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Last Updated on May 16, 2019 by Work In My Pajamas
Whether selling on Amazon is a full-time job or a part-time side-hustle, exploiting the global market by selling overseas is crucial to maximise sales. It is almost too easy these days to find a buyer, with Amazon’s global customer base at over 300 million and growing. Other than increasing your revenue, selling overseas can be a great way to grow your company’s brand, and it may mean there are more opportunities to spot undersupplied markets.
Often you will find that inventions, or fashion trends, will hit some markets later than others. The market for e-cigarettes is vastly bigger in USA than anywhere else, and some countries’ demand came later on as a result of its American success in the mainstream. This I’m sure would have been exploited by American vape companies, to sell to countries where the market was still infant. Additionally though, in the example of running a vape business in the UK, the new restrictive legislation has damaged vaping demand, meaning UK companies would now have to look to other markets for sales. This is why overseas selling on Amazon can be absolutely vital for success.
In This Post:
Potential issues with Amazon overseas
For all the opportunities when selling abroad though, there are some potential problems you can run in to. Here are some of the key issues to be aware of:
Shipping
Shipping overseas can be a bit of a pain. Shipping with proof of delivery is expensive even domestically, let alone across the globe. An example of how exorbitant international delivery can be is PostNL’s international prices – the biggest delivery provider in The Netherlands. To send a parcel of 11kg outside of the EU from Holland will set you back €105. No, really.
Customers also may not be best pleased with the amount of time their delivery takes, and this can limit the amount of 5 star reviews you receive. Lengthy and drawn-out returns can also create cash flow problems for you, particularly when just getting started.
Suspension
Suspension can sometimes be out of your control when dealing with Amazon, it only takes a 5 minute Google to hear the horror stories. But the key thing to bear in mind here is that a suspension in one marketplace may mean a suspension in all marketplaces. If you get a string of poor feedback on Amazon India, know that the consequences can affect all of your Amazon marketplaces.
Domestic prices
Selling to other countries may mean you have to price your product differently. A few quick eBay or Amazon searches can gain you a quick understand the domestic prices of a countries. Sometimes though, these prices will be too competitive for you. Particularly in developing countries with cheap raw materials, prices will be much lower than in the US or central Europe.
Currency
When selling abroad through the Amazon Global Seller Program, payments from foreign currency are handled through Amazon. Amazon’s currency exchange automatically has a markup of 4%, which directly takes a huge hit to your profits. Given the fee is inflicted on the lump sale price, not your profit margin, this could rack up to thousands in exchange fees. When conducting business in a market that has already-tight margins, for example selling phone cases or printed t-shirts, then the 4% markup could potentially render your business unprofitable.
How to hedge against these issues
When selling abroad, it might be wise to not rely on one shipping provider. From the above example, PostNL may be an incredibly established and reliable way to send parcels to neighbouring EU countries, but cheaper alternatives can be found depending on what country you are selling to.
It may be that you cannot find a delivery provider cheap enough to deal with a certain country – this is fine, considering the sheer amount of market opportunities that still remain. The same attitude should be taken towards countries with very low domestic prices, too. However, there may be plenty of opportunities to raise prices in expensive countries. Changing delivery location on eBay can easily be done to browse what the buyers in any given country are presented with.
Despite it being the most damaging problem, it is unreasonable to pay Amazon’s 4% foreign exchange markup. There are alternatives that are offering overseas collection accounts for online sellers with much lower markups. These alternatives are essentially services where you can open collection accounts abroad, and they handle the transfer of funds on your behalf.
Foreign exchange markups can be mitigated almost entirely, with some companies offering as low as 0.5% markups. To give some perspective here, a turnover of $50,000 overseas will mean $2,000 in annual fees. With a provider offering a markup of 0.5%, you would save $1,500 per year in unnecessary fees.
With the problems that abroad selling can pose, most can be mitigated and its opportunities tend to outweigh the negatives. Whether it is general business awareness, such as having a cash flow buffer to account for lengthy overseas returns, or making use of alternative companies that provide more competitive services, such as opening collection accounts or finding a more relevant courier service.
