E-commerce in the UK is an unrivalled success story. Much to the ire of the high street retailers, the domestic e-commerce market is the largest of any country in the EU. British consumers shop more often and spend more than any others in Europe, with 86 percent of internet browsers making at least one online purchase in 2017.
Unfortunately, a little-known phenomenon called Brexit could be the potential stumbling block that threatens to bring the e-commerce success story to a shuddering halt.
What will Brexit mean for domestic e-retailers?
That’s undoubtedly a question that will have crossed the minds of e-commerce operators across the UK. You’ve worked your backsides off to create a successful and profitable e-commerce business. You’ve risen to the top of the search engines, have received endless positive reviews and established yourself as a trusted retailer. Now, something you have no control over threatens to undo all your hard work.
- Will Brexit affect your sales overseas?
- Will you have to comply with new regulations?
- Will UK shoppers buy more goods from domestic sellers?
These are all very good questions. Unfortunately, with the ongoing Brexit turmoil, we don’t have solid answers for you as of yet. However, what we do have is opinions and predictions from the experts at the European eCommerce and Omni-Channel Trade Association (EMOTA) to hopefully bring you some peace of mind.
EMOTA is the European federation that represents online retail across Europe. We asked EMOTA a few questions about the potential implications of Brexit for cross-border e-commerce and sales within the UK.
What does a no-deal Brexit mean for online sellers?
Currently, a no-deal or ‘hard Brexit’ seems like the most likely scenario. In that instance, we expect to see serious disruptions in cross-channel trade as all products have to pass customs, product conformity procedures and other potential hurdles. The likelihood is that it will cause long delays for customers who are waiting for their parcels to be delivered. More problematic still is likely to be the issue of returns. With return rates of up to 50 percent in some product categories, the likely delays could lead to dissatisfied customers and a serious downturn in sales.
What are the implications for cross-border e-commerce in Europe?
In the months following the EU referendum, many UK online retailers actually saw an increase in sales as a result of the falling pound against other major currencies. However, according to the IMRG MetaPack Delivery Index, there was a slowdown in online sales towards the end of last year, with delivery volumes lower than forecasted.
The trouble is that if shoppers are looking for the lowest price, UK retailers will always lose out to China. Moreover, EU shoppers also have to pay customs duties on goods from the UK, and in some competitive product categories such as clothing, these fees can be high. That can negate savings that EU customers might have made due to the weakening of the pound.
Which regulations will be affected?
Many important pieces of EU legislation affect cross-border e-commerce, including the recent GDPR rules, the Consumer Rights Directive, cross-border parcel delivery, a directive banning geo-blocking and more. The UK will not change EU laws that have been accepted and made into national laws, which will make life easier for UK e-commerce businesses. Over time, it may also be the case that domestic legislation is introduced that will be advantageous to British firms.
What are the biggest challenges facing online retailers?
The biggest challenges facing UK e-retailers in a post-Brexit world are undoubtedly the duty and delivery issues. While larger operators will be able to solve this problem by opening fulfilment centres in Europe, smaller operators will struggle until the terms of Brexit are ironed out and it’s business as usual once again.
Helping cross-border businesses thrive, whatever Brexit brings
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