E-commerce growth soars as firms adapt to online demand
According to UK technology company Growth Intelligence, more than 85,000 businesses have launched e-commerce platforms or joined online marketplaces since the UK’s first coronavirus lockdown in March 2020.
Another study by Wunderman Thompson Commerce revealed a surge in B2B e-commerce, after the B2B Future Shopper report 2020 – which polled over 200 B2B professionals found that 46% of B2B purchases had been made online in the COVID-19 aftermath.
Data from Statista shows that nearly a quarter of all businesses in the UK were forced to close their doors amid coronavirus lockdown restrictions. Those in the arts, entertainment, and retail sector, were among some of the worst affected by the pandemic, compared to the human health and social activities sector.
However, many companies have had to accelerate their digital transformation in a bid to keep their business afloat and meet the growing demand for online shopping.
Although firms are reopening as the UK government eases lockdown restrictions, e-commerce activity continues. The latest IMRG Capgemini Online Retail index showed that online retail sales increased by 41.3% year-on-year in the week commencing June 14th, which was when non-essential retail stores first began resuming normal business operations.
The fashion and apparel sector has had one of the most significant transformations, with 8,665 clothing companies adding online payment methods and innovative e-commerce technology to their sites.
Similarly, 9.3% of businesses in the pharmaceutical industry launched new ways of selling online during the lockdown, followed by farms, fisheries and industrial food production at 6.9%, and the professional training sector.
With online demand growing amid the pandemic, e-commerce businesses are now presented with an opportune moment to expand internationally, especially as market growth directly correlates with profitable opportunities in transborder e-commerce. The global e-commerce market is currently growing 1.3 times faster than single-country platforms.
Increasing profit margins when paying overseas suppliers
Whether it’s purchasing low-cost goods from countries like India, or luxury goods from China, your exposure to fluctuating exchange rates could have a significant impact on your bottom line when sending money overseas.
It is essential to calculate the cost of your international payments and find a more cost-effective way to pay overseas suppliers, thus saving your business money and adding profit to your bottom line.
Banks tend to have higher transaction fees and can charge a margin of over 5% in some circumstances, meaning you get less value for your transaction reflected in higher costs to your business.
Benefits of using a foreign exchange provider
Whether you are making payments to international suppliers or paying overseas wages, foreign exchange currency specialists can help your business process these payments, while navigating past the risk associated with fluctuating exchange rates.
With Halo Financial, you can protect your profits and save substantially in bank fees and margins when paying overseas suppliers by locking in a desirable exchange rate.
Halo Financial are authorised by the Financial Conduct Authority (FCA), and unlike your bank, Halo monitors exchange rates 24/7 to offer you a competitive advantage and maximise your currency exchange transactions.
When sending money overseas with Halo, your payments tend to arrive faster as they execute international money transfers immediately and can often provide same-day payments.
Halo Financial also offers several contract options to protect your business from adverse currency fluctuations. Through proactive risk management of your currency requirements, you can decide which exchange rate option is best for your business.
What types of exchange rate contracts are available for e-commerce sellers?
Depending on your circumstances, there are several foreign exchange rate options available such as forward contracts and spot contracts, which are widely used by businesses to shield against the uncertainty created by today’s volatile exchange rates.
Spot contracts are convenient for businesses that don’t make international currency transfers often.
If you need to send money overseas at the best available exchange rate for immediate delivery, this is the option we recommend.
Forward contracts are advantageous when you need to budget for a future currency transfer.
You can protect yourself against adverse exchange rate movement by locking in a fixed rate for your chosen currencies that could be transferred up to two years into the future. During this set period, the buyer and receiver will be protected from fluctuations in currency prices.
A limit order allows you to buy and sell currencies from your foreign exchange provider at a specified target rate.
Your dedicated foreign exchange dealer will monitor currency markets and contact you when your desired exchange rate becomes available to facilitate your international payment.
How to reduce costs in international business
If your business is trading on an international scale or moving towards international trading, then you should understand the different factors that could affect your business costs to help you save money in the future.
Currency markets are currently faced with post-Brexit trade concerns and COVID-19, which is producing a significant amount of uncertainty for businesses over supply chains and increased international trade costs.
Hedge against fluctuating exchange rates by using a currency specialist, and consider how transmission delays and political risks may affect your business costs, as this could mitigate risk and open up upside potential for profitability.
Future planning and preparation can prevent delays along the payment chain and protect your business from the impact of negative cash flow.