International Dropshippers – Here are 3 easy ways to boost your profits

17 July 2019
Chris Garrett

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Dropshipping is one of the most lucrative ways to make money online without having to front up a TON of money. In fact, 33% of all online stores use some form of dropshipping to fulfill their orders.

 

But because the barriers to entry are so low, dropshippers rely on selling a very high volume of products for a relatively small amount of profit each. 

 

In fact, our data shows that eBay dropshippers make on average $2.67 profit per item and compared to other forms of e-commerce, the average margin for dropshipping is around 6% vs 30%. 

 

So, how can you squeeze more money out of your online store?

 

Here are 3 ways you can boost your profits, without requiring a ton of effort and/or time. 

 

1. Use repricing software to win more sales

 

If I asked an online store owner to suggest some ways they could make more profit, they might suggest something like:

  • Listing more items for sale
  • Finding new suppliers 
  • Changing the niche of their store

But what if you want to make more profit from your existing items?

 

On online marketplaces like eBay, having the lowest price amongst your competition is likely the #1 factor for winning sales – particularly as a dropshipper when you’re selling the same items as everyone else.

 

The problem is, the competition isn’t static. 

 

You might decide to list a green hairy wig on eBay for $20.00 because that would make you the lowest priced green hairy wig seller at the time.

 

But what happens when 2 days later, someone decides to join the hair battle and lists the same wig for $18.00?

 

Or equally, what if a competitor that was selling the wig for $21.00 stops selling it and now you’re way underpriced compared to your competitors?

 

This is why you need repricing software

 

Repricing software (also known as repricers) lowers and raises the prices of the items in your store for you to help you make the most profit and sales possible. Some repricers are more advanced than others and have different features.

 

2 Examples of Repricing Software:

 

Salefreaks – eBay competition-beating repricer

 

Salefreaks own dropshipping software includes a repricer that allows you to specify the profit margins you’re willing to accept. For example, if the minimum profit margin you wish to make is 10%, you can make sure the repricer doesn’t lower your prices any further.

salefreaks-repricer-screenshot

 

Informed.co Repricing software for Amazon sellers

 

If you’re managing e-commerce stores on many platforms, Informed.co may be a good choice for your business as it supports Amazon, eBay, and Walmart.

 

For Amazon dropshippers, your price is a huge determinant of whether you win the buy box and are shown as the default seller on Amazon. According to Informed.co, Buy Box ownership increased 63% in just 2 weeks for Amazon dropshippers that use a repricer, making it an incredibly valuable way to make more profit.

 

Need more info? We wrote a whole guide about boosting profit using eBay repricing software.

 

2. Get a Global Currency Account to minimize foreign exchange fees

 

As an international dropshipper, you may need to transfer money between countries.

 

And if you don’t use the right provider, you may be stung with sneaky margins that cut into your profits, and very costly fees,which when you’re selling lots of items, could add up quickly.

 

Here are a couple of scenarios:

 

You’re based in a different country to the one your store operates in

 

Like, what if you’re British but you have an online store that sells items to customers in the U.S? As your customers are Americans, they’ll expect you to charge them in their local currency – U.S. Dollars.

 

Yet, when you withdraw the money you make, you’ll need to exchange or convert your U.S. Dollars into British Pounds to be able to spend it. 

 

Remember, the average profit margin for dropshippers is just 6% so if you rely on the poor currency exchange rates from most marketplaces and payment providers, you could suffer rates and fees that can easily completely wipe out your profit.

 

Paying private suppliers in their local currency

 

If you’re doing traditional dropshipping rather than retail arbitrage, there’s a high chance that your suppliers will be based in a different country to you. And when it comes to paying them, you’ll need to provide payment in a foreign currency. 

 

The preferred method to receive payment for nearly all private suppliers is by local bank transfer. This is because it gets rid of credit card processing fees and avoids the potential risk of chargebacks. 

 

For these reasons, if you pay private suppliers with an international money transfer you may be able to negotiate a hefty discount too which can widen your own profit margins.

 

How does a Global Currency Account work?

 

A Global Currency Account allows you to receive, hold and send payments in multiple currencies. You can essentially hold the equivalent of a local bank account in  major currencies, to enable you to receive and send payments with very low margins [and zero OFX transfer fees].

 

How can a Global Currency Account help you to make more profit when dropshipping internationally?

 

Lower conversion fees when accepting foreign payments

 

For example, let’s say a customer is buying your goods on card.

 

One of the most popular merchants for processing card payments is Stripe, and many dropshippers that have their own online store use it to accept card payments.

 

If you’re collecting payments from customers in a foreign currency – let’s say US dollars, then Stripe would normally apply its own conversion fee and a high margin to your revenue as they convert it to GBP and send it to your local bank account – that’s in addition to their standard processing fee!

 

But if you have a Global Currency Account, you can hold the equivalent of a local bank account in USD and link those bank details with Stripe instead. Stripe will then send the money to a USD account instead, and you avoid a costly conversion!

 

When you’re ready to send that revenue back to the UK, make your transfer from within the Global Currency Account and you’ll get great rates and zero OFX fees.

 

Lower conversion fees if you’re dropshipping on foreign Amazon marketplaces

 

If you’re dropshipping on Amazon, you’ll need to attach your bank account to your Amazon Seller Account to withdraw your money.

 

But if you don’t have a local bank account for the marketplace you’re selling on (e.g. a USD account for selling on Amazon.com), then Amazon will apply their unfavorable conversion fees when withdrawing your balance.

 

If you have a Global Currency Account instead, you can get the equivalent of local bank details for the Amazon marketplace you’re selling on and send the money to it instead, without Amazon’s conversion fees.

 

How to link your Global Currency Account to your Amazon Seller Account

 

  1. Log in to your Amazon Seller Account
  2. Go to Settings – Account Info – Payment Info
  3. Select Add Deposit Method
  4. Input the local bank details from your Global Currency Account

 

Then, when you’re ready to transfer your revenue home, you’ll get great rates and zero OFX fees. 

 

Lower conversion fees when sending foreign currency to private suppliers

 

When you’re paying private dropshipping suppliers you have a choice.

 

You could pay by card – but often this involves high fees (3%+) for both you and the supplier.

 

Or instead, you could pay by international money transfer.

 

The problem is that most banks can charge around 5% on the interbank rate when sending money overseas which wipes out most incentive to use it.

 

However, if you use a Global Currency Account or a reputable Currency Exchange Provider (CEP) that specializes in international payments, then the cost is normally considerably less (~1.5% fee).

 

You may even find yourself in a situation where you have European suppliers, and you’re holding revenue in Euro from sales made on a European marketplace within your Global Currency Account. In this case, you can pay that supplier directly from the balance you hold, so you avoid currency conversion costs altogether.

 

Our recommended solution: OFX Global Currency Account

OFX-compatible-marketplaces

We advise OFX to be used by international dropshippers that need to deal in foreign currencies. Unlike others, their account is specifically designed for online sellers and:

 

  • Offers the equivalent of a local bank account in USD, EUR, GBP, CAD, AUD & HKD
  • Can accept payments from some of the world’s largest online marketplaces like Amazon, eBay, PriceMinister.com, Newegg, Buy.com, Game, Wish.com, CDiscount.com, Rue du Commerce and Shop.com.
  • Charge no account fee for their Global Currency Account
  • Offer 24/7 support for free
  • Are a publicly-traded company,  regulated by the United States Department of the Treasury Financial Crimes Enforcement Network. 

 

Here’s the link to the OFX Global Currency Account.

 

Always make sure you’ve done your own due diligence before choosing any currency exchange provider as they are not the only provider on the market.

 

3. Make back-end profit as well as front-end profit

 

You buy an item for $10, you sell it for $15, and minus say $2 of fees, you make $3 of profit, right?

 

The kind of profit I’ve described above is called front-end profit. 

 

Front-end profit is only the profit made by subtracting the selling price of the item, from the cost of supplying it.

 

But dropshippers can also make back-end profit from selling items too.

 

Back-end profit is additional indirect profit, usually made after the item is sold.

 

Here are 3 ways you can make more back-end profit in your international dropshipping business:

 

Make more from your shipping costs

 

Selling items internationally can be a hassle when it comes to dealing with shipping costs, taxes, and duties.

 

The quick fix for this is to block buyers on eBay in countries with expensive shipping costs, but this limits your reach.

 

By allowing yourself to ship globally, you can open yourself up to a huge pool of potential buyers.

 

A lot of dropshippers use the “default options” provided to them by their suppliers when shipping internationally. For example:

 

  • Your supplier may offer to dropship your item direct to your customer for an international shipping fee.
  • The marketplace you sell on may offer its own shipping program for you. eBay has a Global Shipping Program that allows items to be forwarded to most countries worldwide.

 

 

The problem with these “default options” is that they’re often significantly more expensive than they should be because most people are too lazy to research alternatives. 

 

For eBay and Amazon U.S. dropshippers – consider using Hipshipper

 

How it works:

 

You ship all your international orders to their warehouse in the U.S., and they ship your orders on to your customers.

 

How you can make more back-end profit with Hipshipper:

 

  • Sellers can change the price of their shipping to make a profit on the shipping itself
  • Hipshipper partner with multiple carriers to get the lowest rates possible 
  • Free international returns on all orders!

 

Want to see Hipshipper in action? Read our case study of Pini, who made $2627.20 in back-end profit from Hipshipper in just 30 days

 

Use cashback websites

 

If you’re doing retail arbitrage dropshipping, there’s a good chance your supplier will be listed on a cashback website, which is an easy way to make a small % more on every order.

 

The most popular cashback websites which you should check if your supplier is listed on include:

 

 

With some dropshipping platforms like Salefreaks, the functionality to collect cashback from suppliers is built-in which makes it hassle-free.

 

By the way, even getting 1% off the price of your items can make a big difference. 

 

Make purchases with cashback credit cards

 

Cashback credit cards are useful if you’re purchasing items from a supplier in the same currency. 

 

How they work:

 

It’s very simple. Typically, you make a purchase on your cashback credit card, and as part of the rewards package of your card, you are given a % of your purchase price back.

 

Cashback credit cards vary in attractiveness depending on each country. They typically offer a higher % of cashback in the U.S. as there are fewer laws regulating interchange fees compared with Europe.

 

Some options for cashback credit cards:

 

If you’re dropshipping from Amazon to eBay in the U.S…

 

Amazon Prime Rewards Cardget up to 5% back on Amazon purchases.

 

If you’re dropshipping in the U.K…

 

American Express Platinum Cashback Cardget up to 1.25% cashback on purchases.

 

Thanks for reading. Do you have any tips of your own you’d like to share when dropshipping internationally? Let us know in the comments!

 

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Chris Garrett
Content Editor

Chris is Salefreaks' rockstar content editor. He writes articles for various e-commerce software companies talking about eBay, Amazon, and Shopify. Views expressed are that of the company.

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