(By Karsten Strauss)
“Asking your online customers to pay in a way they are not accustomed can make them suspicious and creates friction to purchase that will cut into your revenue. You can make them feel at home by working with what they know. “In Germany, for example, wire transfers are the most important local payment method,” explained Vodnik. “Whereas in Japan, the Konbini payment method is a popular alternative, representing nearly 40% of some of our clients’ Japanese transactions.”
Ecommerce is exploding and that means that businesses that couldn’t afford an actual store are all of a sudden selling their products online, not only to customers in their own neighborhoods but halfway around the world.
But getting people to buy what you’re selling is more nuanced than you think, especially with the added complication of dealing to overseas clientele.
Craig Vodnik, co-founder and VP of operations at Cologne, Germany-based ecommerce provider Cleverbridge, has some insight into global business strategies. His company deals with over 300 international software and SaaS corporations like Acronis, Avira, Dell , Malwarebytes and Parallels. He’s also the author of “Building Keystones,” a digital e-commerce industry focused blog.
Here is his list of pricing issues that every business that’s even thinking about online sales needs to pay attention to:
1 Flexible Pricing
The wider you sell your products, the more market prices you’ve got to be aware of and make changes accordingly, if you can. “If you sell a product competitively for £50 in the UK, converting that product to U.S. dollars results in a product that costs about $80 in the U.S.,” explains Vodnik. “However, competitors in the U.S. might price their product at $50, so even though you are pricing in the local currency, you are not priced competitively and price conscious shoppers will abandon your site for a competitor’s.”
2 Currencies Are Confusing
Despite the fact that it’s easier than ever to convert currencies, seeing an unfamiliar currency on an ecommerce site is confusing to a lot of people and can lead to the abandonment of online shopping carts. To decrease e-commerce friction and cart abandonment, set prices in every relevant local currency,” says Vodnik.
3 Price Presentation
Rounding numbers can make a psychological difference to consumers, believe it or not. Exchange rates can cause friendly-looking price figures to turn to less rounded, awkward-looking numbers. “If you show an EU customer a product priced at €23,81 rather than a more customer-friendly price of €25,00, you are increasing e-commerce friction unnecessarily and making them aware of the fact that your company is obviously not located in their home country,” says Vodnik. “Your customers should see product prices in clean, round numbers to further simplify the purchase decision-making process.”
4 Local Payment
Asking your online customers to pay in a way they are not accustomed can make them suspicious and creates friction to purchase that will cut into your revenue. You can make them feel at home by working with what they know. “In Germany, for example, wire transfers are the most important local payment method,” explained Vodnik. “Whereas in Japan, the Konbini payment method is a popular alternative, representing nearly 40% of some of our clients’ Japanese transactions.”
Showing sales taxes in a way your online customers are familiar with will avoid suspicion and increase buyer comfort. There are also legal points, as some countries have different tax disclosure requirements. “In the U.S., sales tax is added to the marketed price and varies widely across the country and within individual states,” said Vodnik. “In the EU, however, Value Added Tax (VAT) is a tax on the perceived value of a product, so it is marketed as a component of the final price.”
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