Six ways SME online sellers can maintain profits during Black Friday and Cyber Monday

Two of the world’s biggest retail sales events – Black Friday (23 November) and Cyber Monday (26 November) – kick off the busiest shopping season for online sellers and their customers. A falling Australian dollar, however, presents a serious challenge to SME online sellers in maintain a strong profit margin during these busy sales events.

To make the most out of this busy selling season, here are six tactics to help online retailers avoid losing thousands of dollars on unfavourable foreign exchange rates and fees.

1. Budget for exchange rates. For the rest of the year, the AUD is expected to bounce between US$0.70 and $US0.75. When operating overseas during this period, and well into the new year, it is essential that online sellers monitor exchange rates and factor currency changes into their budget and profit forecasts. This will enable them to determine the discounts they can offer on Black Friday and Cyber Monday.

2. Pay overseas suppliers in the local currency. Before exchanging overseas profits from Black Friday and Cyber Monday back into AUD, online sellers should first pay overseas suppliers in their currency and their countries. By using the local currency to pay suppliers, Australian sellers can avoid losing money on two exchanges. The best way to do this is through an international virtual receiving account, which allows online sellers to receive profits from the sales events in various currencies – such as the US dollar, pound, euro or yuan – then pay suppliers in that same currency, without having to exchange it back first. It is advisable to find a money transfer provider that offers no start-up fees, monthly charges or fees for receiving money.

3. Repatriate earnings when our dollar is lowest. To ensure the widest profit margin on high-volume events like Black Friday and Cyber Monday, online sellers should repatriate their overseas earnings back to Australia when our dollar is low against the other currency. Unlike directing earnings straight to an Australian bank account, online sellers can repatriate earnings at a time that suits them when our dollar is low, with a virtual receiving account.

4. Take advantage of overseas marketplaces. To take advantage of the other markets this busy shopping season, retailers should consider selling on international marketplaces, such as Amazon US. To do this they will need to set up a US bank account, which requires a US ID card, or open a US receiving account with an international money transfer service. WorldFirst allows its account holders to receive funds from multiple marketplaces and platforms, including Amazon, eBay, Trade Me and Shopify.

5. Fix or hold exchange rates. Online sellers that want to avoid the uncertainty of volatile foreign exchange markets over Black Friday and Cyber Monday can look to fix exchange rates for a set period of time. Some money transfer services allow businesses to lock in a future transfer for up to two years at a specific rate. This can lower risks if the AUD drops further against the world’s major currencies, but it can also prevent a business from taking advantage of favourable currency movements in the future.

6. Avoid the banks. Choosing their bank over specialised money transfer providers could cost online sellers $180-$200 more for every $5000 AUD to USD transfer. While banks often impose a heavy margin above the actual exchange rate, in addition to added transfer fees, fee-free services such as WorldFirst offer exchange rates that are up to seven times cheaper than the big four banks.

Patrick Liddy, Head of Foreign Exchange, WorldFirst

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