Thursday, April 23, 2009

Econ 202: International Business Super-Duper Simplified

I just answered an Etsy forum post (yes, the movers are coming in an hour) and realized it should be an Econ-for-Etsy blog entry. Also, I need to make all these Econ-for-Etsy things into a book and sell it. Oh, EtsyLabs! Storque! Where's my advance?

From the forum:
talkingbeads says: Message from U.K. seller
I have just listed a Handbag charm and have priced it at $6 including postage. Is this a good price. Too High or Too Low? Advice Please x

My response:
1) Find out the REAL cost of mailing your items to various locations. You can include handling, etc, though if it gets too high compared to the cost of your item itself you may want to shift and up the charm's cost some to absorb the shipping so people don't freak out when they go to the checkout. Convert to US$. US$ suck right now compared to the pound. Cringe a lot when you see this.

2) Ask "what's the most someone would be willing to pay for this charm?" Try to remove yourself and your attachment to it and just think like a buyer. Convert to US$. Cringe a lot again and realize you're best off selling to other UK people and buying off US sellers because, as previously mentioned, the pound is killing the dollar. So is the euro.

3) Market your brains out. Probably to others on your side of the Atlantic because your shipping will be cheaper and exchange rates won't make your prices seem high so you can actually charge more.

I'm only half joking. US tends not to sell much to Mexico, but the US gets flooded with Mexican goods because of exchange rates and the relative cost of labor, etc. You can make value judgments about free trade and such all you want, but for Etsy sellers, it is what it is and we'll do best if we can understand the market and deal with it accordingly.

For me, the cost of shipping to the EU/UK may or may not be worth it for buyers from those countries to purchase my products. It might be worth a promotional blitz, it might not. Offering cards in Spanish and making a major push for more American business south of the US is probably NOT worth it for me, since the shipping costs will be higher AND the exchange rates mean most people would be willing to pay less.

Isn't economics FUN???

No matter what country you are from, it's useful to keep in mind what other countries' goods are considered less expensive and where your currency has little value. People are more likely to buy from you if you are considered a "cheaper" country, but make sure shipping costs don't kill your prices. And if your currency is currently on top? Your fellow countrymen (and countrywomen) are more likely to pay top dollar for your products, so market locally and if somebody from elsewhere wants to pay for what you make, more power to them.

DISCLAIMER: This whole post is SUCH a generalization. There are perfectly fabulous ways to do business from any country, with any country. There are tons of complicating factors I'm not going into. But theses are some super-simplified basics to start. Feel free to yap about the various exceptions and other ideas in comments. Or ask questions. Or tell me I smell. I like comments.