Few UK importers will claim to have been immune to the big change in exchange rates in the last three years. Clive Daley co-founder at Daley Hub, Business consultant, Coach and Personal Mentor, discusses the ongoing effects and how to mitigate them…
What to do… After the events of 2016, the fluctuations in exchange rate have had a dramatic effect on the cost of goods into the UK. This situation has not changed and in fact it has recently got even worse. With exchange rates of 1.27 dollar and 1.12 euro to the pound, this situation is ongoing. So what to do?
If you source product from Asia or mainland Europe and supply it domestically you will be feeling the pain of the exchange rate and no doubt will have been requesting price increases from your retailer customers with varying levels of success. If you source product from Asia or mainland Europe and supply it directly in containers from factories to retailers then likely your retailers will have been asking you for cost reductions to mitigate their loss. This is a time where collaborative relationships are key and in times such as these you can easily destroy your relationships. My advice is do your homework and tell the story of what has happened with your cost of goods. Go back to when you last set pricing and map out the flow since then to demonstrate the overall effect and justify your request. For sure no one party, be that you, the consumer or the retailer, can absorb the costs involved here so it does need to be a shared responsibility… well if one is sensible, that is.
Opportunities… This situation does offer some opportunities, last year over 30% of businesses increased their export business in order to capitalise on the beneficial exchange rate when you are selling outside of the UK and there are partners here who can help:
Encouragingly the Department for International Trade (DIT) is currently running an initiative to support businesses wanting to do exactly this, grow their business outside of the UK to take advantage of the currency gains and they are actively pushing marketplace platforms.
There is business to be made in the marketplace. They are not only offering a fast way to expand business across countries but also a way to increase your profit. Through their expertise in digital acquisition it should be your most profitable sales channel. I recently worked with the team at ManoMano, a dedicated marketplace for Home Improvement and Garden, and they are working in partnership with sellers to increase their business across the UK, France, Germany, Italy and Spain, with much success.
There are also providers who can manage this export opportunity for you. I spent some time recently with the team at Infinity Blue who manage marketplace selling for businesses offering a number of services including Logistics, Translations, Returns solutions and Active price Management across many different countries and platforms, so you do not have to do this all yourself.
When times are challenging, I always take a business optimistic approach, and look for ways to increase business. If anyone wants to discuss what you can do, please get in touch.