The U.S. dollar is the King of Currencies right now. The dollar is ahead of the euro, Canadian dollar and Australian dollar. While it’s nice to be No. 1, a stronger dollar can be challenging for companies that sell overseas, as American products are more expensive to consumers who shop in other currencies.
Online retailers who sell globally are not unfamiliar with currency fluctuations. Yet the U.S. dollar has been going strong since last summer, and this scenario isn’t likely to change anytime soon.
So what can retailers do? First and foremost, remember that selling globally is a long-term strategy. While at least the early part of 2015 will be tough, globalization isn’t going away. And nothing lasts forever, especially not foreign exchange rates.
There are some markets where it wouldn’t make sense to invest right now. For example, Russia, which has been impacted by sanctions, a devaluing currency (the ruble was the worst performing currency in the world last year) and ongoing friction with Ukraine. Or some European Union countries, like Greece, where the economy is faltering.
Plenty of bright spots exist, though. Here are five markets we think are worth paying attention to right now while the dollar is hot.
China
China is not as exposed to the FX market as the government sets the official rate. Though news reports say China’s economy is gradually slowing, that should matter little to ecommerce retailers: China has a massive market—with 500 million consumers online. Its citizens are getting wealthier, too, with the national average disposable income of urban Chinese up 10% to around $3,200 this year. And average order values are rising as Chinese shoppers get a taste for luxury items.
Hong Kong
With its currency pegged to the US dollar, affluent Hong Kong is a stellar market. It has a relatively strong economy, a strong expat community that’s always looking for overseas deals, and familiarity with US brands. Hong Kong is a free port, meaning most imported items are duty free.
Singapore
Singapore also has a thriving economy, and the Singapore dollar is up against the US dollar. In this city-state, shopping is considered a national sport. And given the high cost of goods, shoppers often are looking for cross-border deals and variety online, with more than 50% of Singapore’s ecommerce dollars coming from cross-border shopping. Singapore is also a free port.
Saudi Arabia
The Middle East is a great place to invest now. The region’s currencies are pegged to the US dollar and there’s plenty of disposable income. Saudis are big retail spenders compared to the rest of the world, with a $397 average order value across the Borderfree network last year, the third-highest rate after Kuwait and Qatar. The King recently handed out large bonuses to government employees, soldiers, pensioners and some students, and many are going shopping online with the funds.
United Arab Emirates
Like Saudi Arabia, UAE is home to a large population of online shoppers who are familiar with western brands. This gulf country has the highest foreign-born population in the Middle East, around 84%, and a disproportionate number of males. UAE also saw one of the top five highest rates of organic sales growth across the Borderfree network in 2013.
Though these five markets aren’t the only ones retailers should focus on in 2015, they’re good bets for many and should show solid growth over the next few years. In the meantime, retailers should protect the base that they’ve built, knowing that the FX winds will moderate or change soon enough in their favor.
Michael DeSimone is the Chief Executive Officer and President of Borderfree.