As e-commerce flourishes, more small and mid-size companies are offering their products and services online and in multiple currencies. To ensure a high quality user experience, these applications must have a pricing engine in place so that currency localization and conversion can happen quickly and accurately. Price localization functionality might seem deceivingly straightforward, but a pricing engine is only as strong as the data that informs it. We discuss the importance of this process from a technology perspective and offer tips for companies looking to optimize these programs.
Price localization is becoming a more critical component of e-commerce platforms thanks to increasingly global transaction patterns. A study done by Profitwell saw that companies who failed to price their products in the local currency sold 30% less overall versus companies that did localize their pricing in the local currency.
For business and consumers alike, worldwide usage of web-based shopping, banking, travel and other applications has made this a very competitive space. In order to thrive, companies must consider usability and versatility of their price localization tools, which means those engines must have access to reliable currency information so that they can provide fast, accurate quotes for goods and services in local currency.
The currency functionality of any website that caters to an international marketplace must also be aware of the speed and accuracy by which they allow conversion. This extends to smartphone applications as well, since mobile penetration in the e-commerce space has been on a rapid rise.
Those who design these platforms need to factor in a number of things when building price engines– a deep understanding and thorough knowledge of the region and purchasing patterns of its user base is extremely important. The value of a currency changes almost every day, therefore it’s critical to have a system in place, or a platform established that accurately converts one currency value to another.
Here are some solutions to streamline the process:
· Real-time FX rates and Tick-by-Tick data: Having real-time FX rates and tick-by-tick data powering your price engine allows for prices to reflect the market value at that moment in time, providing the most competitive pricing available, usually updated by the fraction of a second.
· Fixed rates: Alternative to the real-time rates or tick data, you can set your rate based on daily averages or choose a fixed rate to fit your business needs. This way you can streamline your operations while protecting your bottom line.
· Exchange rates API: Automated exchange rate functionalities are a great way to price your products and services automatically and accurately wherever they are offered.
· Strategic partners: Identifying and partnering with local FX vendors who have access to reliable historical data of the specific region can be another way for offering payment solution to an international marketplace.