And why setting up an online sellers account with an international money transfer provider could be a good option.
Selling products online can be a great way to make some extra money, and platforms like Amazon help make this possible. Because you’re selling products to people in different countries, you’ll need a way to manage the international payments. This includes foreign transaction costs and currency conversion exchange rates. This guide covers exactly how to do this, so you can get started selling on Amazon.
Open an online sellers account
Why sell products on Amazon?
If you own a brick-and-mortar store, your customer base is restricted to the local market and people who physically come into your store. However, if you sell your products on Amazon via its Marketplace, you can sell to people all over the world, opening up a much larger customer base. Amazon Marketplace has more than 300 million people buying on the site, and items sold through the Amazon Marketplace represent 50% of all items sold on the site globally.
Plus, you don’t need to own a physical store or shopfront, so you’re saving money this way too. Amazon offers a service called Fulfillment by Amazon (FBA), which allows sellers to store products at Amazon’s warehouse and Amazon dispatches goods to customers as needed. However, there are some fees and charges for selling on Amazon, which we detail later in this guide.
Can anyone sell on Amazon?
There are no specific criteria set as to who can be a seller on Amazon Marketplace, though some categories may require sellers to meet special guidelines. Just note that when signing up to sell products on the site, you’ll need to have a business name and a business email address.
What costs are involved for Amazon Sellers?
If you want to sell products on Amazon Marketplace, there are some costs involved.
There are two different types of selling plans offered by Amazon. The Professional selling plan is available for a $39.99 monthly subscription fee plus per-item selling fees, which vary by category. This plan is best if you plan on selling more than 40 items per month.
If you plan on selling fewer than that, then the Individual selling plan is your other option. With this plan, you don’t pay a monthly subscription fee, but you do pay $0.99 per item sold as well as other selling fees, which vary by category.
Selling fees typically range from 6% to 20% of a product’s selling price, with the average seller paying 15%.
Foreign transaction fees
You also have to think about how much it costs to convert one currency into your local currency or vice versa. For example, if you need to pay an international supplier, you could get stung with a large transaction fee each time you need to make a payment.
Foreign exchange rates
You also need to factor in the foreign exchange rate. The better the rate, the less money you’ll lose when making international payments. The banks and online marketplaces like Amazon typically have poor exchange rates, while dedicated online money transfer providers are much more competitive.
What’s the best way to manage international payments?
Selling on Amazon is great as it allows you to reach customers from all over the world. However, along with international customers come international currencies, which isn’t as great. For example, if someone from London buys one of your products, they’ll pay you in pounds, which will then be converted into US dollars. You could get stung by high fees for this, plus lose money due to poor exchange rates.
You could try to open a bank account in London, but trying to open an account overseas yourself can be challenging without a local residential address.
Can I receive overseas payments into my existing bank account?
It’s worth checking with your bank to see whether you’re able to receive foreign currency payments directly to your existing USD account. Many banks offer this service. However, be aware that they typically charge a transaction fee each time an overseas buyer transfers money to your account. The payment may also pass through one or more intermediary banks on the way to your account, meaning additional fees and charges.
Another issue to be wary of is the exchange rate that will be applied to the funds upon reaching your account. Generally, banks will apply whatever exchange rate they’re offering on that particular currency at the time they process the transaction. Depending on how that currency is performing at the time, this may result in a poorer exchange rate, meaning fewer funds in your account once all is said and done. The intermediary banks through which the transaction passes may also carry out currency conversions, resulting in additional losses.
Receiving overseas payments into a multicurrency account
Another option for receiving foreign currency funds is to open a multicurrency account. This is an account offered by a bank specifically designed for individuals who regularly transact in a foreign currency. The transaction fee for these accounts to receive foreign currency may be substantially reduced compared to a standard bank account.
International money transfer for online sellers accounts
Another solution is to opt for an online sellers account with a dedicated international money transfer provider. These accounts open up local bank accounts in the international market you’ll be selling to, so you’ll have an account overseas that you can use to receive local currency.
For example, the online sellers account offered by WorldFirst comes with local receiving bank accounts in Europe, America, China, Japan, the United Kingdom and Canada. TransferWise also provides an online sellers account option, which comes with local receiving accounts in America, Europe, the United Kingdom, Canada, Australia and Hong Kong.
This way, if you sell a product to a customer in London, you’ll get paid in the local currency (pounds) into your local receiving account. Your money can stay in the local receiving account while you keep an eye on the exchange rates. Currency exchange rates fluctuate daily or even more than that, and transferring your funds back into US dollars when the rate is strong can save you lots of money.
All you need to do is add your local bank account details to your Amazon account, like you would with your normal bank account. Then when you sell a product online, Amazon will send your payment to your local bank account in the local currency. Easy!
Benefits of using an online sellers account when selling products on Amazon
- The work is done for you. Trying to open a bank account in a country you don’t live in is stressful and complex. With an online sellers account, the work is done for you.
- Compatible with Amazon. You can use your online sellers account on Amazon as well as on many other online marketplaces.
- Decide when to bring your money home. When you receive payments in your international bank account, there’s no hurry to transfer it back to America.
- Competitive exchange rates. Since you decide when to bring your money home, you can keep an eye on the exchange rates and transfer your currency into US dollars when rates are competitive.
- No transaction fees. An online sellers account provided by a dedicated international money transfer provider typically doesn’t charge a fee to receive money into your local account or to send it back into your local currency. Instead, the company makes its money by charging a slight commission on the exchange rate.
An online sellers account is going to simplify handling international payments for your business or side hustle on Amazon and other online marketplaces. So if you find that many of your transactions are taking place overseas and you’re losing a small percentage of profit to foreign exchange costs, you should consider the benefits of an online sellers account.
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