How to cope with foreign exchange challenges

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How to cope with foreign exchange challenges
31 Dec 2014
Today we have some good and some bad news for those of you who wish to sell internationally. The bad news is that even though selling internationally is an indisputable source of additional revenue (even to the point of doubling your income), about 3% of this revenue is lost due to foreign currency exchange commission. However, the good news is that there are ways to cut this commission charge by half, meaning more of the net revenue from your international sales actually belongs to you. Here’s our explanation of how it works.

International revenue reduced by 3%

Let’s look at the situation for internet retailers in the UK market as an example. As you know, there is a platform that enables you to sell internationally in Germany, Italy, Spain, and Australia amongst other countries. In fact, for anywhere you are prepared to sell, the platform can offer a solution that enables you to immediately increase international sales and dominate international marketplaces with listings - as it helps foreign buyers to find your products by creating active localized listings in foreign marketplaces. This will push your listings to the top of foreign search results because they will be built with keywords and descriptions specific to foreign local marketplaces, thus increasing your international market share, and potentially generating millions in new revenue.

Of course this is an exciting new opportunity for your business. However, if you calculate how much more you would earn from selling internationally, you will soon figure out that it is not quite as good as you first imagined because when the money generated from international sales is transferred into your local GBP account, charges are applied through the exchange rate and these charges eat into your profits. As a result, you will end up receiving up to 3-4% less from your sales after it is converted into GBP.

The additional drawback relating to the exchange of foreign currency occurs when buying stock from abroad. Transfers made through a regular bank are subject to a 2-3% charge and high transfer costs. This means that when buying stock from abroad, you also end up paying more GBP which increases the cost price.

Disillusioned by these additional costs, you could be forgiven for believing that it doesn't make sense to sell internationally and therefore miss out on the potential these new markets offer your business.

However, this is where we come to the good news. There is a solution to the problem of foreign exchange. E-tailer Collection Accounts - multiple bank accounts located in the countries you sell in. This solution enables you to bring money home from online marketplaces in source currency without converting it and maximize your international sales proceeds.

Keeping your revenue as high as possible

For online retailers, WebInterpret and their partners such as Currencies Direct are the answer to the challenges you face when selling internationally. While Webinterpret enables you to sell wherever you desire, Currencies Direct helps by removing some of the challenges that exchanging foreign currencies present.

Sellers who decide to expand their online businesses by starting to sell internationally with Webinterpret, are now able to transfer their money back to their bank accounts in GBP with a commission rate of just 1-2% instead of the normal 4% taken by standard transfers made via the international marketplaces.

This, in turn, means that you are now able to offer products at lower, more competitive prices as you have the guarantee of a wholesale exchange rate and minimal transfer fees.

Seller Dynamics