Trading in other Currencies, Is it Worth it ?

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T

taggingsupplies

  • #1
    Hello and good day all despite the weather...

    I am currently using 123reg as Eccommerce and i trade in £ for now

    I sell a few items in Europe and also USA Etc.

    I get asked a few times whats the exchange rate etc.

    I want to know does anyone think that if i pay 123reg an extra £250 to upgrade my account to accept about another 7 currencies will it make a difference?

    Is it worth having other currencies on your website ?

    Does anyone know a website using ePages with 123reg so i can compare it to my one?

    Thanks in advance
     
    C

    Christiane

  • #5
    I have the facility for the customer to choose to see the prices in euros. a few customers (including Irish) will leave the euros on and the order is invoiced in euros although it's obviously converted into £ by Streamline. The only thing is having to keep the exchange rate up to date.
     
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    greenwood-IT

    greenwood-IT

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    Oct 31, 2008
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  • #7
    Hiya,

    I used to run a website that supported almost every currency under the sun. Over a number of years we gradually knocked it down to just the big 3, GBP, EUR and USD. We also setup 3 separate bank accounts in order to avoid exchange rate issues. As we purchased internationally we also paid invoices in EUR and USD thus avoiding the exchange rate fluctuations a second time.

    Originally we tried the pseudo exchange rate logic on the website where we convert the GBP prices into a preferred local currency, but billed in GBP - we could never get the bank statements to match our invoices :rolleyes: and users were often billed a couple of days later on a different exchange rate - that was really bad for everyone!

    I don't know what 123reg offer, but I would suggest adding Euros for starters and see how it goes. If it's a one off payment of £250 for the setup, then go for it (and add USD later if you're happy with it). I can't actually think of 7 currencies worth adding these days :|

    Chat soon.
     
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    A

    AndyP

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    Oct 11, 2008
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  • #8
    I agree mostly with greenwood-IT and what he has done is pretty much what we do as well.....we work with GBP, Euros and USD....that just about covers it..... and we run an exchange rate update first thing each morning to keep everything in sync.
     
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    greenwood-IT

    greenwood-IT

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  • #9
    Hiya,

    I would recommend not changing the exchange rate numbers every day, but to lock the prices at a reasonable marketing figure.

    For example, if you sell Organic T-Shirts for £27 each, then using the current rates you would be advertising these for 52.68USD and 34.06EUR. These don't exactly roll of the tongue. It's probably better to round them to 50USD and 35EUR - if the customer can be bothered to convert the rates, they may save a couple of cents, but thats their choice.

    It also means that your prices don't change by a couple of cents every day as the exchange rate fluctuates.

    Chat soon.
     
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    AndyP

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  • #10
    But whats wrong with the price changing daily? If nothing else it shows that exchange rates do change...plus of course if you have the price absolutely correct on your site when the customer goes to pay they will end up paying exactly what they thought that they would pay as opposed to a rough approximation.

    Its no big deal to change the exchange rate each morning and run a re-publish.
     
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    greenwood-IT

    greenwood-IT

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  • #11
    Hi Andy,

    There are a couple of reasons for avoiding the daily price changes;

    • It can cause problems with refunds - you actually lose money if the rates go down.
    • What happens if someone has a product in their basket (in USD) and the rates change (this is more likely if you change the rates more often).
    • All marketing material (other than your website) will be incorrect if it includes prices (eg magazines, flyers, exhibitions and forum posts ;))
    • It makes it difficult to 'value' your current stock. You paid a fixed price for it last month, but your now selling it at a loss in USD and EUR (but not GBP!).
    As usual, there probably isn't a wrong answer, but I like my answer more :D

    Chat soon.
     
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    AndyP

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  • #12
    OK...I do take your points but to answer them,

    1. We don't lose money if the exchange rate changes - we refund based on the exchange rate in play at the time.
    2. Whilst there is the possibility of the rate changing with a product in the basket this would be the case whenever the rate changed. We do, however, run this through during our quietest trading time and also given that the vast majority of our overseas sales are to the US we ensure that this is the guiding factor.
    3. We take into account our marketing at the same time that we make exchange rate changes. Our only marketing that ever shows prices in other than GBP is online and part of the update includes running in new feeds to wherever is required....an obvious example being our US feed to Google Base which displays in USD.
    4. Our stock holding, bearing in mind that we buy from numerous sources worldwide is always valued in GBP. Yes, there are swings and roundabouts but our FD has never raised this aspect as an issue. Whilst sometimes we might sell something for slightly less margin than we would expect it also works the other way....so at quarter end it balances.

    As you say, there is no right or wrong way of doing this......this just happens to be our view and what we know works for us :)

    What I do know, however, is that customers get seriously hacked off if they think they are buying at one price and find when they get to actually making the payment that the price is different. Our method alleviates that possible issue. :)

    Cheers
     
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    greenwood-IT

    greenwood-IT

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  • #13
    Hi AndyP,

    I think it's only you and I talking now :)

    As I mentioned, most of my experience is with separate bank accounts for each currency. So I'd like to understand your response to point 1 in more detail.

    Are you saying that if I purchased something from you today for $100 you would received £64 into your bank account, assuming 1 GBP = 1.55789 USD (and ignoring all bank charges). If I then requested a refund 2 weeks later, and the exchange rate had dropped to 1.45 what would happen?

    a) £64 * 1.45 = $92.80
    You refund me the £64 you charged me, but I only get $93 :mad:

    b) $100 / 1.45 = £68.96
    You refund me $100 but it costs you £69 so you lose £5?

    Either way, you're playing the exchange rate and so there's a risk involved. You could argue swings and roundabouts.... but it does make balancing the books harder (Order Number ABCD +£64, Refund Order Number ABCD -£69 :redface:)

    The basket issue is quite small as you rightly point out, but the more often you change rates the more chance of it happening, especially if you are into all markets (I worked in global VoIP and so we never had a quiet period for rate changes). We had a network of distributors and so had printed prices all over the place! :eek:

    The stock value point really depends on the business and volumes involved. But like you say, if it works for you and the FD and Tax man are happy (always important!), then stick with it. :)

    I agree with you totally that the basket price MUST match exactly what appears on the customers bank statement a month later.

    Chat soon.
     
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    AndyP

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  • #14
    Hi again

    Good point raised and I don't have an immediate answer for you....however I will have a word with our FD when he gets back to the office and ask him to explain it to me...then I will get back to you especially as you now have me thinking on this point as well!! :)

    I'll post back asap.
     
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    AndyP

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  • #15
    I am advised that the exchange rate is set by the credit card processing company and not by us so what we choose to display on our site is irrelevant....the charge will be calculated at the exchange rate of the day....hence our decision to always display the latest correct rate.

    Yes, there is an element of swings and roundabouts but overall it has never really been a major issue and our refund level is so low anyway as to be negligable.

    So, a customer buys something for £47.95 which for example converts to $75.00. They pay in USD - $75.00....down the line we need to refund.... we simply refund $75.00 - the customer get $75.00 and we have the equivalent of $75.00 removed from our account using the exchange rate of the day which may or may not be the equivalent to £47.95 on that day....but whilst we can lose on the deal we also sometimes win.

    However, that is not what I originally stated earlier in this thread as my understanding previously was that we refunded using the exchange rate used at the time of the original transaction - which clearly (to me, now) is incorrect, so my apologies for any confusion that I may have caused!
     
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    P

    PayVector

  • #17
    There is a technology called Direct Currency Conversion (DCC). What DCC does is at the point of transaction the amount the customer will pay in his local currency is displayed next to the currency transacted in.

    There is also an exchange rate savings, IE the DCC rates are better than the daily card scheme rates as the card schemes rates are always hedged. Some merchants keep this for themselves and some pass it on as savings to their consumers.

    If you are in a product market where margins are tight with your competitors then DCC can have a significant impact. However if you only do a few overseas sales the cost of setting up a DCC program are prohibitive.

    In my oppinion the best way to transact in multi currency is to transact in each of the currencies and settle into an account of that currency. You then have the choice of when to move money between curriences and can use services to minimse the cost of changing from one currency to the other.
     
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