The COVID-19 pandemic has been an unprecedented event that has been ongoing for more than two years now. There isn’t one country, economy or industry that hasn’t been touched by it and the ripple effects are expected to last for years, if not permanently. And while much of the focus is on the way the pandemic has affected people’s health, and rightly so, there is a whole other side of things, as mentioned, and that’s the economy.
To say the COVID-19 pandemic has sped up globalization seems like an understatement as you look at supply chains around the world. It has never been more obvious how connected people are in terms of selling goods internationally in an online market environment. Ecommerce has changed the way companies set up their business model and the way consumers shop. This isn’t just a trend; it is the new way of life moving forward.
Let’s peel back the layers and take a look at why it’s so important to be able to sell internationally, the difficulties that companies can encounter when selling online, such as logistics and pricing, and how currency exchange can make selling internationally even more trying.
Why Do Businesses Need to Enter into Ecommerce?
So, what’s the big deal about selling products online to a global consumer base? Think of it simply from a numbers standpoint; by reaching out to international markets, companies can grow their profits substantially. This is even more important if they are currently residing in a market that is saturated with similar products and services. Being able to branch out into markets
with less competition will prove incredibly wise and likely profitable.
Businesses no longer look at their country as a limiting factor where sales are concerned. Thanks to technology, companies can connect with people anywhere in the world. Global supply chains and a plethora of shipping options also make the logistics more streamlined, so that shipping products internationally isn’t the headache it once was.
Want to Be Competitive with Pricing? Get Online
For those companies that feel they have a competitive price and that they have what it takes to go head-to-toe with international companies, offering their goods online is a natural solution. Some countries excel and are known for particular products thanks to an abundance of parts, ingredients or sourced material in the country they reside in. So, why not let customers from around the world take advantage of the pricing model?
On the flip side, if companies haven’t considered how currency exchange, fees and shipping costs will affect the final price, then they are in for a bumpy road. It’s a fine line that businesses need to walk and balance as you want your goods to remain competitive in the global market.
Selling Internationally with Amazon? What to Know About Foreign Currency Exchange
Getting your products on the Amazon platform can help businesses with their quest to expand their customer base and globalize their sales. It’s a smart move and it can help them to be more competitive online in a global market. And while there are plenty of reasons to take this approach, businesses need to understand what the Amazon currency exchange looks like and why it may not be the best option.
There is no question that selling products online leaves a company exposed to currency movements. Sometimes they can work in the company’s favor and other times it will work against them. Using the best foreign currency Amazon alternatives, you can save up on that and also in some cases set up protection against price movements.
Companies are often quick to use the default setup in Amazon to exchange funds. This is called the Amazon Global Seller Program, and because it’s easy and available, it tends to be a popular choice. But is it the best option? Did you know that Amazon charges 4% on currency? While that may not sound like a huge percentage, once you start applying it to foreign currency sales, the total adds up. That is money that would have otherwise been part of the profits. So, what’s the solution?
You may be quick to jump to eBay as a solution, but again you will be dealing with currency exchange feeds that are very high. This is reflected in the item’s listing, bumping up the price of your item and making it less competitive for any international buyer.
Bank exchanges typically cost up to 5%, which is even more than Amazon. If you have foreign currency accounts, you won’t have that same fee.
A solution can be to set up a multi-currency account for receiving funds, use a currency broker for collection accounts abroad or maybe keep a multi-currency balance.
It’s wise to look into the multi-currency virtual bank account options, weighing the pros and cons of each. Pay close attention to such specifics as the minimum transfer amount (if applicable), which countries are included in the multi-currency bank accounts, and how easy it is to use the service. You should also look at whether there is a companion app, and what the foreign exchange margins are (FX margins). Keep in mind these are typically designed for online sellers and businesses, which can include those selling on Amazon and/or eBay.
It’s a Whole New Frontier for Consumers and Businesses
As you look at the way business is conducted today versus a couple of decades ago, the changes are truly shocking. It’s a trend that can’t be stopped and will only continue to grow, paving the way for more diversity, competition, and ease of shopping in an online environment.