Brexit will affect the Ecommerce market in Europe. A strong Brexit strategy for your Ecommerce business requires knowing the potential impacts. We answer how Brexit could affect day-to-day operations like shipping, policies and tariffs.
How to Prepare for Brexit:
- What is Brexit and who will it affect?
- What does Brexit mean for Ecommerce in Europe?
- How To Prepare For Brexit?
- Guide to shipping post-Brexit
- 4 steps to prepare your Ecommerce business
Brexit is the departure of the UK from the European Union, and is scheduled for January 31st 2020. The UK is set to leave on this date with the deal current Prime Minister Boris Johnson arranged in October 2019.
It is expected that Johnson’s deal will pass through Parliament with the Conservative Party now holding a majority Government. The UK will then formally leave the EU, moving into the transition period set to last until December 2020. During this transition period, the UK will remain in the EU’s Customs Union and Single Market, but will have no place in the political institutions and no members of the European Parliament.
However, it is still unclear what Brexit will fully entail. The UK’s deconnection from EU laws, regulations and trade deals will still need to be negotiated and determined during the transition period. This means it is still unknown what the relationship between the EU and the UK will be.
A No-Deal Brexit is where the United Kingdom will leave the EU without any formal agreement about future relations. Basically, it’s cutting ties completely. This will result in the UK immediately reverting to World Trade Organization rules and the EU will treat the UK as a non-EU country. There will be no trade deals or partnerships established. Although the UK will be free of EU regulations, they will also have to face the EU’s tariffs and other restrictions and regulations immediately.
Although Johnson has agreed a deal, this deal only covers the UK’s initial withdrawal and does not stipulate the future relations with the EU. Trade negotiations (along with everything else) cannot be determined until the UK has entered the transition period. Many fear that the threat of a No-Deal Brexit is still possible if trade negotiations are not sorted by the end of the transition period. This means the UK will be leaving the Customs Union and Single Market without formal agreements, effectively resulting in a No-Deal.
Brexit could affect you if you fall into the following categories:
1: British companies selling anywhere
British companies that sell cross-border outside the UK may face new regulations with shipping. Even if you don’t ship outside of the UK, you could still face issues if you import any of your supply chain or products from outside of the UK.
This is particularly pertinent for a No-Deal Brexit. The UK will revert to WTO rules and have no active trade deals with overseas nations. Restrictions or prohibitions with new trade barriers like tariffs and import duties will arise. We don’t know what these will be as new trade deals will need to be negotiated with countries across the globe.
2: British companies selling in Europe
British businesses selling into the EU could face a lot of changes also. Especially if the freedom of movement and goods no longer applies. Tariffs, restrictions and regulations could become the new norm, with rising prices and potential delays.
3: Foreign companies selling into Britain and within the EU
Global companies that sell into both the UK and the EU will need to adjust their shipping and selling policies. It’s most likely the UK will have separate shipping and selling rules from the rest of the EU. That means the two will need to be dealt with separately.
Ecommerce stores from EU nations that also sell products into the UK will also be hit. The disappearance of the freedom of movement of goods and people could mean big changes to operations. The UK will likely be considered as a non-EU nation, so the same rules will apply (more on this later in the article).
How Will Brexit Affect Ecommerce in Europe?
The UK is Europe’s current leader and biggest market for Ecommerce. 93% of Brits shop online and spend on average +900 euros per person, per year.
UK shoppers aren’t afraid of purchasing overseas either. 52% of overseas ecommerce orders are from the US and China. And Europe isn’t far behind, with 9% of European purchases coming from Germany.
With the UK’s ecommerce market being so developed, residents from the European Union also like to shop at British webshops. Britain is the second most popular ecommerce destination for Europe (after China). After Brexit, 70% of European e-shoppers may stop buying from UK websites. And 69% of UK shoppers could stop buying cross-border altogether.
Customs and Longer Shipping Times
Britain will no longer benefit from the open borders that enable the freedom of movement of goods and people.
This means stricter customs regulations for parcels entering and leaving the UK and EU. It’s even possible that some British products could even be restricted or prohibited.
Longer shipping times are a likely outcome for packages crossing from either side.
Keep reading for our guide to shipping post-Brexit!
Tariffs and VAT:
Both the UK and the EU will be free to impose tariffs on each other’s imports. This could result in prices rising and risks sparking a trade war between the two.
VAT laws are a major point of contention for the Brexit negotiations already. If No-Deal Brexit occurs, UK businesses will no longer have to collect any VAT on products sold to EU customers. This is a plus in lowering prices, but Britain will also no longer be able to use the EU VAT refund system.
- Guide to shipping post Brexit
- 4 steps to prepare your Ecommerce store
As soon as the UK leaves the EU, the rules which apply to non-EU goods will then be extended to all imports and exports crossing between the two entities. Shipments will become subject to customs. This means custom declaration forms for both imports and exports will become mandatory.
If you either send goods from the UK to any EU country, OR if you send goods from an EU nation to the UK, you will need to complete customs declarations forms.
This is immediately true in the case of a No-Deal Brexit.
If a Deal is agreed on, then during the transition period there will be no need to fill out these forms (unless stipulated as necessary in the deal). Whether you will need to complete these forms after December 2020 all depends on what negotiations determine.
Custom Declaration Forms
- For items with a value up to 270 GBP / 270 EUR then you will need to use a customs declaration form CN22.
- For items with a value over 270 GBP / 270 EUR then you will need to use a customs declaration form CN23. The CN23 form must be placed in an adhesive pouch available from your post office on the address side of your parcel.
Read more on the UK’s Royal Mail site.
Europe: CN22 and CN23
Shipments to countries outside the EU (which will soon include the UK) that are over 300 Special Drawing Rights must use a CN23. The CN23 form must be placed in an adhesive pouch available from your post office. Stick the pouch with the form on the address side of your parcel.
Each country may have a different threshold. Please research online with your nation’s government website, OR check the information at your local post office.
For more information on international shipping, then read our full article.
Brexit & Sendcloud
Use Sendcloud with DHL Express to automate the process of your customs forms. DHL’s Paperless Trade allows you to electronically send customs documents. This eliminates the need to print and physically attach the forms to your shipments. Through Sendcloud, the Customs documents will be automatically forwarded digitally to DHL. Enter the information for your customs documents and print the label then your form will be forwarded automatically.
Taking proactive steps to prepare for a post-Brexit world can help manage the impact. Preparing will help put you in front of your competitors and avoid any disadvantageous situations.
1: Check Suppliers
Arguably the most important thing to consider is to check your supply chain. Currently where do your products – or parts/materials to make your products – come from? If you predict Brexit could impact your supply chain then begin researching alternative or extra suppliers. This way you avoid any complications like tariffs or custom changes post-Brexit.
2: Stay Informed and Update Policies
Keep informed with the latest news to better assess the impact Brexit will have. Although there’s still uncertainty, keeping track can help you judge the current forecast and help you prepare.
You will need to update shipping and tariff policies to reflect specific Brexit details. Of course, it is not currently possible to tailor new policies as Brexit is not finalised. But beginning to contemplate draft policies will help get updates ready once things become concrete.
Train staff with these changes in advance to avoid bottlenecks in operations once things change. Pre-warn customers that things are going to change so people aren’t caught off-guard.
3: Currency and Shipping Options
Offering multiple currency options can help reduce any Brexit-induced confusion. This can help accommodate online shoppers who have access to use more than one currency.
Offering several shipping options can also help accommodate both UK and EU customers. Giving customers the choice will help to push users through the checkout process.
As mentioned, many of the new changes – shipping, supply chain, VAT – could result in needing to change prices. Whether deducting VAT or increasing the price due supplies costing more, make sure to prepare this in advance to reduce risks of loss.
As soon as the Brexit negotiations are complete, we will have more concrete knowledge of how trade will continue between the two entities. The required Customs documents will become known, and you can find these on the MADB (Market Access Database).
If you have any further knowledge or advice, then please leave a comment to share with the rest of the community.