fluctuating-dollar-and-conversion

February 25th, 2016

US_Dollar_Index_from_Stooq_dot_com

 

eTailers have been noticing that in the past few months, conversion rates for their international sales are moving in the wrong direction. In our discussions with them, we help them focus on those items that affect conversion such as:

 

  • Difficult or painful checkout process
  • Inflated pricing by 3rd party international processors
  • Currency exchange charges
  • US dollar strength

 

The US dollar has strengthened significantly in just the last few months. As shown in the chart below by stooq.com, we have seen the strength of the US dollar go from all time lows from 2007 to early 2015. The last half of 2015 has seen dramatic strengthening in the US dollar as other markets have weakened.

 

For example, one can see how the cross-border eCommerce business is impacted is by looking at one of our trading partners, Canada. Since 2006, we have been used to the US (USD) and Canadian (CAD) dollar trending close to a 1:1 ratio. In 2015, we saw a change in that ratio where the CAD was at 1.45 vs what the USD is now in January of 2016.

 

In essence, your product and shipping charges have gone up 45% in the eyes of the Canadian consumer. This impacts conversion.
What to do? Don’t panic—orders are still happening. Make sure you take control of your international business and control the costs to the consumer. Over time, currency will fluctuate, but your cross-border business processes can and should be solid.

Written by: Frank Reid, VP – Go to Market iGlobal Stores

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