and those between 55 and 64 and those over 65 account for 14.6% and 14.4%, respectively.

And how much are older Americans spending online? According to our most recent consumer attitudes survey, What Consumers Thought About Ecommerce, Fraud & CX in 2021, 47% of Americans over the age of 55 spend between $50 and $200 per month on online shopping; 30% spend over $200 per month. 

What (and how often) are people buying online?

Shopping online has become a habit. According to our survey, 52% of American consumers shop online once or twice a week. 

And they're buying just about everything: As of February 2021, ecommerce sales accounted for 69% of all book, music, and video sales, and 53% of all computer and consumer electronic sales in the U.S. The next two most popular categories for online shopping were toys and hobbies (about 45% of all sales) and office equipment and supplies (about 40%).

There are some categories in which ecommerce is still finding its feet, but growth is still taking place. In 2020, only 3.2% of food and beverage sales in the U.S. were online in 2020, as were less than 4% of automotive and auto parts sales. In 2021, ecommerce sales in each of those two segments now sits at 4.8%.

Key Benefits and Opportunities of Selling in (or into) the U.S.

The most obvious reason to do business in America is that the United States is the world’s largest economy, a position the country has held since 1871. In fact, the U.S. represents nearly a quarter of the global economy, thanks in part to its abundant natural resources, advanced technology and infrastructure, and large population.

Investopedia assessed the U.S. economy at $20.89 trillion in 2020, but that's not the only good reason to expand your ecommerce business into the United States.

First, internet penetration is excellent in the U.S. As of 2021, 90.8% of Americans were internet users. That number climbs to 99% among 18-29 year old consumers. 

 

While the vast majority of Americans are internet users, Americans do not all access the internet the same way. 15% of American adults do not use broadband at home but rely on smartphones for their internet access. Again, that number is higher in the 18-29 set: 28% of them don't use broadband at home. 

Even among broadband subscribers, mobile internet is commonplace in America, with an 83% penetration rate in 2021. 

Almost all American millennials (95%) own a smartphone, as do 83% of consumers aged 50 to 64. 

What does this mean for ecommerce stores operating in America? It means if you don't have your mobile commerce site or app in order now, get started.

Willingness to shop across borders

While America is known for its domestic ecommerce behemoths (especially Amazon), Americans are not averse to shopping beyond the borders of their own country to secure a deal or access products they can’t get at home. And as the pandemic brought them shopping online more frequently, they started to explore other options: From January to mid-June of 2020, total U.S. cross border ecommerce growth hit 10.2%

What do Americans like to purchase abroad? Top categories include automotive; vehicle parts and accessories; clothing, shoes, and accessories; home and garden products; sporting goods; and jewelry and watches.

 

 

The Challenges of Ecommerce
in America

Willingness to shop across borders

As one would expect, the world’s largest economy and second-largest market for ecommerce attracts the biggest players. The competition is fierce for ecommerce customers in the U.S., and new entrants into the market must go up against giants like Amazon, who, because of their sheer scale, can offer perks like free two- or one-day shipping, convenient returns, and low prices.

On the other hand, rather than launching their own sites, ecommerce merchants can choose to do business on existing marketplaces like Amazon or eBay. The pros of selling on Amazon include access to hundreds of millions of potential customers, a readymade storefront that allows customers to review your products, minimal costs for web hosting, and less worry about logistics and shipping.

The downside of selling on Amazon is the competition and lack of control. As an Amazon merchant, you will not be able to tailor the shopping experience to your customers' needs and your brand image.

Tax complications

In the federal system of the United States, each state determines its own system of sales tax. Some states have no sales tax at all. In the 45 states that do charge sales tax, rules, rates, and regulations vary.

For example, some states waive sales tax for groceries, while others do not. Some states tax shipping charges, while others do not.

This can be confusing to merchants that are accustomed to working in more centralized systems. We recommend you consult with an expert on U.S. taxes before entering the American market.

Difficult logistics

The United States is not only one of the largest countries in the world by population. By landmass, the U.S. is fourth largest in the world.

Much of the country is populated, although quite sparsely in some areas. This can present some logistical challenges, especially to companies that aren’t familiar with American geography. 

Ecommerce Fraud in the United States

Payment fraud is a global phenomenon. Card-not-present (CNP) fraud is especially on the rise, even as in-person fraud declines due to widespread adoption of payment card chip technology. Card-not-present fraud is expected to result in global losses of $130 billion between 2018 and 2023.

Naturally, the United States, with its wealthy residents and robust ecommerce economy, has become a prime target for online fraudsters, especially recently: U.S. ecommerce merchants reported a 140% increase in fraud attacks in 2020. 

Some reasons for rising CNP fraud rates in the U.S. include:

The frequency of data breaches is also skyrocketing worldwide including in the U.S.: The Facebook data breach alone leaked data on over 32 million users. 

Each new incident exposes payment card information for thousands or millions of consumers to the risk of fraud.  Fraudsters build off the information they gain in data breaches to instigate account takeover attacks, compromising other customer accounts.

Industries & Regional Markets With the Highest Level of Fraud Risk

Fraudsters prefer to target products they can resell easily. So, the product categories that are the highest risk for fraud in the U.S. tend to be high value, high demand, and small enough to ship easily and cheaply.

ClearSale internal data allows us to classify product categories into risk groups, which are broken down in the chart below:

ClearSale internal data indicates that the U.S. states with the highest risk of fraud are Florida, New York, and Michigan. Within Florida, most of the fraud is concentrated around Miami, due to the high presence of freight forwarders. In New York, the borough of Brooklyn has the highest fraud rate.

Government response to fraud

Despite the high and growing rate of CNP fraud in the United States, the U.S. government has not made combatting fraud a priority. There are currently no U.S. equivalents to the European Union’s Payment Services Directive 2 (PSD2), a regulation that, among other things, requires an additional layer of fraud protection on electronic purchases known as Strong Customer Authentication (SCA).

However, ecommerce merchants should be aware of the California Consumer Protection Act (CCPA). Put into effect on Jan. 1, 2020, CCPA grants California residents certain rights concerning the personal information they share with for-profit organizations online (get more specifics here).

The California Consumer Protection Act applies to any merchant that meets certain criteria for doing business in California. Consult with an expert to determine whether your business must comply with CCPA.

How to Prevent Fraud When Selling into the U.S.

Top payment methods

4 Options for Fraud Protection

1. Fraud filters

Typically, the first line of fraud defense for ecommerce merchants doing business in the U.S. market is the fraud filter. Fraud filters are provided by ecommerce platforms and are designed to identify potentially fraudulent orders and stop them from being processed.

Fraud filters can function a number of ways, such as by:

While these common filters can prevent a high amount of fraud, they may also stop even more legitimate transactions.

The Effective Fraud Solution for Ecommerce in the U.S. Is ClearSale

At ClearSale, our fraud managed services solution combines advanced statistical and artificial intelligence technology with the world’s largest team of specialized fraud analysts to deliver a balanced, real-world approach that is unlike anything else in the American ecommerce market.

With ClearSale, ecommerce merchants receive:

With our headquarters nearby in Latin America, ClearSale knows the American market.

If you’re thinking about expanding the reach of your ecommerce business into the United States of America, get in touch with us today to talk about keeping your business, your reputation, and your customers safe from fraud.