June 23, 2016, was a very important day in the United Kingdom. It was the day that sent some into a celebration, some into a panic, and some into complete shock. It was the day that part of the UK voted to leave the European Union in the Brexit vote referendum.
The vote had a global impact, and continues to grow as more news gets released around the subject each day. But why exactly is it so significant?
Well, that’s simply due to the fact that the UK is seen as an eCommerce powerhouse within the EU. In fact, online shoppers in the UK lead the EU in ecommerce usage and purchasing goods online, with a whopping 86% of internet users partaking in online shopping on the daily.
In this article, we’re going to discuss the Brexit impact on eCommerce, and how you can fully prepare your business.
Without further ado, let’s get started.
What Is Brexit?
‘Brexit’ is the name given to the United Kingdom’s departure from the European Union. It is a combination of ‘Britain’ and ‘exit’.
On 23 June 2016, the UK held a referendum on its membership in the EU. The question that faced voters around the UK was: ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’ 51.89% of voters voted to leave the EU.
Almost 5 years on, the transition period reached full completion on the 1st January 2021 and full change came into effect, meaning that the UK has now officially left the EU, and many ecommerce businesses are now trying to stay compliant with the new and ever-changing rules.
Marketplace Seller Brexit Requirements
Marketplace seller Brexit requirements mean that those trading in the UK could face a triple tsunami of customs obligations and VAT charges following the UK’s departure from the EU VAT regime from 1st January 2021. It all arises from the end of the Brexit impact on ecommerce, and HMRC’s new rules on imports and cross-border marketplace VAT liabilities.
If sellers fail to understand the new 2021 rules for the marketplace seller Brexit requirements, it will, unfortunately, mean that they could face:
- Major import tax costs and fines;
- Goods held-up at ports; and
- Upset customers.
Marketplace Seller Brexit Requirements Checklist for EU Sellers Trading in the UK
Basically, selling from EU to UK will apply the same rule as selling to UK from the rest of the world. EU sellers need to collect import VAT for orders below 135 GBP, and need to collect both import duty and import VAT for orders above 135 GBP.
- Register for VAT where it is applicable and make sure you understand the new rules for paying import VAT on parcels you send to UK buyers.
- Check the new customs procedures with your country’s customs authority, for example, what customs procedures will be required for bringing goods from the UK to the EU, etc. Consult local tax authority or tax expert if necessary.
- Update relevant information to the seller center of your marketplace, such as Amazon, eBay or Shopify. Make sure you’ve registered EORI and tax ID, and file tax report in time.
UK eCommerce Sellers Trading With the EU Checklist
If you’re a UK eCommerce seller and have been selling on marketplaces, you’ve probably already made sales to countries all over the world with which the UK has no trade agreements at all. This is because the lack of a trade agreement doesn’t necessarily mean you can’t buy and sell, it simply means that you may be at a disadvantage compared to a seller who is local in the destination country by import tariffs.
But here’s the good news: according to the UK-EU agreement, trades between the UK and the EU that meet the rules of origin will be customs duty-free. Though the details is still unclear, there’s a chance that UK sellers still enjoy price advantage selling to EU, compared to sellers located in rest of the world.
With that being said, let’s take a look at this actionable checklist for UK eCommerce sellers trading with the EU:
- Revise your shipment model. As new customs requirements can cause heavy delays, act in advance. Provide your carriers with complete and accurate data for customs clearance. Make sure your shipping platform is set up to handle customs data. Offer multiple delivery options and stay transparent about potentially longer shipping times.
- Consider delivering part of your inventory directly to fulfillment centers around Europe. Set up warehouses closer to customers: if you ship a big amount of products to one particular destination, consider investing in facilities there.
- Revise & update your policies to reflect the Brexit changes as soon as details are finalized.
- Keep your customers in the loop about their deliveries and the changes they can expect.
- Explore new markets: after Brexit, seek business opportunities outside the EU, for example on marketplaces in the USA or emerging markets.
Brexit Impact on eCommerce – Tips and Suggestions
Logistics
A priority of yours should now be to contact your courier/postage company and ask them the question about deliveries into/outside of Europe or the UK. They should be able to answer your question clearly as a plan should already be set out to deal with the sending and receiving of packages.
Suppliers
If you’re an ecommerce seller trading in the UK, you’ll probably have suppliers scattered all over mainland Europe, as well as the UK itself. Make sure that you follow the marketplace seller Brexit requirements so you don’t run into any problems. After all, the last thing you want is to run into red tape you haven’t experienced before when you go to order your next batch of products.
Similar to communicating with your courier company, make sure you also call your suppliers and ask about how the changes in shipping products have affected them. If you’re able to, consider ordering your shipments earlier to ensure that business is not interrupted.
Customers
The engine that keeps the Ecommerce seller train running. Ensure that you continue to communicate with your customers and keep them up to date on the happenings. As you have now sourced valuable information from your courier and your supplier, you should be able to have a better idea of the Brexit impact on ecommerce. Look at posting banners on your website, add to your email footers, and even update your online listings if need be.
Be Ready To Adapt
“It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.” – Leon C. Megginson
The very same quote can be used for eCommerce sellers trading in the UK. Over the years, many have used this quote from Megginson when he paraphrased Darwin in ‘’The Origin of Species’’.
At the end of the day, you’re either driving the bulldozer, or you’re about to be bulldozed. When you’re unfortunately presented with a situation that you can’t control, but can impact your business, you just need to make sure you’re ready to act quickly and accordingly.
Conclusion: Keep Calm and Carry On
Brexit’s impact on ecommerce and ecommerce sellers trading in the UK and outside of the UK continues to change day by day, as the full departure is still causing some confusion to many out there.
However, that doesn’t mean that you can’t stay positive, keep calm, and carry on doing what you do best. As we just said, make sure that you’re ready to adapt and create the best plan of action. Keep tabs on the news, be proactive, and base your business around the Brexit future.