Currency and Price Localization: Adapting to a Global Marketplace
What is localization?
When it comes to e-commerce, to truly adapt to another specific region, locale or market, different cultural values need to be taken into account.
According to Cambridge Business English dictionary, localization as a marketing term is defined as “the process of making a product or service more suitable for a particular country, area, etc…”
Usually when we hear the word localization, the most common and obvious requirement that comes to mind is language, making your website understandable to your potential customers. However, translation is not enough.
Along with language, other aspects of localization like website design, usability and providing local payment solutions must also be considered.
A key (although sometimes forgotten) part of the localization process is making a priority of also optimizing the currency and price for different audiences and regions.
Supporting the local currency
The easiest way of taking a solid first step in the direction of currency localization and to prevent shopping cart abandonment is to present your price in the local currency, for example using Brazilian Real in Brazil.
Consumers prefer to buy in their local currency and online consumers are not an exception. Having a shopping cart that is forcing a user to pay in USD or Euros does not inspire confidence. Supporting the currency they are already comfortable using encourages trust and, consequently, consumers are much more likely to complete their transactions.
However, you should be aware that simply converting your price into a new currency might lead to your product being mispriced in that specific market which can translate into a significant loss of revenue.
Finding the right price
The next step is to know that overall, the world is becoming smaller as more people shop online. As an e-commerce merchant, you can no longer afford to limit yourself to a single currency display and price localization is one of the smartest moves you can make.
A number of factors influence the localization of prices:
- The value of your product may be perceived differently by your foreign customers.
- Different foreign markets may value different aspects or features of your product.
- The level of your competition in the target market varies.
- Different regions may have different price sensitivities.
- The purchasing power of consumers vary between countries.
It is important for you to thoroughly research your market base to determine how price-sensitive consumers are in each market.
Doing your research
To determine what price points will appeal to consumers the most, you can use multiple price sensitivity survey tests.
For example, the Big Mac Index which is released annually by the Economist can help guide you as how to pick a localized price. If the consumers of a market all have low purchasing power, their willingness to pay for your product or service will likely be lower as well.
Using marketing research tools such as the Van Westendorp Pricing Sensitivity Meter or Conjoint Analysis can also be very useful.
Apart from tools, one of the best tactics to learning about a market's price sensitivity is to test with real-world consumers. Testing new prices, changing your price points, and tracking sales is part of the trial-and-error process (and secret) to discovering the best localized price for your product in the international marketplace.
Earning the trust of your customers
Pricing and currency affect the perception of your customers, irrespective of where they are. Starting slowly with simple cosmetic localization and gradually implementing true localization helps when you want to earn the trust of your customers and connect with them, from every corner of the world.
BoaCompra offers solutions that can support your business as it goes global by giving your shoppers an array of local payment options to choose from in their local currencies.