Read the source article by The International Trade Administration (ITA) here.
When it comes to exporting, few things matter more than ensuring you set the right price and remain competitive. In this article, we’ll discuss some key pricing considerations; the full cost of doing business online; and how to ride the ups and downs of currency fluctuations.
Using eCommerce to reach new customers overseas can be a tempting strategy – but tread carefully. For example, what are your product’s full landing costs? How much do competitor products sell for?
You should also consider the impact of a fluctuating dollar. Depending which way it goes, it could mean your customers are paying much more, or much less, for your product than they did before.
Here are some steps you can take to address problems caused by currency fluctuations and retain international customers.
Find ways to help global customers
A stronger dollar means people are paying more for your product or service, especially in Japan and Europe. How about passing on any savings you make from things like lower handling or transportation costs?
You could also temporarily lower your wholesale prices, or pay for any marketing or promo activities your distributor recommends. Another option is offering increased volume discounts to hedge against future rises in the dollar’s value.
Offer better payment terms
The Export-Import bank may be able to lend your customers money to buy your products. The Bank also offers insurance products to cover any currency losses you might face.
Optimize your supply chain
Ask your freight forwarder and shipping company for ideas on how to retain or grow your customer base. After all, it’s in their interest to see you succeed. For example, shipping products in bulk will be cheaper than sending lots of smaller orders.
Expand your horizons
20 countries around the world have low or no duties on certain U.S. products. Without neglecting your existing global customers, explore ways to reach these new shoppers. You could also look at countries with currencies tied to the dollar.
Explore or grow your eCommerce channels
Selling directly to end users could reduce your overheads and reliance on middlemen. There’s no shortage of providers ready to handle things like duties, taxes, documentation and even translating your shopping cart.
Here are some other steps you can take to help your eCommerce strategy thrive:
Price your products in the customer’s local currency, and use hedging to minimize exchange rate fluctuation costs.
Export products that suit bulk shipment, such as goods requiring self-assembly or dilution.
Make sure your products carry the right HS (Harmonized System) number, so they qualify for the lowest rate of duty. For example, “syringes” have a more favorable rate than the broader category of “medical supplies”.
Check the minimum value when your buyers will have to pay import duty. Always let customers know what they’ll need to pay to import your product. In China, duties are paid on products over USD 5, whereas in Australia it’s USD 900.
Communicate regularly with buyers so you can stay up-to-date with their marketplace and act fast to keep their business. Remember that small agile businesses tend to offer better customer service, so use this to your advantage.
Economies are continually changing, so be prepared to take a long-term view on the international side of your business. The U.S. Commercial Service is on-hand with help on growing your international sales.