Impact on e-commerce in general
The e-commerce sector is one of the areas that would probably suffer the most from a no-deal Brexit, or from any kind of impediment to trade. Small and medium-sized companies in particular would suffer from the reintroduction of tariff and non-tariff barriers. Similarly, such a (non-)solution would also make business more difficult for large companies. The additional costs of tariffs would in many cases be passed on to the customer. In addition, however, the costs of adapting current frictionless processes would be considerably high. Furthermore, delays in e-commerce are to be expected in this case.
If no consensus can be found in the negotiations between the UK and the EU27, it is also to be feared that a coherent legal framework will not be in place. This in turn would make trade even more difficult and lead to additional complications.
Influence on your e-commerce business
At the moment one can only speculate what kind of deal can be achieved by the end of the year. For e-commerce companies, the following topics, which are still uncertain, are particularly worth observing.
- the internal market
- the free movement of goods
- customs arrangements
In addition, every e-commerce entrepreneur should pay special attention to areas such as, possibly modified, data protection regulations. To avoid getting into trouble, please inform yourself in detail so that there are no rule violations on the website of your online shop. It is important to keep an eye on the negotiations between the UK and the EU in order not to be surprised by new regulations at the beginning of 2021.
Brexit preparations & the E-Commerce
According to the age-old proverb, preparation is half the battle. As an online trader you normally have no influence on the negotiations between the EU and the UK. However, you can already take the fate of your e-commerce business into your own hands as of now.
One possible strategy to avoid the problems of customs duties, import sales tax, bureaucracy and longer delivery times, for example, is to set up logistics centers and fulfilment centers on both sides of the canal. This has recently proved to be relevant for both British and Continental European companies. The problem, however, is that for most companies building such a network is very costly. Nevertheless, many British e-commerce entrepreneurs, who also ship internationally, have already decided to emigrate to the EU – especially to Germany – with their business. The e-commerce companies expect that moving their business will give them easier access to the European market. German online shops therefore also have to adjust to the increasing direct competition.
In order to find the right logistical strategy to deal with this challenge, you should ask yourself the following questions:
On the supply side:
Which raw materials are sourced from which geographical regions?
- How does this affect the cost of export / import?
- How important is the time factor?
On the demand side:
Does a large proportion of the orders in your online shop come from the other side of the canal?
- Then the establishment of a logistics centre or cooperation with distributors is recommended.