Brexit has hit UK based entrepreneurs, like everyone else in the UK.
But I think it’s time to start reflecting quietly on what this means for your Amazon business. There will be threats and issues – but also opportunities.
First and foremost: Don’t panic. Don’t despair. Respond but don’t react! Assess everything with a cool business brain. Don’t be a Polyanna; don’t be pessimistic, either. Just be aware of events and stay aware of threats and opportunities. When you spot the latter, act decisively!
Threats & Solutions
The USD/Pound rate
- The pound now buys you about 15% less in USD (at time of writing) than before Brexit (about 1.30 USD).
- So now is not the time to start selling in pounds (UK) and buying in dollars from China (nor in fact in RMB, the Chinese currency, which has more or less tracked the dollar).
- If you are already selling in the USA, and are having funds paid into your UK account in pounds, set up a USD account in the UK Fast (I use Metrobank simply because it was so quick and easy to set up an account; others use HSBC with success) and set up a receiving account with a decent currency exchange (I use Currencies Direct, who are the most cost effective and quickest out of all solutions I’ve tried).
- If you already have dollars in reserve, I would be inclined to use them to get more dollars, ie sell in the USA.
- Having said all of which, always analyse each individual opportunity (market research) for profitability/cash needed. There will almost certainly be some amazing opportunities in the UK, just be very careful to analyse the unit costs from China.
The USD/Euro exchange rate
1. For now, if you’re selling in Euros (if you have inventory in the UK or other European marketplaces) and are selling into Germany, France, Spain, or Italy, again, get yourself a Euro account in the UK and set up Currencies Direct or similar to receive your payouts from Amazon. Euros are for now worth more than before Brexit.
2. However, I would say that medium term (who knows exactly but I guesstimate within 6-18 months or so), the Euro itself will be hit by crises and thus lose against the pound (worth less to you if reconverted) and against the Dollar, which you need to pay Chinese suppliers (to an extent it has itself been hit by Brexit).
I almost guarantee a crisis, if nothing else, because of the Greek debt situation. I’m no expert but it’s pretty obvious that if they couldn’t pay their debts last two crises, next time (when they will have expanded), they will simply have to be written off to a degree (in a “haircut”). The markets are going to hate this and they will punish the Euro. It will probably bounce back, I suspect, but that is way harder to predict.
3. Of course, one way to mitigate Euro currency risk is to sell in wealthy Euro countries on Amazon (eg in Germany) AND buy in Euros from lower-cost countries (eg Estonia). This is something I’ve been exploring in depth but I’ve no practical experience yet.
Simply put, tough times thin out the herd. We aren’t in a recession yet, but for people converting pounds to USD, their dollar costs just rose 15%. That may drive some people out of the whole business model.
If there is too much competition for your liking on Amazon UK, or from UK sellers on Amazon, this is one way that it will get reduced. It may indeed be the right decision for you and your business to shut up shop. Assess objectively if you can. But equally, if you can ride it out, you will have less competition at the end of the process.
If you sell and buy in dollars, you are effectively outside the UK economy and outside the pound’s relationship to other currencies. Congratulations! You still have to deal with the intense competition on Amazon.com but if you can handle that, there is money to be made.
HOW TO SUBSCRIBE TO THIS PODCAST
A podcast is a free downloadable audio show that enables you to learn while you’re on the go. To subscribe to my podcast for free, you’ll need an app to listen to the show from.
For iPhone/iPad/iPod listeners – Grab your phone or device and go to the iTunes store and search “Amazing FBA”.
This will help you to download the free Podcasts App (produced by Apple) and then subscribe to the show from within that app. Every time I produce a new episode, you’ll get it downloaded right away.
For podcast enthusiasts – If you already listen to podcasts and have a podcatcher that you prefer, the feed you’ll need to add is: http:// amazingfba.com/feed/podcast.
For those who don’t have a mobile device – You can always listen to the show by clicking the audio file at the top of this page.
If you have any queries, just go to www.amazingfba.com/ask
Watch Post Brexit thoughts for UK Amazon sellers
[video_page_section type=”youtube” position=”bottom” image=”” btn=”light” heading=”” subheading=”” cta=”” video_width=”1080″ hide_related=”false” hide_logo=”false” hide_controls=”false” hide_title=”false” hide_fullscreen=”false”]https://www.youtube.com/watch?v=59nEfHf6eh8&feature=youtu.be[/video_page_section]