The Impact Of Brexit On UK eCommerce

Yes, its finally happened. After all of the chatter, all of the arguments, the constant negotiating and renegotiating of trade deals – the transitional period for Brexit has at last come to an end.

So with the UK no longer associated with the EU Customs Union and the European Single Market, what does that mean for the world of eCommerce?

Quite a lot, in fact.

Change Is Inevitable Regardless Of Your Industry

The UK has been the biggest eCommerce market in Europe for some time now, with 93% of Brits choosing to shop online with an average annual spend of just over £800.

As the UK eCommerce market is so developed, EU shoppers have previously felt very comfortable buying from British businesses without issue. The UK market is the second most popular eCommerce market after the global giant that is China.

Sadly, it’s believed that Brexit is set to have a significant negative impact on these figures, with research from DPD showing that 69% of shoppers may stop cross-border shopping altogether now that Brexit has been completed.

So what does this mean for you, the eCommerce retailer?

Well, for most businesses, the most amount of change is probably going to be around their products, where they come from and how quickly they can be delivered. Not only that, there are new rules when it comes to tariffs and customs.

Increased Costs And Time Delays Are Likely

There are likely to be two main factors that will change for UK retailers that rely on imports from the EU or ship their products to European customers.

The first is delivery and shipping times. As border and custom controls are now in place, it’s highly likely that the movement of goods and people will take longer with more checks in place, particularly in the first part of 2021 as the systems being utilised are in their infancy. It’s worth bearing in mind that you may suffer from delays in some capacity and that may in turn directly impact your customers.

Secondly, there is the new agreement around tariffs and VAT which is a little less straightforward.

Brexit will have a direct impact on all merchants selling from and to the UK as a customs border has been reinstated between the UK and the EU. Since January 1st 2021, there are now new VAT rules for goods being imported into the UK.

For goods that are shipped to the UK from outside the UK, the following changes will take place:

• Merchants need to collect VAT on orders shipped to the UK below £135. However, if you’re a merchant using an Online Marketplace (OMP) to supply imported goods with a value below £135 to UK customers, the VAT liability will be shifted to the OMP.
• Merchants need to file for and remit VAT to HM Revenue & Customs (HMRC) every quarter.

Please also bear in mind that orders above £135 will be subject to duties and import VAT.

For goods that are shipped from the UK to the EU between January 1, 2021, and June 30, 2021, the following changes will take place:

• Merchants are not required to collect VAT on orders shipped from the UK to the EU, provided that the EU customer will import.
• Buyers are responsible for paying any applicable import VAT and duties on orders shipping from the UK to the EU (see below for details of UK-EU free trade agreement).
• Customs documents are required with all orders being shipped to the EU.

Having A Post-Brexit Strategy Is Key

With such a wide range of complex changes, we suggest that you take the time (if you haven’t already done so!) to read up on the intricacies of the above changes and how they might affect your business specifically in 2021 and beyond. We found this page on the UK Government’s advice helpful on what to do now that the eCommerce Directive is no longer applicable.

As always with a dramatic change to the eCommerce landscape, the core principles remain the same – put your customer first and do whatever you can to keep them at the forefront of your thinking.

With that in mind, here are 10 things you can do as part of your post-Brexit strategy:

1. Communicate delivery delays quickly and efficiently
2. Update any shipping policies you have on your website
3. Propose your new shipping timelines publically
4. Make sure product availability is clear and accurate
5. Review your order status update emails
6. Provide clear guidance on cross-border purchases
7. Review your returns, exchanges and refunds policies
8. Consider data privacy and protection law changes
9. Inform all employees of latest updates and changes
10. Keep calm!

Lastly, remember you can also look to use Brexit as an opportunity; for example by potentially exploring new markets or business opportunities outside of the EU, or perhaps looking into utilising a different shipping aggregator, or perhaps reviewing the suppliers you currently use.

However you approach it, Brexit is here to stay so it makes sense to keep your finger on the pulse and work smarter now to save time and money in the future.

For more information or if you need assistance with implementing any changes for life after Brexit, please do get in touch!