Bring your overseas sales home in time for Christmas (and in one piece!)
Currencies Direct October 27th 2015 - 3 minute read
You’ve decided to maximise your potential sales this Christmas and try selling your product lines in a new overseas market.
When you’ve done the research, translated your listings, and have the logistics in place to deliver the goods, you’re close to letting the sales roll in and the profits stack up. But selling to customers in a foreign country means you have to receive payments in foreign currency – and this is an issue that you’ll want to consider if you want your international sales to make the biggest possible impact on your bottom line.
When you’re selling through international marketplaces like Amazon or Rakuten, there are three ways that you’ll be able to convert your foreign sales into the home currency you’ll need to pay your staff, buy more stock, invest in marketing activities and reward yourself with a glass of mulled wine and a mince pie!
- Let your marketplace take care of the conversion process
If you connect your international marketplace to your home bank account, the marketplace will automatically convert the funds in foreign currency to your local currency. Amazon does this through the Amazon Currency Converter for Sellers.
- Arrangement is already in place – you receive payments as scheduled (usually every two weeks)
- Marketplace conversion fees are notoriously high: You’re usually charged 4% of your total sales amount – and that’s on top of the standard commission fees
- You have no control over when conversions take place – the process is automated each time you make a sale
- Open your own overseas bank account and receive the foreign currency
If you don’t want to hand a significant portion of your sales to your marketplace, ideally you’d open an overseas bank account in each of the countries you sell to, where you can collect sales in foreign currency and don’t have to worry about currency conversion. However, if you have no outgoing payments in that foreign currency you may eventually still need to convert it back to your own home currency. At this point your bank will be able to charge you fees.
- Useful if you’re able to spend money in foreign currency without converting it (for example, paying overseas suppliers)
- Avoid marketplace conversion
- The power to choose when you convert funds lets you get take advantage of a favourable trend in exchange rates
- Opening overseas accounts is often a very expensive and time-consuming process
- You’ll need extensive documentation, and in some cases proof of residency is required
- You’ll still be charged by your bank when you convert currency to your domestic bank account, often at a cost of around 3 – 4% of your total sales amount
- Use a specialist international e-tailer bank account
Foreign exchange providers with specialist services for online retailers can provide overseas bank accounts, and without the hassle of setting them up yourself. You can use this segregated receiving account to collect your foreign sales direct from the international marketplace, then hold your takings in the foreign currency.
When you decide to convert the funds to your home currency, you’ll get a far more competitive rate than you would from your marketplace or your bank.
- 1-2% conversion cost saves you at least half of your transfer costs, compared to using your bank or marketplace
- Opening an account is quick and simple – your new account can be up and running in less than a week
- You can collect funds in the receiving account before converting them to your home currency – giving you the control over when you convert your funds and allowing you to take advantage of a favourable exchnage rate
- The account is yours and yours alone – it’s used only for your funds, and your money is completely secure
- An online platform to manage your payments 24/7 and a dedicated team of currency experts if you have any queries
Poorly managed currency conversions could have a significant impact on your ability to compete in overseas markets this holiday season. For more information about the foreign exchange strategies that can give you an edge, take a look at our other Christmas sales articles:
Or get in touch with the friendly experts on our e-tailer team: email email@example.com or call +44 (0) 20 7847 9269.