E-commerce platforms boost international sales for SMEs, Currencies Direct reports

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Small British businesses are using online retail platforms to reach far beyond the UK high street this Christmas, taking tens of thousands of pounds from online buyers in Europe and across the world, new analysis finds.

Figures from foreign exchange specialists Currencies Direct suggest the amount of international business carried out by SME sellers using e-commerce platforms, which allow small companies and sole traders to sell their wares direct to consumers, has soared in the last three months – with overseas transfers up 150% per cent year-on-year.

Based on international money transfers – sellers repatriating overseas takings – by a sample of 800 users of the Amazon Marketplace, the data shows the number of transfers has risen 47% between September and November this year, compared to a 34% during the same period in 2012.

This also suggests that December’s Cyber Monday extravaganza is the peak of a much longer upward trend for small online retailers, with the amount of money repatriated from sales steadily climbing from the end of the summer until the New Year.

And it’s not just the volume of transfers that increases, said reserachers. At their January 2013 peak, the size of the average transfer climbed by 76% as retailers repatriated bumper Christmas takings, reaching more than £12,000.

According to the Currencies Direct data, the bulk of sales are between the UK and countries in the Eurozone, with 63.5% of sellers located in Britain.

But coming the week after Prime Minister David Cameron led the UK’s largest-ever trade delegation to Beijing, the figures also reveal that one in seven international Amazon Marketplace sellers (14.4%) are based in China.

In contrast, a mere 2.9% of international sellers are based in America, narrowly behind Germany (4.3%) and just ahead of France and Japan (both 2.1%).

Alistair Cotton, Currencies Direct head of corporate dealing, said: “Platforms such as Amazon or eBay give small retailers a way into lucrative international markets in a way that would have been unthinkable even a decade ago. But as overseas sales grow, the process of getting money back to your home country, and currency, can end up being neither straightforward nor cost effective.

“Previously, the only option was a local bank account, which would mean a 4% hit on any takings just to change funds back into their own currency. Setting up international bank accounts and using foreign exchange experts can mean not only better exchange rates, but also better economic management of transfers.”

Cotton said: “Online retailers need to optimise their input and output cost. If you buy stock or supplies in sterling but sell in euros, you’re creating a foreign exchange exposure on two counts: through the loss realised by converting from one currency to another, and also the potential for exchange rate movement – especially if the product selling price is fixed.”