The Margin Line Cross-Border Sellers Never See
If you sell through marketplaces in multiple countries, you've made a currency decision. You probably didn't make it consciously, and you almost certainly didn't price it.
Here's what typically happens: you sell in euros or dollars, the platform converts your balance to sterling automatically, and a payout lands in your bank account. Clean, simple, no admin.
The conversion rate used sits somewhere between 1% and 4% away from the interbank rate depending on the platform and the currency. On six-figure international sales, that's a cost line that never appears in your P&L as a cost — it just makes your revenue slightly smaller than your sales reports suggest.
Why it's larger than it looks
E-commerce margins are thin and volumes are high, which makes percentage-based costs behave differently than in other businesses.
A seller doing £800,000 of European sales at a 3% conversion cost is losing around £24,000 a year. For a business running 15% net margin, that's roughly £160,000 of sales needed to replace it.
And unlike your ad spend, your COGS or your fulfilment costs, nobody reviews it quarterly. There's no invoice to query and no supplier to negotiate with.
The alternative: get paid in the currency you sold in
Most major marketplaces and payment processors let you nominate a bank account in the currency of the marketplace. Sell in euros, get paid in euros into a euro account. Sell in dollars, get paid in dollars.
You then control the conversion: when it happens, at what rate, with which provider, and whether it happens at all.
Three things this unlocks:
1. Better conversion pricing. You're converting in larger, less frequent amounts through a provider you chose, rather than in automatic increments at a rate set by the platform.
2. Paying costs in the currency you earn. If you hold stock in the EU, pay a European 3PL, run ads in euros, or pay EU VAT, those costs can come straight out of your euro balance. No conversion at all — which beats any spread, however tight.
3. Timing. You decide when to convert rather than accepting whatever rate applied on the platform's payout schedule.
The VAT and fulfilment angle
This matters more than the headline conversion cost for sellers using overseas fulfilment.
If you're selling into the EU with EU-based stock, you likely have EU VAT registrations and euro-denominated VAT liabilities. Converting euro sales to sterling, then buying euros back to settle a VAT bill, is a full round trip — a spread paid twice on money that never needed to leave the currency.
Same for US sellers with state sales tax obligations, US 3PL costs, or dollar-denominated advertising spend.
The general principle: map your costs by currency before you decide what to convert. Most cross-border sellers discover they need far less sterling than they've been converting to.
Sourcing: the other side of the ledger
Many sellers buy in dollars and sell in euros and sterling. That's two currency exposures moving independently, against a price list that usually stays static for months.
A 6% move in GBP/USD on your cost of goods, against fixed retail pricing, comes straight off net margin. For a business at 12% net, that's half the profit on affected lines.
If you place regular supplier orders in dollars, forward contracts on forecast purchase volumes stabilise your landed cost and let you price with confidence. This is standard practice in traditional import businesses and unusual in e-commerce, which is odd, because the exposure is identical and e-commerce margins are typically thinner.
Worth doing, and worth not overdoing
A caveat: if your international sales are modest — under, say, £100,000 a year — the admin of multi-currency accounts and manual conversions may outweigh a few hundred pounds of saving. Platform auto-conversion is convenient, and convenience has value at low volume.
The calculation changes fast as volume grows. The point at which it becomes clearly worth doing is lower than most sellers assume, and by the time it's obvious, a couple of years of unnecessary cost have usually gone.
The five-minute check
Take last year's international sales by currency.
Multiply by 2.5% as a working estimate of your conversion cost.
List your costs in each of those currencies — fulfilment, VAT, ads, suppliers.
Compare. How much of your foreign currency income could have paid foreign currency costs directly?
The gap between what you converted and what you actually needed in sterling is the size of the opportunity.
William Fuller, Co-Founder of Orbis Exchange Group contact on 0203 918 5622
Ben James, Co-Founder of Orbis Exchange Group contact on 0203 918 5621