While online shopping has been growing for decades and brick and mortars from Macy’s to Best Buy, fear losing their foot-trafficked business, the current moment for e-commerce is like nothing they’ve seen before. Thanks in part to the new normal, social distancing, and the temporary shuttering of most non-essential businesses, e-commerce has been provided the ultimate catalyst.
The growth of e-commerce falls against the backdrop of widespread talk of a global recession and GDPs sliding. The US is bracing itself for a contraction of around 5 percent for 2020, while China can anticipate anemic growth of 1.8 percent. (The 1.8 percent growth rate is the country’s slowest since 1976).
If estimates for e-commerce are to be believed, online retail will grow to a $6.5 trillion industry by 2023. Even now, US online retail growth is up 68 percent in year over year mid-April comparisons. Yes, there will be winners no and losers to be sure. Disposable gloves, bread machines, and cold and cough products have seen a 300-500+ percent surge in March 2020 vs. March 2019 sales. Conversely, purchasing of suitcases, luggage, men’s swimwear, and bridal clothing have witnessed sales drops of 63-77 percent.
But on balance, if you’re a small or medium-sized business with an online component or an SMB who is considering becoming one, now is the pivotal moment.
However, if your business elects to go that route, caution in one crucial area is advised: international currency volatility.
Pacify Global Payment Pains
It’s a reality that makes international commerce a challenge. That’s true, especially now as volatility is higher than usual. As of this article’s publication, global currencies are rallying against the dollar as positive new emerges for vaccine progress. Conversely, a strong dollar (which has been the case throughout the COVID-19/coronavirus pandemic) while beneficial for Americans’ purchasing power abroad, also makes US goods more expensive overseas.
Regardless of a strong dollar or a weak dollar, the conundrum is that when SMBs sell online, they’re required to transact in the country currency they’re selling in. To do that, banks will charge up to 5 percent (or more) to complete the currency conversion. Amazon, too, and other e-commerce platforms, will likewise charge a similar amount.
Considering some 17 percent of Amazon sellers made more than $500,000 per year, and 1 percent generated more than $1 million, significant dollars are at stake. And this is just one online selling platform. eBay, Walmart, and Rakuten offer similar international e-commerce currency conversion rates.
For a SMB to maximize profits overseas, SMBs require three essential tools:
- The ability to track and manage their international transactions in real-time
- The need to reduce their currency conversion costs to the lowest possible percent
- Instant access (and alerts) to currency volatility trends to know when to make a purchase or complete a payment
Worldesk is just such a tool. The Worldesk platform helps business owners and executives navigate a volatile international marketplace with full transparency and the tools they need to save money, reduce exposure, and safeguard profit margins.
If you are selling on Amazon, Rakuten, eBay, or other marketplaces, Worldesk meets the policies and standards for international collections. Through a unique currency account, Worldesk ensures that your marketplace funds are accounted for and converted at an exchange rate far below the competition. In addition, Worldesk has built-in ways to manage currency conversion and help you increase critical profit margins.
Avoid exorbitant fees and volatile currency markets once and for all. Take advantage of a simple and intuitive approach that gives your online business the clarity it needs to succeed globally.
Beyond the Benjamins
Of course, seamless currency conversion is only one part of the equation. Selling your products abroad begins with making those products enticing to buy.
As online and e-commerce businesses embrace this coming of age moment, take this opportunity to ensure your desktop and mobile website are up to par, review your calls to action, and make sure your company story makes sense. Check loading times and consider an inventory upgrade that shifts from luxury products to must-have essentials.
Combined with smart financial planning and currency management e-commerce, and brick-and-mortars with a robust online presence will emerge from the COVID-19 crisis stronger than ever – immune from future international shocks.