What does Brexit mean for e-commerce?

18/02/2019

With the UK on the brink of leaving the European Union, we explore how it could affect e-commerce businesses and some of the complications it could potentially have on your business. It is difficult to assume what will or could happen with the United Kingdom’s proposal to leave the European Union. There are several different scenarios and options as of right now. On January 15th, Members of Parliament (MP’s) rejected Theresa May’s Brexit deal. Regardless if there is a deal on the table or not, as things stand, the United Kingdom is due to leave the European Union on March 29th, 2019.

At the moment, the goal for the United Kingdom is to come to a consensus on a deal in order to leave the European Union in the smoothest way possible. If a consensus is not reached, this can have a drastic effect on trade, businesses, and individuals who reside in the UK. A deal will ensure that both the Conservative and Labour parties have time to prepare and agree on a new set of rules and regulations regarding trade and the movement of people agreements. A smooth transition could potentially be the most ideal option for both parties so that businesses and people are less likely to suffer economic and or political hardship. The worst-case scenario would most likely have to be if the UK left without any deal on the table. This will cause severe disruptions on a shorter term basis for businesses that conduct their business in the UK or for companies that export goods or services into the EU.

With that being said, we want to focus on what can be expected if there is a failure to reach a deal for the UK’s exit. 

What to expect:

Customs at the United Kingdom – You will be faced with customs formalities and possibly (longer) waiting times at the border. It is especially important to take this into account for just-in-time delivery and perishable goods.

Declaration of Exports – In most cases, you will be required to inform your country’s Customs Control that you are exporting goods outside of the EU.

VAT return changes – Other VAT rules will apply to the export of goods to non-EU countries.

Export documents – Make sure that you prepare and check all the required documents that are needed at Customs when doing business internationally.

Product requirements – If you are an exporter of goods then you must also take into consideration that specific product requirements might change.

Visit www.channelengine.com or contact us at hello@channelengine.com to find out more about how we can help you tackle these kind of road blocks.

If an exit deal is not agreed upon between Europe and the UK, it could lead to complications. One of the possible bigger effects of post-Brexit legislation is the import tariffs on goods and services, increased shipping and merchandise/fulfillment costs, and customs arrangements. This could lead to a competitive disadvantage for e-commerce merchants. Due to the fact that UK consumers love to shop at online retailers outside the United Kingdom, if no deal is reached, Brexit can have a direct effect on the consumers and suppliers of these goods. Below you can see the trade relations of the UK and EU from 2016 – 2017.

Changes in the distance-selling regulation would create a more complex system of duties and taxes, and imports to the UK would be more expensive. Besides, there could be cross-channel trade disruptions in which custom product conformity procedures could be applied. This would increase the waiting period for customer’s parcels until they are delivered giving EU e-commerce merchants a lack of competitiveness and vice-versa for UK merchants who mainly sell to customers outside the United Kingdom.

Although there is nothing definitive today and the final movement of the UK and Europe is still unclear, the conclusion we can make is that the e-commerce landscape will change. In order to minimize loss during this political and economic process, we provide different strategies & tips in order to minimize the risks during the Brexit process:

Important to consider:

Think about international expansion – Increase your revenue by making sure your online store is accessible globally. This can be your life jacket.

Make the different currencies visible –  If the  British Sterling Pound continues to be weaker than the Euro and the USD, make sure that your platform provides different currencies for customers. If your webshop does not contain that service, consider to implement it.

Keep a flexible shipping policy – In case you export to any EU country, make sure your policy can be adapted to any change in case additional costs appear, avoiding disruptions in your margins.

Target other big e-commerce markets – Whether you are a UK webshop who sells mainly to EU countries or an EU webshop who targets consumers in the UK, it is a good idea to begin focusing on expanding your target market to different countries or audiences nearby.

Don’t forget about geoblocking –  If the UK leaves the EU, then webshops from the UK could have a harder time reaching consumers in Europe, forcing them to focus on other markets.

Follow the currency fluctuation For British manufactures, they have the chance to become more competitive abroad as the British pound is more affordable.

Consider moving to member state – If you believe that the effect of Brexit could potentially hurt your business severely, consider moving to a member state.

Constantly keep track of the events  As Brexit unfolds keep an eye out on what is happening on a daily basis so that you are not caught off guard when there is a sudden change.

Update your technology for global use It is possible that you might need to grow your business outside of the UK and EU, prepare your technology and processes so that you can tackle international markets.

It is very important to stay flexible at a time like this in order to be able to tackle the events of Brexit as they are unfolding. Brexit does not necessarily mean that it will affect you negatively if you prepare for it properly and already start implementing strategies to tackle it, you could reap good rewards as others might have waited too long. That is why it’s important to also seek out help. For more information check here. We at ChannelEngine are dedicated to helping our clients face complications such as Brexit. For more information contact hello@channelengine.com.

 

 

References:

Ministerie van Economische Zaken en Klimaat. (2019, February 15). Export. Retrieved from https://www.brexitloket.nl/onderwerpen/export

The biggest foreign ecommerce markets for UK shoppers. (2019, February 12). Retrieved from https://ecommercenews.eu/the-biggest-foreign-ecommerce-markets-for-uk-shoppers/

Impact of Brexit on international ecommerce: Will you sink or swim? (2018, November 27). Retrieved from https://www.webinterpret.com/us/blog/brexit-ecommerce-guidebook/

Raynor, & Richter, F. (2017, December 11). Infographic: Brexit: Trade Relations Between The UK And The EU. Retrieved from https://www.statista.com/chart/12181/brexit_-trade-relations-between-the-uk-and-the-eu/