Multi-Currency Enterprise e-Commerce platform | Clarity
Turn Complication into Simplicity
When I was in Germany during the fall of '09, the Euro was at one of the highest points of exchange against the dollar in its history. Needless to say I was unable to buy as many libations and souvenirs as I had anticipated. Then, as I departed Europe, the Euro Crisis began and the dollar shot up to its most favorable position against the Euro in the past 5 years. I still remember feeling the sting of annoyance in the knowledge that if I would have waited to visit Europe just a couple weeks later, I would have saved (ok, spent) a LOT more money. This story happens millions of times throughout every day to businesses that don't have their e-Commerce prepared for numerous rapid, daily exchanges of foreign currencies online.
Barring some disaster that instantly and drastically affects currency exchange rates (like natural disasters), currencies, relative to US dollars, don't normally change more than a few cents at most throughout the day. However, if you're an enterprise eCommerce business moving massive volume through daily transactions where foreign money is involved, a delayed or inaccurate exchange of foreign funds can quickly add up to thousands if not millions of lost revenue and profit.
It's this kind of situation in which those businesses feel the sting that I had felt, albeit much more acutely. Clarity's mission when helping craft enterprise global ecommerce solutions
is to make sure you never feel the sharp pain of unanticipated and unnecessary loss due to the incompetent execution of what should be a straightforward process. Here are a few things you should know about global multicurrency exchanges when considering an international web store.
Automated Currency Exchanges
Automation saves your organization time and makes your employees more efficient. On the transactional side of buying from a global online store, a customer is more likely to buy or buy again when the process is speedy and simple. You will never be able to achieve these two aims without an instantaneous transition from one currency to the next. I say instantaneous because that is exactly what it has to be in order to prevent fraud or exchange rate manipulation by a go-between or a lost customer due to a slow calculation of the price that's shown in their native currency.. There are some countries where you simply can't afford to have a nefarious third party hold your funds in escrow or act as the middle man between supplier and consumer.
These third parties can easily hold funds until the rate is lower, therefore costing you money, or simply cancel the transaction if the rate becomes unfavorable to them. For this reason, you can ship a product and never receive your customers' money or lose money on the transaction because the exchange rate tanked by the time that money middle man got around to giving it to you. A great enterprise level multi-currency platform will side step these processes simply by integrating an automated currency conversion module. Best of all, this module can instantly calculate exchanges across all countries where you are legally allowed to do business.
Global Currencies Change Price Strategies
Have you ever seen the price of Ikea furniture displayed as something like $77.05? That would be the US dollar price for a 499 Krona (Swedish unit of money) piece of furniture. But of course this isn't the case because any marketing manager knows that the price consumers see and how they perceive it matters a great deal. Likely, you would see that furniture priced at $74 or $79 because consumers like the simplicity in thinking 75 or 80 and leaving it at that. This is but of the many ways pricing strategies change when you bring new currencies and foreign consumers into the mix. Here are a few more common examples:
Law of Low Right Digits
It has been proven that the digit furthest to the right in the number is a more important factor than the discount itself
.Therefore an item priced at $52 discounted to $42 is more effective than a discounted from $49 to $39, even though the amount off is still $10. Consumers are more or less irrational when it comes to the psychological factors that influence buying behavior. If you understand these factors and apply them broadly across each item price after accounting for the changes from diverse state monetization exchange rates, you can have great success with a global web shopping cart that deals with several currencies.
Let's say you're selling a product in the US for $50. You want to give a 15% discount so you advertise for 15% off rather than $7.50 off because 15% sounds better. Sweet! It worked, let's do the same thing for our product in Argentina, right? Wrong. If we're charging the same price in Argentina as the US the price would be $344 Pesos. 15% off doesn't sound as good as $50 off and so you would have to change your pricing strategy for Argentina and all other countries where the exchange rate is over 2 for every dollar (ok,ok- the discrepancy should be a little more, but this was for illustrative purposes only).
Luckily for you, some of these discrepancies can be automatically changed depending on which discount language sounds better, and a company like Clarity can integrate that into your global e-Commerce platform
This can't be stressed enough. Know the culture, study your local competition in a unfamiliar geographic territory, and you'll avoid sluggish sales. Some cultures and collectivistic vs. individualistic, more prone to give or more prone to take advantage, buy groups of items in different bundles (For example: Germany- beer, sausage, potato, sauerkraut. Southern US- beer, potato, fried chicken, green beans. If you're selling potatoes or beer in these places, pay close attention), or stress utility messaging over pleasure messaging.
These are just a few of MANY, MANY pricing strategies to take into account. You should also take taxes, customs and duties into account as well as the necessary forms
that come with them when calculating global pricing strategies. There are many more important cultural nuances to take into account that will cause you to tweak or custom tailor your pricing for different global markets. How money is exchanged between nationals of different countries is a major factor in an effective asp.net shopping cart built for E Commerce between nations.
What to Consider When Planning Your Multiple Currency Solution
First is simplicity. Not for you, but for your customer, as this is what really matters. If you want to increase multi-national sales, use different international currencies. Ultimately, the easier and less confusing the online transaction process is for your prospective consumers, the more likely they are to become bonafide customers.
Ideally, all the complicated processes and calculations of pricing that includes strategy, taxes, shipping, customs and duties are tallied instantly on the back-end to where all the customer sees is the attractive final checkout price. The simplicity of pricing on the consumer end and the convenience of the platform
are key for increasing consumer purchases in your web store. The right platform to enable you to do this will be custom built. Why? Because your business is unique and so are your customers. You're both used to processes specific to your organization or your industry. Try and jam this into a pre-packaged platform and you lose simplicity. You lose sales.
There are two key benefits to a custom built solution. The first is outlined above. You can tailor your solution, platform shopping cart or checkout specifically to your target market and customer. The more you can hyper-segment your platform for your most valued target audience, the more they will convert and create value for you. A custom built e commerce solution can also be retrofitted to integrate with all the CRM and ERP programs you already love. The second reason your multiple currency online store should be custom built is that third party platforms cost money over time. This is not only to build and integrate with your website; they also take a percentage of each transaction. If you're moving a lot of volume or have a lot of transactions, this eats in to your profits very quickly and will become more expensive for your organization over a relatively short period of time (which is why I'm hesitant to say the 'long run').
Ultimately, when entering a new market, whether it's multicountry web commerce or a city nearby, the most important thing you can do to be successful is to do your research. After that, hire people who have done their research and have worked on the products you're seeking on previous, successful occasions.
Accepting Foreign Currency: Key Takeaways
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