Is the weak Euro affecting your business?
At the end of last week, one pound sterling was worth around €1.40. The uncertainty in the Eurozone, in particular concern about a possible Greek exit from the Euro has driven it down over the past few months.
I was in Belgium last week and it was noticeable just how much more I was getting for my pound. It certainly meant there was no skimping on the beer and frites.
But it’s not all upside for ecommerce. It might mean that when we’re buying things from the Eurozone that we’re getting better value but equally it means that pople buying from there will find that buying goods in sterling is that much more expensive.
Have you experienced any affects on your business as a result of the relatively weak Euro?
Its mighty inconvenient for sure as Europe is accounting for about 35% of turnover in the last month or two so I for one wish it would head back to the 1.2 region !
Yes and this is the reason why I applied for a Eurozone bank account this morning in order to receive Amazon’s disbursements in Euros. It’s painful to compare how many pounds we were getting back in November/December last year compared to now.
We’ll keep the Euros with the aim of exchanging them when the rate will be more favourable. Remember the parity 4-5 years ago? It might be worth sitting on that money for a while although it’s going to hurst cashflow. It also gives us an opportunity to start using FBA France and register with VAT there for example or to look for suppliers in the Eurozone.
Does anyone know if it’s possible to open a paypal account just for the purpose of receiving Euros? My understanding is that withdrawals will still be converted to GBP then back to EUR since the business’s registered address is the UK. I hope I am wrong.
The weakening Euro is certainly affecting businesses selling into Germany and France. We are seeing a reduction in Euro sales volumes from clients who sell into these markets. We have also noticed an increase in new enquiries from sellers who are looking to squeeze every penny, or should I say cent, out of their European sales. One of the easiest ways to do this is to avoid marketplace exchange rates. This is relatively easy with Amazon, but less so with eBay.
If you do use Amazon to sell into Europe, a bank account in the Eurozone is a must – it must be located in the Eurozone and not just a Euro account located in the UK or the USA. Your bank may be able to do this for you however the reality is that the process usually takes several months and the cost of doing it can wipe out the advantage. You can also go for a specialist e-tailer Collection Account which is your very own “client account” in the Eurozone, has no monthly fees and can be set up in a few days. This will knock out about half of the marketplace exchange cost (of circa 4% of sales) instantly and will also enable you to keep currency in the account until you want to move it back at your convenience. You should be able to pay VAT out from the Euro’s collected.
Unfortunately it is not easy to pull money out of Paypal in similar way without initially having your eBay listings generated via an overseas company (which you will need to establish). You will also need an additional Paypal account set up for the company and also a local bank account to ultimately collect your money into.
There maybe light at the end of the tunnel for Euro sellers. The recent weakening of the Euro is mainly driven by a swathe of negative sentiment and uncertainty in Europe – mainly the recent effects of quantitative easing in Europe and the potential of Greece defaulting on its debt. We could see a move back downwards once the situation blows over. We could also see 1.40 if the sentiment worsens. My advice is to avoid trying to second guess exchange rates and instead consider reviewing your pricing in overseas markets0 and other markets. As the GBP/EUR gets higher it may make your pricing (especially automatic international listings) increase which in turn will affect your sales. If you drop prices, you may make less profit…..but you will be selling and keeping stock moving and protect turnover numbers. GBP/USD is conversely moving downwards which means that sales into the US are more and more lucrative for UK sellers. It might be worth expanding US sales activity whilst you wait to see what happens in Europe.
Please feel free to get in touch in case I can help further.
Head of E-commerce, Currencies Direct
It’s great for us, we buy container loads of stock from Germany and sell it in the UK, hope it reaches 1.50+.