There’s untapped niches in Amazon marketplaces across the world, and many sellers are grabbing this growth opportunity with both arms. Are you an International Amazon seller? Props to you! It’s no big secret that expanding a growing FBA business by selling in different territories can provide some huge wins for your bottom line. But when it comes to managing your payments and finances, there’s an added layer of complexity. That’s why I invited Richard Gilbert, from leading payments solution software, Payoneer, to chime in on this topic for the Fetcher readers.
As a seller in multiple marketplaces, money is always on the mind. But managing your business cross-border is always a challenge. Add the complication of foreign transaction fees and currency conversion rates and your challenges just got a lot harder.
So how can you ensure successful growth, timely payments and good conversion rates? Keep on reading. In this article we’re going to take a look at:
- Getting paid from international Amazon stores
- Growing your business and handling international payments to suppliers and other services
- Navigating international taxes
- Converting your profits to your own currency
Let’s get started!
Step 1: Getting paid
Having multiple stores on Amazon is a great business opportunity, but is your company ready for the global marketplace payment process? The main difficulty with this is having multiple bank accounts, in different locations.
When launching into new marketplaces as an Amazon seller, you may opt to open a local bank account for each market for tax benefits. So if you’re selling in the US, you would set up a local USD bank account. The same applies for each European location, including establishing a physical address to attach to each bank account. Not a simple process.
It’s not impossible to manage your payments this way, but it’s time-consuming to set up, and depending on where you are selling, increasingly difficult and sometimes costly. Most FBA sellers won’t want this level of complexity which is usually reserved for huge ecommerce businesses (like Amazon, themselves).
Using an alternative route can make this simpler, such as Payoneer’s is a Global Payment Service. It’s an easy and fast solution to cater for payment needs for Amazon sellers and ecommerce businesses. It provides users with local currency receiving accounts in the US, UK, EU, China and Japan. This saves you the hassle of opening bank accounts and securing physical addresses and can be used for several marketplaces, not just Amazon.
This allows you to be one step closer to accessing funds through your existing local bank account, and ten steps closer to providing yourself with hassle-free payments for your business.
Step 2: Growing your business
Not only are you selling your products globally, but you’re also using international vendors to create or source your products. Finding reliable and trustworthy manufacturers is only part of the battle. Learning how to pay them efficiently and cost-effectively is a major part of your partnership.
Most suppliers, particularly in China, won’t accept methods such as PayPal to order large quantities of inventory. This doesn’t mean they are not legitimate, it’s just how manufacturers operate. They’re typically concerned with paying high fees with services like PayPal. Wire transfers are the most common payment solution for FBA sellers. Wire transfers usually take several hours or even several days, and most banks charge around $45 per transfer.
Another huge failing of using a wire transfer (sometimes known as a T/T transfer), is that once the payment has been executed, there is no way to recover money for whatever reason. Not ideal if something goes wrong!
One way to ease this process is to opt for a service that specializes in international payments to save fees and expedite the process. Payoneer’s Make a Payment service allows you to make payments to other Payoneer account holders for free, along with low currency conversion rates. Money is transferred within the Payoneer network, and the transfer takes a maximum of 2 days and a minimum of a few short hours, saving you time and money.
There are an increasing amount of manufacturers and suppliers offering this as an option. You can ask your supplier if they accept Payoneer or similar payment services.
Step 3: Paying taxes
As each business challenge is solved, another one arises. There are complicated sales tax laws that vary from country to country and figuring out who charges what is another headache all of its own.
In the US there are sales taxes, and in the UK there is VAT (Value Added Tax). Understanding your taxes as an international seller can become complicated and time-consuming. You can figure this out manually and submit your own taxes, or you could hire a tax professional to help you with this burden.
You can also opt to use a service (like Payoneer) that offers limited time service to help sellers settle their VAT debts to government collection accounts in the UK and EU via the Make a Payment service. As a global company, you may need vendors that understand the global ecosystem and can easily navigate international payment laws.
Step 4: Converting funds
Everybody loves payday. But when it comes to withdrawing your funds as an international Amazon seller, you can be stung by poor conversion rates and high bank transfer costs.
Other things to consider are that currency fluctuates daily, even hourly. Plus, if you opted for the route of creating local bank accounts in every country, then Amazon would pay you into this account, in the local currency. From here you would need to transfer that money from that account to your local bank account in the country you reside. It varies from bank to bank, but generally speaking, you will get a poor rate and have to pay a fee each and every time you transfer money from one bank to another. Not ideal when you are trying to run a profitable business.
Alternative solution: Payoneer offers you localized transfers at a competitive rate, so you can withdraw into your local bank account in your local currency. Currency fluctuations are taken into account as the service guarantees the current rates at a competitive cost.
You can also load your funds onto a MasterCard to use at ATMs, in stores or online anywhere that MasterCard is accepted. This option helps sellers all over the world get paid in their local currency. Plus, Payoneer’s Global Payment Service works with other marketplaces, think Lazada or Cdiscount, or Upwork and Fiverrr for your outsourcing. This means you’re avoiding excessive fees by not having to deal with bank transfers around the globe.
Fetcher readers: Sign up for Payoneer & earn $50 when you recieve $100 worth of payments!
As an international seller, understanding how to better navigate global payment systems will make your life easier, and your business more successful. It will make selling on multiple marketplaces a much smoother process. In addition, it allows you to focus on the things that matter most in your business; providing great service and products to your customers, while growing your business relationships through reliable and trustworthy payments.
Feeling good about figuring out the payment system? Us too. When it’s that simple, the decision is practically made for you.
About The Author – Richard Gilbert
Richard is the General Manager of North America, based in Payoneer’s New York headquarters. Before joining Payoneer, Richard led strategic partnerships and business development for Infusionsoft, a SaaS-based CRM dedicated to serving SMBs. His focus on serving SMBs began with leading co-marketing partnerships for Google’s US SMB Marketing division. Richard commenced his career as a Strategy Consultant with Booz Allen and Price Waterhouse. Richard lives in New Jersey with his wife and three children.
Author: Shane Stinemetz
Jiu Jitsu fighter, Sci-Fi lover and Digital Nomad. After becoming an FBA seller, Shane left the tech scene in Silicon Valley to work on Fetcher and travel around the world.