International sales – newbie or seasoned pro?
Some e-tailers may even be enjoying the best of both worlds: continued selling in the EU while the UK is still a member, combined with a more competitive footing for non-EU trading, thanks to the weakness of Sterling against the US dollar in particular.
So, if you have been thinking about the United States as a possible market, or have been working on establishing your business there already, this could be the time to make that big push. The burden of order fulfilment may have put you off in the past, but if you are already selling on Amazon or eBay, both offer shipping and fulfilment services which can greatly ease the load.
So don’t delay – sell in the USA!
Here are five reasons why now is the time to act.
1. Fall in Sterling
The weaker pound will help you to sell your goods to the United States at a more competitive price point and bring in more revenue when repatriating US dollar sales. Sterling fell below $1.30 in the aftermath of the Brexit vote – and some economists are predicting that it could fall to parity with the dollar by the end of the year. If you are selling in dollars, you now have the option of pricing your products more competitively or taking the extra margin to cover increased delivery and fulfilment costs.
An additional benefit is that Sterling’s depreciation makes it more expensive for online retailers from the US (and other EU countries) to sell into the UK, so you may also see a reduction in competitors from these areas at home.
2. Size of market
Figures from eMarketer estimate retail ecommerce sales worldwide will reach $1.91 trillion in 2016, with sales in North America rising 15.6% to reach $423.34 billion. This growth is expected to continue, driven by increased spending from existing buyers, expansion into new categories such as grocery, and growing m-commerce sales.Some 197.6 million North Americans are expected to shop online in 2016.
Amazon is the leading e-retailer in the United States. The company’s sales in North America grew by 28% in Q2 of this year to over $17 billion (net), with sales of electronics and general merchandise increasing 31.6% to $14 billion.
Around 90% of US adult online shoppers say they are Amazon customers, according to Internet Retailer’s 2016 Online Shopping Survey. Of those, more than 59% say they or someone in their household are Prime members. The total number of Prime members in the US has been estimated at 63 million.
With regard to eBay, the gross value of merchandise sold on its US marketplace increased 2.6% to $33.44 billion in 2015 and the company has quoted some 47 million active visitors on their US sites.
3. Help with fulfilment
Amazon’s Fulfilment by Amazon (FBA) and eBay’s Global Shipping Programme (GSP) try to make life easier for international sellers by offering a seamless service to minimise the complications of operating internationally.
eBay claims that GSP is an easy way for business and private sellers to reach millions more overseas buyers with minimal changes to their current processes.
If you are a UK-based seller, you can send your sold items to a UK address and the international postage and customs paperwork (where applicable) will all be handled for you:
- International postage costs are shown on your listings and communicated to your buyers.
- Any customs or import charges applicable to non-EU buyers are included.
- Postage incorporates an international tracked service from the UK Shipping Centre to your buyer.
- Once your item has arrived safely at the UK Shipping Centre, you are protected from any delivery-related defects against your seller standard.
FBA is a service offered by Amazon to:
- Store your inventory in an Amazon fulfilment centre
- Pick, pack and ship orders to your customers
- Provide return management and 24/7 customer service for those orders, in the local language.
With the most sophisticated logistics network in the world, Amazon has totally changed the expectations of online shoppers in terms of delivery speed, cost and returns policy. The fact that this network and resource is available via FBA, means that third-party sellers have access to an extremely valuable tool, which delivers high levels of customer service while removing the fulfilment headache. That helps to remove two major headaches when selling into the United States.
FBA products are automatically enrolled in Amazon’s Prime programme, which includes free 2-day delivery. This is a real bonus for little-known sellers in a new market as it gives customers the reassurance they need to proceed to purchase.
Through FBA, you can offer multiple shipping options, fast delivery and an easy returns process - all you need to do is get your products to Amazon’s fulfilment centre.
Of course, additional charges apply with both FBA and GSP, and must be factored into your pricing.
4. A strong dollar to underpin pre-Christmas buying
Online retail sales in the US increased 20% between Black Friday and Christmas Eve, according to data released by MasterCard Advisors at the end of 2015.
That’s quite a surge and indicates the importance of this season to sellers.
Given the current strength of the dollar against the pound, this is a good time to start building sales in the US in the lead up to Christmas –particularly if you want to be established in the US market in time to reap the benefits of the Christmas trade.
That means building awareness, discoverability, having the right products available and enough inventory available at your fulfilment centre or warehouse to cope with the spike in demands over the Black Friday weekend – which is less than three months away.
5. Receive more of your dollar sales when you convert with Currencies Direct
Historically the high cost of currency conversion when repatriating funds has been a pain point for sellers exporting to the US. Amazon sellers lose up to 4% of their US dollar sales in foreign exchange charges if they allow their revenue to be automatically converted by the Amazon currency converter tool.
US dollar Collection Accounts were introduced by Currencies Direct to solve this problem. They give sellers the use of receiving bank accounts located in the United States. Once connected up to the sellers’ marketplace platforms the Collection Account will receive US dollar sales without converting them. When you do decide to convert the currency collected in your account, Currencies Direct will make the transfer at a cost of 1-2% of your sales proceeds - often cutting your foreign exchange costs in half or more.
This service has been available to Amazon sellers for over a year but US dollar Collection Accounts are now able to receive payments from PayPal. This exciting new addition to the Currencies Direct online seller service gives international sellers using eBay in the US more cost-effective way of repatriating their sales.
No time like the present
For the bold, Brexit needn’t be all doom and gloom. In the next few months at least there are opportunities to be had – and more reasons than ever to expand your US operations.
To save up to 75% when converting funds from PayPal and Amazon register for a Collection Account today. If you’re an existing Collection Account customer who would like to start collecting sales from PayPal, please contact your account manager for more guidance.