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How to Increase Profitability by Selling Globally on Amazon
Jason Magee, Head of Partnership Sales, US at World First
Jeff Cohen, Head of Business Development at Seller Labs
Who is Seller Labs?Ranked first by Atlan10 as Atlanta’s most innovative young tech start-up of 2015, Seller Labs understands what it takes to grow a business in the evolving world of Amazon. Built upon a foundation of technological innovation, customer success and education, we strive to help sellers “Be Famous on Amazon.”
Our software application Feedback Genius provides sellers with an automated Amazon seller feedback and product review solicitation solution. It is considered the most robust and stable software application of its kind in the industry.
Snagshout.com provides sellers with a reliable platform to launch products on Amazon and to improve their product reviews. With more than 150,000 shoppers using the site, there’s no doubt as to why Snagshout has become the premier Amazon deals destination.
Who is World First?World First is an award-winning international payments company. We help tens of thousands of individuals and businesses to transfer money around the world quickly, securely and at competitive exchange rates.
We specialize in currency management for international marketplace sellers, helping them to collect payments in foreign currencies from marketplaces and transfer their revenues home.
More specifically, we offer in-country receiving accounts for merchants selling on marketplaces in other countries such as Amazon, eBay, Rakuten, etc.. We save clients money and give them more control.
Topics Covered Today• How Brexit is Affecting International Sellers
• Taking Advantage of the International Landscape
• How to Increase Profits While Reducing Fees
• Protecting Yourself Against Currency Fluctuations
• Price Your Products to Maximize Profitability
How Brexit is Affecting International Sellers
What happened? • The UK has been a member of the European Union since 1973 (a collective of
28 European countries created to establish a free trade zone)• Eliminating hurdles to trading and traveling between countries
• The UK launched a referendum to vote on whether they should stay or leave the EU and the vote passed to have the UK leave the EU in 2 years time
Fluctuation In currency • During June, the GBPUSD rate dropped from about 1.50 to 1.29 → This means
that £1 was worth $1.50 and then £1 devalued to only be worth $1.29 – that’s a 14% drop!
Uncertainty on relationship with EU • The UK will have to renegotiate their trade relationships with the EU → VAT
could change, other fees, etc.
How Brexit is affecting international sellers
GBPUSD over the past month
Brexit
What does this mean for you? • VAT and other fees could potentially change• FBA – Currently on the Pan European FBA program you can use Amazon’
s UK warehouse to ship to the EU. This isn’t likely to change. Tax regulations may change but this is more Amazon’s problem
• Other regulations could be established making it tougher to sell in the UK and do business with it’s neighbouring countries in Europe
• Yes, it is less profitable to sell there right now BUT… DON’T PANIC!
Why still sell there? • Stability will come back • Right now is business as usual, it will take two years for the UK to leave
the EU• Do what others are not willing to do • Still a very easy place to expand – same language and buying behavior• Focus on growing a global brand – this is the second biggest market for
ecommerce outside the US!
How Brexit is Affecting International Sellers
Taking Advantage of the International Landscape
• Internet Retailer says there’s $3.1 billion of sales up for grabs in Amazon’s European markets.
• Almost 50% of all sales on Amazon from outside the USA*.
• Less competition! Selling in Europe means that you could have anywhere between 50% and 100% less competition*.
• Reach new markets – some of which get up to five million visitors per day.
Amazon operates 11 online marketplaces worldwide
Taking Advantage of the International Landscape
Opportunities
• Slow domestic growth – Factors such as market saturation can cause growth to level off.
• Seasonality – Don’t limit yourself to seasonality of one country. It’s always summer somewhere else!
• Competition – Strong domestic competition can put a strain on your margins.
• Diversify risk – Selling in one country leaves you vulnerable to its economic climate and limited to one group of buyers.
In a global merchant survey, nearly 80% of respondents agreed that selling their products
or services overseas is profitable1.
1Payvision global survey
Taking Advantage of the International Landscape
80%
Why sell globally?
How to Increase Profits While Reducing Fees
• When selling in another country sales are generated in a foreign currency.
• Amazon owes sellers revenue and if those sellers are not based in that country then the currency needs to be exchanged.
• What Amazon doesn’t tell you is they take a percentage out of the exchange rate. This fee is typically 3.75%!!
• What most sellers don’t know is you don’t have to use Amazons Currency Converter Service (ACCS).
How to Increase Profits While Reducing Fees
Transferring your revenue back home
*saving calculated by mystery shop data obtained on 08/10/15
If you were sending monthly sales of £20,000 back to the US, you could
save up to $600* using World First compared to a typical bank wire transfer. That’s $7,200 over a year.
Alternatives to using ACCS
• Set up a physical bank account in that country
➢ Typically expensive➢ Most accounts have to be opened in-person➢ Most often have to register your business there➢ Ongoing fees involved
• Have a company set up a receiving account designed to bring Amazon revenue home in the country you are selling in
➢ Offer much better rates of exchange➢ Sellers have full control over when they transfer
How to Increase Profits While Reducing Fees
How to Increase Profits While Reducing Fees
How does it work?
Sign up for World First and get your receiving bank account details in the countries into which you are selling
Go into your Seller Central Account and upload your new bank account details
The marketplace deposits your revenue into this new account
You tell World First when to bring your money home at a much more competitive exchange rate
1
2
3
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Sell on marketplaces - business as usual
Protecting Yourself Against Currency Fluctuations
Forward Contracts• Lock in your rate ahead of time… up to 3 years!• You can do a flexible forward contact where you draw down on an amount as
needed
Protecting Yourself Against Currency Fluctuations
Rate Alerts• Get a notification when a target rate was hit➢ Via email or SMS (Text)
Firm Orders• Automatically trigger a payment if a certain rate is achieved
Keeping an eye on the market• Have someone be your eyes and ears on the market so you are freed up
to work on your business
Hedged vs. Unhedged
Hedged vs. Unhedged
Price Your Products to Maximize Profitability
You should be aware of how your goods are priced in that marketplace both in terms of competition and expected revenue considering exchange rates.
• Work out the most competitive and the highest price you’re prepared to sell at
• Make sure you’re aware of how fluctuating exchange rates could affect you
Exchange rates are constantly fluctuating. Having a good pricing strategy is important and could be the difference between being competitive and pricing yourself out of the market.
Global Repricers can help!
Price Your Products to Maximize Profitability
Pricing your goods abroad
Let’s say that the Euro strengthened 3% compared to the dollar. This means that your profit margin has increased 3% for every product you sell!
Ways to consider how you are pricing your goods:
• Leave your prices the same and see an automatic 3% increase in your profit margin
• You could reduce the cost of your item up to 3% and still see the exact same profit margin ➢ That price reduction could win you the coveted buybox! ➢ Could lead to more sales due to a lower price
Price Your Products to Maximize Profitability
Example:
You Asked About…
• VAT ➢ Value Added Tax: a type of consumption tax that is placed on products sold in the UK and Europe.
It’s your duty to pay!➢ Percentage varies country by country – hover around 20%➢ Distance Selling Thresholds – you owe VAT once you hit a certain volume➢ You can register for this yourself or use a third-party service
• EORI ➢ Economic Operator Registration Identifier – AKA import number → A MUST HAVE➢ Very easy to apply for and it doesn’t take long BUT you have to have a pending shipment going to
Europe in order for them to issue this
• Transportation➢ There are two main ways to get your goods there
➢ Courier service: E.g. DHL, FedEx, etc. - usually preferred when shipping lower quantities➢ Freight Forwarder: E.g. Samuel Shapiro & CO – better when you are shipping at least a pallet
• Customs and Brokerage➢ You need to clear customs and there are fees associated with this➢ Some couriers and freight forwarders can handle this but if not you need a customs broker
Taking Advantage of the International Landscape
World First will offer any online merchants an unbiased, FREE audit of their foreign
exchange exposure.
+1 (737) 226 [email protected]/worldfirst
Inquire here:
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QUESTIONS?
World First will offer any online merchants an unbiased, FREE audit of their foreign
exchange exposure.
+1 (737) 226 [email protected]/worldfirst
Inquire here:
Jason MageeHead of eCommerce Partnerships
+1 (737) 226 [email protected]
Learn More
Jeff CohenHead of Business Development
+1 (773) [email protected]
