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eCommerce Tips & Trends

8 Truths That Open Doors to More Ecommerce Revenue

Our partner PingPong breaks down the strategies ecommerce merchants need to implement to drive more revenue and growth.
8 Truths That Open Doors to More Ecommerce Revenue
Jules

By Jules

 

February 22, 2021

This is a guest post by our partner PingPong. They help merchants across the globe save money on cross-border payments, VAT payments, supplier payments, and more.

Do you know that icebreaker game, ‘Two Truths and a Lie’? Everyone playing takes a turn telling the group two truths about themselves and one lie, and the rest of the group tries to guess which of the three phrases is a lie.

It’s a fun game when you’re trying to get to know people more intimately - not so much when you want to cut through the noise in the already complex eCommerce industry and make a profit from your business.

If you’re an eCommerce merchant of any kind your end goal is to make a profit. It’d be so much easier to do that if you didn’t have to shift through the truths and the lies in this ever-changing industry. Transparency is important above anything else. Here’s how payments service providers - like PingPong -  helps merchants generate and save more revenue.

Let’s play the eCommerce version. Here are your first two truths, and one lie (don’t worry, we’ve eliminated the guessing games).

WHEN IT COMES TO FEES...

FACT

Amazon is the largest online retailer in the world generating $280.5 billion in revenue in 2019.

FACT

Around 50% of all sales on Amazon marketplaces come from third-party sellers.

FICTION

Because Amazon is already so profitable, the platform makes all of its fees super clear, always. All the time.

Even a seller who signed up yesterday knows this isn’t true.

In fact, Amazon seller fees vary widely and are dependent on factors like:

  • item cost
  • category
  • weight
  • seller shipping solutions
  • seller plan
  • the chosen order fulfillment process

While you can’t put an exact number to the cost of selling on Amazon, this might give you an idea. This list of Amazon fees is as long as Santa Claus’s naughty and nice list, combined. See for yourself: source

Standard Fees

  • Seller plan
  • Per-item fees
  • Rental book service fees
  • High-volume listing fees
  • Refund administration fees
  • Variable closing fees

Selling Services fees

  • Pre-packaged service
  • Recurring services

Referral fees

  • Minimum referral fee
  • Referral fee percentages

Yes, the list is still going…

Shipping fees

  • Individual Selling Plan
  • Professional Selling Plan

Fulfillment by Amazon (FBA) fees

  • Inventory storage
  • Long-term storage fee (LTSF)
  • Fulfillment
  • Per-unit

FBA Small and Light fees

  • Order handling
  • Picking and packing
  • Weight handling
  • LTSF
  • Multi-Channel Fulfillment (MCF) fees

Amazon currently has 12 marketplaces: USA, UK, Germany, France, Canada, Japan, India, Italy, Spain, Mexico, Brazil, and China. Amazon Australia and Singapore are launching soon. There are over 100 million Prime members who spend over $126 billion per year.

There is still money to be made. The marketplace wouldn’t be made up of over 50% of third-party sellers if revenue wasn’t yours for the taking.

Get your hands on more of that revenue by expanding your eCommerce operations internationally.

When It Comes to Expanding Internationally

FACT

When doing business internationally you’re dealing with:

  • Different countries
  • Different currencies
  • Different payment systems

FACT:

Payment specialists (like PingPong) exist that can create virtual bank accounts in more than 10 countries and currencies to help merchants receive their money as fluidly as possible when selling into a foreign country.

FICTION

  1. You must set up a local bank account in the country you want to sell
  2. You will end up having to sell your products wholesale in the country you want to expand to and lose money

You want convenience.  

A payment service like PingPong provide merchants with a virtual bank account (in 10 different countries) with unique account numbers for sending and receiving currency in those countries.

With money moving across borders, a virtual bank account of this type:

  • eliminates long delays for receiving and sending money
  • the need for a local bank account
  • saves your business significant time and money.

Your finance department will thank you.

They avoid the nightmare of having to learn and manage different online banking platforms, the reconciliation of funds, and inevitable accounting issues with money sitting in different places around the world.

When It Comes to Currency Conversions

FACT:

A currency conversion takes place any time one currency is changed to another currency, whether you’re aware of it or not.

FACT

Most marketplaces work with a bank or another financial institution to convert your profit to your domestic currency. This markup is usually hidden and charged IN ADDITION to the current conversion rates. It can be up to as much as 5% of the revenue (at Amazon).

FICTION

Mid-market rates don’t exist. Eating the fees Amazon or other marketplaces charge is my only option.

Let’s look at this in action. Here’s how the traditional payment model works in many marketplaces.  

Assume you’re a US merchant who wants to expand internationally - to Japan. Naturally, your customers will be paying in Japanese Yes, their legal currency.  

If selling on the Amazon platform, Amazon first receives the Japanese yen. When the time comes to pay you, the seller, your profit (more on payout timing below), Amazon deposits US dollars into your (the merchant’s) bank account.  

Seems super convenient and super easy for everyone, right? Well, convenience comes at a cost. The exchange rate is not a factor that a lot of people think twice about when it comes to saving money on cross-border payments. You receive your money in US dollars after the fee has already been assessed. Everything just works out well. Not so fast. Look how much money you could be losing:

PingPong performs the currency conversion at the mid-market rate, eliminating the 5% markup that banks and other financial institutions tack on.

When It Comes to Getting Paid for What You Owe..

FACT:

Traditional marketplaces generally make payouts once or twice a month on a fixed date.

FACT:

You can actually control when you want to convert your money - to your benefit.

FICTION:

The dates marketplaces payout seller profits are optimized so the merchant makes the most revenue possible.

With all the different things happening throughout the world, FX rates fluctuate drastically - sometimes on a daily basis. So the ability to control when you convert your money back into US dollars is another opportunity to save a significant amount of money.

When It Comes Down to It....

Savings don’t stop at FX fees. There are more ways to keep more of the money you’ve worked hard to earn. Why are you giving it away?

Did you know?

You can avoid conversion fees altogether

If you receive money in a certain currency from an international marketplace in your virtual account, you can pay suppliers, invoices, and logistics companies in their domestic currency right from your PingPong account - and avoid additional conversion fees!

In a traditional model, your profits would have already been converted to dollars for a fee (up to 5% tacked on). To pay suppliers, vendors, logistics, and other invoices you’d be slapped with that fee a second time to convert money back to those entities’ domestic currency to get them paid.

Ten percent of your profits have just gone to banks or whatever financial institution is handling your money.  

Did you know?

It takes minutes to set up an account. Using the latest technology, PingPong will have you set up and positioned to start saving potentially thousands of dollars monthly!    

Before PingPong came on the scene, the payments industry was suffering from the duopoly of two incumbent providers. Neither of them were prioritizing speed of payment, and customers had to face high and often hidden fees. Our transparent costs and local service standards provide merchants with a real alternative to what is currently available. We made same-day delivery the new industry normal.

From 2016 to 2019, merchants have saved 70% of costs in terms of fees for Amazon and other platforms – which translates in a $2 billion saving.