Finance 09 December 2019
Don't Fall into the Amazon Seller 'Money Exchange' Death Trap
I'd like to share a personal story with you if I may. I've been an Amazon seller for years. Most of my customers are based overseas and that's where my bread and butter is – foreign markets. To be honest, I assume that Amazon was the perfect go-to solution for most every component of my online e-commerce operations. I listed my products with them and promoted them accordingly. When buyers were interested in making a purchase, I simply use the Amazon currency converter for sellers to determine my fees.
Now, if you're based in the UK and reselling to the European Union, currency conversion is necessary. The same is true for any other country in the world. There are all sorts of fees to consider with an online business, including things like storage costs for FBA, value-added tax, and things like currency conversion rates. It's really important to understand how much you're being charged vis-a-vis currency conversion rates. I'll digress for a moment with PayPal as an example. PayPal is extraordinarily expensive for sellers – much more expensive than online money transfer services like TransferWise, Skrill, and CurrenciesDirect for example.
You really want to get a good grip on the exchange rate that you're being charged – those little percentages add up to big amounts at the end of the month when you're determining your profits. You will notice them even more if you operate your business on low margins. Unfortunately, this is a fact of life for many e-commerce operators given the intense competition and the glut of sellers in the market. Everybody wants to have an online business nowadays; whether it's selling goods or services – people see the benefits of 'passive' income streams through e-commerce activity. The reality is decidedly different, and I'm going to break it down in terms of the extraordinary costs that are brought to bear on your business if you use Amazon's services.
So, what costs am I talking about here? Ideally, you would want to have a mid-market foreign exchange rate – nothing too high to contend with. If the prevailing GBP/USD rate is 1.30, you certainly don't want to be quoted a rate of 1.26 if your business is based in the UK. That $0.04 difference means that you are getting less USD for every GBP-priced product or service that you are selling online. If we're talking about high-volume, or expensive products and services, that differential can make or break you. All cost considerations need to be borne in mind when evaluating things like base fees on international transactions, hidden fees and international transactions, commissions, and the exchange rate that is actually charged by Amazon. I started digging around, after realising that mind of my profits were far less than I had hoped.
How to reduce your fees when selling on Amazon?
Granted you can't get away from fees entirely, but you can certainly cut down on them to prevent the total erosion of profitability in your e-commerce operations. Other money transfer services like WorldFirst, Azimo, Payoneer and PingPong have rates between 1% – 2% on average, and this got me thinking – how competitive are Amazon's rates? My research led me in many different directions. Fellow Amazon sellers advised me that the best way to avoid exchange rate fees was simply to open bank accounts in the markets that you were doing business with to avoid all the shenanigans associated with exchange-rate fees. That's not always an option with a business that sells in multiple countries. The currency converter at Amazon typically levies charges of 3% – 4% of the total amount of the sale. Unfortunately, banks also want a cut of the money and that could be as much as 2%. It's important to verify the effective exchange rate before the transaction is completed.
The recurring theme in this whole saga is to try and establish a bank account in the country where you are selling your products and services. If this is possible, then you can use your own foreign exchange provider to reduce that figure of 5% – 6% of total charges down to just 2%. To get There, you must pick a different online money transfer service where the total fees and commissions will be between 1% – 2%. There's no getting away from international money transfer services taking account of the funds that are being transferred. However, you can certainly reduce the amount that you are haemorrhaging every month to an affordable figure by shopping around.
Amazon's currency converter for sellers utilises the prevailing exchange rate on the day your transfer to your bank account is made. If you think that the published rates at Bloomberg, CNN, BBC, or Al Jazeera is the rate that you're getting – forget about – that is the interbank rate. However, Amazon's rate is different. You can click on view exchange rates from the payment summary section when you are making transfers to your account. Even if you have a GBP-denominated account in a foreign country, Amazon usually transfers funds in the currency of the receiving countries bank a.k.a. the local currency.
Managing Amazon transfers effectively
So how does Amazon transfer payments to your bank account? Well, Amazon uses ACH (Automated Clearing House) and/or electronic funds transfers to send money into your bank account. It can take up to 5 business days for this process to complete. Amazon Payments Inc is responsible for transactions payments when buyers agreed to make payment before goods have been shipped or before services have been completed. Amazon Services LLC is responsible for payment processing when buyers agreed to make payment after goods have been shipped, or after services have been rendered. So, in closing, I'm going to provide you with two powerful tools you can use to save money as a seller on Amazon:
- As a seller, you can streamline your operations by using different payments providers to facilitate more efficient business operations. There are many options in this regard, including World First, Global Reach, and Currencies Direct
- If you're selling between the UK and Europe, you will need to take that into consideration. Rather than withdrawing your earnings, converting back to EUR and then sending a wire transfer for VAT (expect fees of up to 5%) use a reputable money transfer service which has free services like back payments to EU authorities. I'm not going promote one or another – simply do some research and pick the one that is best for you. If you use the services of international money transfer companies which have local bank accounts in the markets that you are selling in, an international currency allocation, you have an account based in an overseas territory that allows to receive local currency. With this method, you can sell to customers anywhere in the world and get paid in local currency in your receiving account. Then your money can stay in that account while you monitor the exchange rates and you can transfer the funds back to your main account when exchange rates are favourable. Simply add your local bank account information to your Amazon account and Amazon will transfer payment to your local account in that currency.
Hopefully, this sheds a little light on the topic and you will be able to use this information to cut down on the expenses and boost your bottom line accordingly.
3 Min Read
With a lack of certainty surrounding the future, being and feeling healthy may help bring the security that you need during these unpredictable times.
When it comes to your health, there is a direct relationship between nutrition and physical activity that play an enormous part in physical, mental, and social well-being. As COVID-19 continues to impact almost every aspect of our lives, the uncertainty of the future may seem looming. Sometimes improvisation is necessary, and understanding how to stay healthy and fit can significantly help you manage your well-being during these times.
Tip 1: Communicate with your current wellness providers and set a plan
Gyms, group fitness studios, trainers, and professionals can help you to lay out a plan that will either keep you on track through all of the changes and restrictions or help you to get back on the ball so that all of your health objectives are met.
Most facilities and providers are setting plans to provide for their clients and customers to accommodate the unpredictable future. The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C. An enormous amount is on the table for this coming fall and winter; if your gym closes again, what is your plan? If outdoor exercising is not an option due to the weather, what is your plan? Leaving things to chance will significantly increase your chances of falling off of your regimen and will make consistency a big problem.
The key to remaining consistent is to have solid plans in place. This means setting a plan A, plan B, and perhaps even a plan C.
Tip 2: Stay active for both mental and physical health benefits
The rise of stress and anxiety as a result of the uncertainty around COVID-19 has affected everyone in some way. Staying active by exercising helps alleviate stress by releasing chemicals like serotonin and endorphins in your brain. In turn, these released chemicals can help improve your mood and even reduce risk of depression and cognitive decline. Additionally, physical activity can help boost your immune system and provide long term health benefits.
With the new work-from-home norm, it can be easy to bypass how much time you are spending sedentary. Be aware of your sitting time and balance it with activity. Struggling to find ways to stay active? Start simple with activities like going for a walk outside, doing a few reps in exchange for extra Netflix time, or even setting an alarm to move during your workday.
Tip 3: Start slow and strong
If you, like many others during the pandemic shift, have taken some time off of your normal fitness routine, don't push yourself to dive in head first, as this may lead to burnout, injury, and soreness. Plan to start at 50 percent of the volume and intensity of prior workouts when you return to the gym. Inactivity eats away at muscle mass, so rather than focusing on cardio, head to the weights or resistance bands and work on rebuilding your strength.
Be aware of your sitting time and balance it with activity.
Tip 4: If your gym is open, prepare to sanitize
In a study published earlier this year, researchers found drug-resistant bacteria, the flu virus, and other pathogens on about 25 percent of the surfaces they tested in multiple athletic training facilities. Even with heightened gym cleaning procedures in place for many facilities, if you are returning to the gym, ensuring that you disinfect any surfaces before and after using them is key.
When spraying disinfectant, wait a few minutes to kill the germs before wiping down the equipment. Also, don't forget to wash your hands frequently. In an enclosed space where many people are breathing heavier than usual, this can allow for a possible increase in virus droplets, so make sure to wear a mask and practice social distancing. Staying in the know and preparing for new gym policies will make it easy to return to these types of facilities as protocols and mutual respect can be agreed upon.
Tip 5: Have a good routine that extends outside of just your fitness
From work to working out, many routines have faltered during the COVID pandemic. If getting back into the routine seems daunting, investing in a new exercise machine, trainer, or small gadget can help to motivate you. Whether it's a larger investment such as a Peloton, a smaller device such as a Fitbit, or simply a great trainer, something new and fresh is always a great stimulus and motivator.
Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine.
Just because you are working from home with a computer available 24/7 doesn't mean you have to sacrifice your entire day to work. Setting work hours, just as you would in the office, can help you to stay focused and productive.
A good night's sleep is also integral to obtaining and maintaining a healthy and effective routine. Adults need seven or more hours of sleep per night for their best health and wellbeing, so prioritizing your sleep schedule can drastically improve your day and is an important factor to staying healthy. Make sure that when you do wake up well-rested, you are getting out of your pajamas and starting your day with a morning routine. This can help the rest of your day feel normal while the uncertainty of working from home continues.
Tip 6: Focus on food and nutrition
In addition to having a well-rounded daily routine, eating at scheduled times throughout the day can help decrease poor food choices and unhealthy cravings. Understanding the nutrients that your body needs to stay healthy can help you stay more alert, but they do vary from person to person. If you are unsure of your suggested nutritional intake, check out a nutrition calculator.
If you are someone that prefers smaller meals and more snacks throughout the day, make sure you have plenty of healthy options, like fruits, vegetables and lean proteins available (an apple a day keeps the hospital away). While you may spend most of your time from home, meal prepping and planning can make your day flow easier without having to take a break to make an entire meal in the middle of your work day. Most importantly, stay hydrated by drinking plenty of water.
Tip 7: Don't forget about your mental health
While focusing on daily habits and routines to improve your physical health is important, it is also a great time to turn inward and check in with yourself. Perhaps your anxiety has increased and it's impacting your work or day-to-day life. Determining the cause and taking proactive steps toward mitigating these occurrences are important.
For example, with the increase in handwashing, this can also be a great time to practice mini meditation sessions by focusing on taking deep breaths. This can reduce anxiety and even lower your blood pressure. Keeping a journal and writing out your daily thoughts or worries can also help manage stress during unpredictable times, too.
While the future of COVI9-19 and our lives may be unpredictable, you can manage your personal uncertainties by focusing on improving the lifestyle factors you can control—from staying active to having a routine and focusing on your mental health—to make sure that you emerge from this pandemic as your same old self or maybe even better.