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Weak $USD
Has it increased sales?
JasonD




msg:652150
 11:36 am on Jan 10, 2004 (gmt 0)

If you sell your widgets with a $USD price tag has the weak $USD increased sales from other parts of the world for you?

 

Essex_boy




msg:652151
 11:37 am on Jan 10, 2004 (gmt 0)

No its have a negative effect on me I buy my stock in sterling and selling $. No a happy man is me.

Miop




msg:652152
 11:59 am on Jan 10, 2004 (gmt 0)

I will look to buying more stock in dollars - it might help offset the cost of the import duty.

JasonD




msg:652153
 12:06 pm on Jan 10, 2004 (gmt 0)

hi Essex Boy (I'm from Romford btw so that's 2 of us plus Shak makes 3)

I understand your concern but was thinking more along the lines of whether the average consumer takes exchange rates to their own currency into account when making a purchase.

In an international marketplace the universal currency is the USD with the EUR fast catching up, but the majority of people online are not American so I believe a mental process takes place of converting the USD price into the consumers' local currency.

I've never been able to test this but as the USD is so low at the moment I feel that this is as good a chance to test for increased sales due to currency fluctations.

If non US sales have increased by a decent percentage and your prices are in USD then I think it is fair to assume that the lower end price for the consumer may have a direct effect on the increased sales.

The theory is sound and this "should" work but I look to all the sellers of various widgets to help me out :)

The main reason for this is that if we can show that a ticket price stays the same but a localised price decrease due to exchange rate changes increases sales then a campaign to those countries that don't use the USD should increase sales further.

Again the theory is good but what about in practice?

Thanks

Jason

andy_boyd




msg:652154
 1:18 pm on Jan 10, 2004 (gmt 0)

Based in Northern Ireland and selling products priced in US $. I don't think that the low Dollar is affecting sales either way, but I can say that it isn't doing me any favours.

I am in a predicament - what do you do if you have a 2CO account with say $1000 in it? If you release it now the conversion rate destroys your profit margin, but if you wait you get no money.

Anyone else in the same boat?

JasonD




msg:652155
 2:01 pm on Jan 10, 2004 (gmt 0)

Although there are many many many bad effects of a week dollar for vendors there must be some upsides too.

Do you have any?

Essex_boy




msg:652156
 3:45 pm on Jan 10, 2004 (gmt 0)

Andy in the same boat - Drop in exchange rate has knocked 60 off of the margins for sales. Might not seem much but I only work on 30 % net.

Take the cash if you need it, else wait......and pray it doesnt go further against you.

If the pound went against the dollar it mean that I could drop my prices.. Oh wheres that witch doctor..

Essex_boy




msg:652157
 3:47 pm on Jan 10, 2004 (gmt 0)

Oh yeah forgot to add - 99% of sales go to the USA so showing two currencies wouldnt really work.

Mungo




msg:652158
 4:16 pm on Jan 10, 2004 (gmt 0)

I import to the UK from the USA - so its made my imports cheaper. :)

I was going to reduce my retail prices to reflect the falling dollar, but thought better of it because i would have to raise them again when the dollar rises, and customers don't like price rises!.

andy_boyd




msg:652159
 4:26 pm on Jan 10, 2004 (gmt 0)

I think I'll be holding my money in 2CO and PaySystems for now, at least until the Dollar strengthens and then wire it across.

This is a continuing long-term problem that needs to be guarded against. I think that I will produce a couple of sites targeted to my native currency, Sterling, so that if the Dollar slides again it won't be as much of a problem.

Has anybody thought about a long term strategy - how do you intend to spread your loss due to a fluctuating currency market?

sun818




msg:652160
 5:44 pm on Jan 10, 2004 (gmt 0)

I'm a merchant in the USA. More sales from UK.

Essex_boy




msg:652161
 5:56 pm on Jan 10, 2004 (gmt 0)

Long term currency stabillity try spread betting, Not as silly as it sounds. Check it out.

JasonD




msg:652162
 8:47 pm on Jan 10, 2004 (gmt 0)

Excellent news Sun

Any other American vendors seeing increased sales from the UK or eleswhere outside the US?

mansterfred




msg:652163
 1:08 am on Jan 11, 2004 (gmt 0)

We have had more sales to International locations because of the dollar. We are based in the USA and use USA goods in our products. We have shipped a lot more to (In Order):

1) Australia
2) Canada
3) UK
4) All other

Really has only effected English speaking countries as our web site is only in English.

BTW we raised prices and it has had no effect..

mktman




msg:652164
 7:29 pm on Jan 12, 2004 (gmt 0)

I know the exporters in Canada are choked because the US$ makes it more costly for Americans to buy our products and they account for 80% of all exports.(When their not putting trade restrictions and tarrifs on them)(.. and they said it was "free" trade!?) But the importers and shoppers are loving it.

The ones making the bucks should be American Exporters as it is now cheaper for the rest of the world to buy. I also would say the informed customer has a handy currency conversion website at their disposal to figure out the price in their currency before they buy and take it into account.

If the theory that behind the scenes the US Gov. is pushing the US dollar down to help rebalance the American Trade Deficit and spark the economy you might be in for a long wait until the US dollar rebounds.

mktman

Essex_boy




msg:652165
 8:43 pm on Jan 12, 2004 (gmt 0)

Yeah I think your right there in as much as the pres needs some good news to bouy his reelection plans. A booming economy is is justthat.

choster




msg:652166
 9:27 pm on Jan 12, 2004 (gmt 0)

Umm, I think most economists would say that exporters to the US have been living high on the hog the last few years and need to come down.

They've been predicting the decline of the overvalued dollar and recovery of the undervalued euro for some time; it was exceeding historical averages in the Clinton administration. The US trade deficit remains totally unsustainable; to sustain the value of the dollar with such an outflow of capital requires a high national savings rate or a massive inflow of foreign investment. Well, the national savings rate is pitiful, and consumer and corporate debt (not to mention state and federal debts) get deeper by te minute.

Foreign investors, meanwhile, have been able to get better returns on their money at home instead of in the US (1% interest rates don't do much for anyone in any country, but especially when it's in a declining currency). Property, for instance, is super-hot in Britain, Spain, Australia, and a few other places. The Y2K bubble is no longer around to suck in... er, I mean attract investment like it did five years ago.

On top of that we have the environmental complication that China and Japan are reluctant to allow the renminbi (yuan) and yen to appreciate, the former because it would shatter the country's banking system and the latter because it would hurt export manufacturers who are one of the few bright spots after a decade of post-bubble recession. Squeezing the balloon on that end accentuates the rise in the euro and sterling against the dollar even more.

The Bush Treasury probably wants a lower dollar, but they don't need to push. The last thing they need is a crash; two fifths of the public debt (according to the Economist) is held by foreign investors, interest rates would rise fearfully, and the stock and bond markets would probably crash as well, all with dire effects. Like the overinflated stock market, the dollar needs a "correction," and hopefully this will rebalance the world economy a little bit. Fewer Argentinas, right?

GarryBoyd




msg:652167
 12:22 am on Jan 13, 2004 (gmt 0)

As a small biz importer, I sell in my local currency, so a weak US dollar (comparatively) just adds a little jam every now and then. Right now the kiwi is about the strongest I ever remember it. However, its not the only factor to take into account when setting prices. My freight, bank and customs costs are still in local currency, so its not as attractive as it first looks.
So far as protecting yourself against currency fluctuations, it is not an easy proposition for a small business, unless you have an accurate crystal ball. I run a column in my accounts called gain/loss on exchange rate. This is the difference between the guess at the cost on the day goods come into stock, and the actual cost on the day we pay for them. Over the year the goal is to end up around zero.
If you have money offshore, with an exchange rate going the wrong way, you may be best to put it in a USD account and use it to pay suppliers or buy services you need from the US. ie, dont convert it.
Tools such as forward contracts dont really work for small amounts of money, due to the fees involved.

ronin




msg:652168
 6:11 pm on Jan 14, 2004 (gmt 0)

Essexboy> I hear you... my margins are being battered by the weak US$ at the moment. I have a few customers in the EU, but not enough to offset what I'm losing in sales to North America.

Essex_boy




msg:652169
 2:53 pm on Jan 18, 2004 (gmt 0)

Just starting to get UK orders. Which is interesting as Im in the UK but my prices are in USD.

Bet they think they have a bargain!

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