…that won’t break the bank.
In this article Ori Greenberg – CEO of Algopix, an automated market research tool for Online Sellers, Gabriel Grisham, eCommerce Sales at OFX, and Christoph Prokes of FBA Hero, a service designed to help launch your eCommerce business into Europe, cut through the complexity of international expansion.
Take the complexity out of Global eCommerce with these 5 easy steps:
- Step One: Quantify the Global Opportunity – Spend 10 minutes on Algopix.com, upload your SKU’s, and find out exactly what profit margins your products command across 10 different global marketplaces.
- Step Two: Create International Receiving Accounts – Forget flying to London to get a GBP bank account. Set up currency specific receiving accounts with OFX to avoid excessive bank fees and control your revenues. Because marketplaces and banks weren’t built to move money globally.
- Step Three: Register with the Appropriate Marketplaces – Register your account with Amazon (EFN or Pan-European Network) so your customers don’t have to wait for your products to arrive on a boat.
- Step Four: Register with a VAT Specialist – Get a VAT advisor like FBA Hero for European revenues. Because domestic taxes are hard enough, getting expert advice to help with the international side is probably a good idea.
- Step Five: Track, Adapt, and Thrive – Track, Adapt and Thrive. Grow your revenues (and profits), and buy that shiny new thing you’ve always wanted.
Businesses that sell online have a tremendous opportunity to capitalize on the explosive growth of eCommerce. For almost every seller looking to continue to grow and stay ahead of the competition, looking beyond local borders and selling internationally is an essential step.
Luckily, taking your business to international markets is easier than ever before. Reaching new customers, communicating with them, and getting your product(s) into their hands (quickly) – no matter where they live – is all possible from the device you are reading this on. Of course, expanding to international markets adds complexity. The good news is this isn’t uncharted territory. Unlike Magellan navigating strange waters or Lewis and Clark making a map as they went, you have a well paved road full of resources and solutions to guide you towards success.
Here is a five-step process (complete with recommended guides) for going global that not only won’t break the bank, they are so easy and inexpensive that just an hour of your time and the change in your pocket will get you well on your way to growing your sales globally.
Step One: Quantify the Global Opportunity
Benefit: Get price points and demand levels across multiple marketplaces with one click.
Cost: Free for single SKU searches; 14 day free trial for file upload batch queries.
As you consider entering new markets, you need to determine two critical data points – demand level and market price. The concept is simple. If the demand for an item is high and the price makes sense, it’s a good market. However, getting accurate information on international markets can be difficult, and flying to Europe to interview some focus groups is straight out of the 1980’s.
Solutions like Algopix are for today’s online sellers. The company makes market analysis easier than ever by providing worldwide product market information almost instantly. You can perform a single product search by SKU to receive actionable insights across all of the major markets around the world. If you are considering a large number of products, simply upload a CSV file. Within minutes you’ll receive a detailed report to help you understand what products have the highest demand, and where you can sell them to maximize profit. Algopix offers the single product search at no cost and has two monthly pricing options for sellers looking to analyze multiple products at a time. They also offer a free 14-day trial that gives you access to the entire platform.
Step Two: Create International Receiving Accounts
Benefit: Save time and money with efficient multi-currency revenue management.
Cost: Free to set up.
Amazon will send your money back to you in your home currency, but on their schedule and with no consideration given to what the exchange rate is. For US based sellers, this means that if the euro or pound takes a dive against the dollar, you get less money. Also, Amazon’s FX margins can be in excess of 3.5% (ouch). Alternatively, setting up your own bank accounts can be both time consuming as well as costly, and managing multiple bank accounts around the world is a headache in itself.
Another option is to set up an account with a professional currency exchange company like OFX so you can easily take control of the money you are earning overseas. OFX offers local receiving accounts in GBP, EUR, CAD, USD, HKD and AUD, all in one easy interface. There is no cost to set up an account and margins are 1.5% or less depending on volume. Contact OFX to learn more.
Step Three: Register with the Appropriate Marketplaces
Benefit: Reach consumers globally with relative ease.
Cost: Free to set it up, seller fees apply to all sales and vary by category.
Assuming the results of your marketplace analysis show promise, you need to register with the appropriate marketplaces. If you are already selling on Amazon or eBay, with a couple of clicks you can make your products available to international customers.
Amazon offers two services for non-EU companies to sell into Europe. European Fulfillment Network (EFN) stores goods in one location and ships throughout Europe. Alternatively, Pan-European Fulfillment stores goods in each country with an Amazon warehouse. Both solutions have advantages depending on what and where you are selling. If you aren’t sure which is right for you, consult with a VAT expert (Step 4) to discuss which solution is the best fit for your business.
Step Four: Register with a VAT Specialist
Benefit: Be tax compliant in the regions you sell in and have a professional calculate those refunds.
Cost: Free consultation
You do not need a business entity in either the UK or the EU to sell in those regions. However, you do need to register with the respective tax authorities to pay the Value Added Tax (VAT), also known in some countries as a “Goods and Service Tax” or GST. This amount is collected when goods arrive in the country for sale, but is passed on to consumers and included in the sales price you set on a marketplace. VAT rates vary by country but are generally around 20%.
You need a VAT number for every country that warehouses your goods and / or once you hit a certain sales volume in a specific country. This means you will need one or more VAT numbers depending on where you store your goods and how much you sell in other countries.
While this sounds complicated, rather than re-invent the wheel, simply consult with a VAT specialist. This will save you time and money, and ensure you are tax compliant throughout Europe.
FBA Hero is one such company that provides VAT registration filings. In addition, the company also provides assistance with translations and marketing campaigns for your products.
Request a free consultation with the following link:
Step Five: Track, Adapt, and Thrive
Benefit: More profits, beating your competition into submission, and winning at life.
Cost: Time and effort.
With these tools forming the foundation of your international business, you are ready to build that 100 story high rise with your penthouse at the top. Of course, success is not guaranteed, and you will need to analyze what is and is not working in different markets to zero in on the best opportunities.
Fortunately, the tools you now have at your disposal will make the process of going global and tracking progress feel like a smooth ride rather than an uphill battle.
Contact this articles contributors below:
Gabriel Grisham: Gabriel.Grisham@ofx.com
Ori Greenberg: firstname.lastname@example.org
Christoph Prokes: email@example.com
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.