Best Practices for Amazon Sellers Learning to Manage Currencies from Global E-Commerce Marketplaces
So you’ve got your Amazon listings up and business is running well. Your optimizations are driving new orders and you ask yourself why you didn’t start your online business sooner.
Then you think about gaining access to new customers in new markets. It’s only natural to think first of the other English-speaking countries so you can easily replicate what you’re doing in the US in a marketplace serving a new audience.
In particular, expanding to Amazon Canada, Amazon UK, and Amazon Australia come to mind. And now, you need to consider some newer aspects of your business to manage. For instance, if you aren’t already transferring money from one currency to another, this can be one of the most stressful, complex, and expensive things to manage.
To help alleviate some of the anxiety, here are some principles to keep in mind.
Look past traditional big banking
While it may seem logical to ask your current domestic bank to help you convert money from marketplace proceeds, you likely will pay both transfer fees and added margin (usually added to the currency rate) for the privilege of making the exchange. There are several currency specialists including OFX who have unique products – like multi-currency accounts – designed to help you manage marketplace proceeds in multiple currencies.
Review the choices provided by the Amazon marketplaces you sell in
Many marketplaces have their own currency conversion capability that are readily available. Remember, currency is not their main concern and they will not give you a great rate on the conversion.
Some e-commerce marketplaces charge as much as 5% on top of the prevailing “wholesale,” “mid-market” or “interbank” rate. This is no bargain.
Most importantly, be sure to compare providers by asking them directly about fees or margins on each transfer and know exactly how much you will get in your preferred currency.
What is the “wholesale rate” and “mid-market rate” and what is a good rate?
The wholesale rate, mid-market rate or interbank rate are the rates banks use to exchange large amounts of currency with each other. Conversion tools use this rate to give you an indication of how the currency markets are moving.
Yet almost no one gets these rates. Instead, banks and currency exchange providers like OFX and add a fee or a reasonable margin on top of the rate. What matters is how much is added.
Generally speaking, if you are working with a company who specializes in currency exchange you may get a better rate than a bank or marketplace that provides the service because their clients ask for it – not because they specialize in it.
Get to know how currency markets work.
Don’t be intimidated by the prospect of continuously moving exchange rates. There are many factors that influence currency exchange rates, with the largest being interest rates and geo-political activity. Sometimes exchange rates move in your favor and sometimes they move away.
If you pay attention you can start to see trends. You can also turn to specialists like OFX to help you think about managing currency and controlling costs for recurring payments. By using a multi-currency account such as the OFX Global Currency Account, you can avoid a lot of currency exchange by receiving marketplace proceeds in any of seven currencies.
The best multi-currency accounts also allow you to hold balances and pay suppliers in different currencies so you can more easily manage your entire marketplace portfolio.
Rely on personal service when you need it.
When it comes to money, its normal to be concerned that your money will arrive securely at your intended recipient. Many online currency specialists have 24/7 customer support that can help you understand the details of your transfer and make sure everything is set up properly, regardless of which time zone you are in.
When you talk to the right person you can also receive insight and strategies to help you manage currencies based on what the experts are seeing. At OFX, there are OFXperts available 24/7 to speak with, who help marketplace sellers keep their online businesses running smoothly around the clock.
Managing a global business on marketplaces around the world is easy in some ways and hard in others. With the right tools and support you can streamline and simplify some of your business work-flows – especially managing marketplace proceeds in multiple currencies.
This guest article was written by Will Moffett from OFX. You can contact Will Moffet at will.moffett@ofx.com or (925) 209-1648
