The euro benefit

>From Jan. 1, 1999, world trading will be dominated by the dollar, the yen, and the euro-the last a currency that won’t even be physically available until three years later.

In January 1999, 11 countries-Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain-will join the European Monetary Union (EMU). On Dec. 31, the conversion rates of their currencies against the euro will be fixed, making all 11 currencies economically interchangeable through the euro. Payments in euros will be an option from January 1999, but euro notes and coins won’t hit the streets until Jan. 1, 2002. Six months later, the national notes and coins of each participating country will cease to be legal tender.

Savings and simplicity For catalogers, the euro will greatly simplify financial transactions within a market that will have a larger gross domestic product than that of the U.S. And as 11 fluctuating exchange rates disappear, companies will find it easier to compare costs across borders.

“The Euro will reduce currency costs,” says Robert Van Langeveld, general manager of New Pig BV, the Dutch arm of the Tipton, PA-based industrial supplies catalog, “and catalogers will incur savings from more open borders, easier money transfers, and mailing one catalog instead of differently priced books.”

Graham Cundick, chief marketing officer of cataloger Viking Office Products, sees the euro as “a buying opportunity-product manufacturers will no longer be able to hide behind the substantial price differences” that now exist within Europe.

Viking, which does business in seven EMU countries, is insisting that its vendors price their products in euros as of January 1999. If they don’t, Viking will look for alternative vendors, but Cundick says its key vendors have already agreed to euro pricing.

“From the beginning, savings will be made,” Van Langeveld says. “But it could take one to two years to offset those savings against the costs incurred for euro-compliance.”

In terms of becoming euro-compliant, “challenges for catalogers will include how they’ll manage internal computations from previous years,” says Ernie Schell, president of Marketing Systems Analysis, a Southampton, PA-based catalog software consultancy, “as well as management systems issues such as handling purchase orders, inventory valuations, and accounting issues such as managing accounts receivable and payable.”

Accommodating the euro is no different from readying one’s computer systems to do business in yet another foreign market, says Eric Hook, director of international marketing for Carol Wright, which mails catalogs into the U.K. and Germany. And catalogers that rely on European vendors to handle their overseas fulfillment and collection have little to worry about in any case, he adds. “In Germany, AZ Correct Marketing provides the bulk of our services. It will be euro-compliant by January.”

What’s more, though the euro will be the currency of EMU credit card transactions beginning next year, “as far as I’m aware, catalogers will be able to request dual accounting from their banks during the three-year transition,” says Elizabeth Hart, chief international economist with Northern Trust Bank in Chicago.

Partner Content

Hincapie Sportswear Finds Omnichannel Success in the Cloud - Netsuite
For more and more companies, a cloud-based unified data solution is the way to make this happen. Custom cycling apparel maker Hincapie Sportswear has leveraged this capability to gain greater visibility into revenue streams, turning opportunities into sales more quickly while gaining overall operating efficiency. Download this ecommerce special report from Multichannel Merchant to more.
The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.