Following on from the EU Referendum and the UK’s decision to back the Brexit and leave the European Union, many online businesses are now faced with a single, albeit monumental, question – what does this mean for my business?
“Many online sellers within the UK, have found that being a part of the EU has been incredibly beneficial to them”
The reality is, as of yet there is no certainty as to what degree the ‘Leave’ decision will have on the economy and the market, the actual impact of Brexit is very difficult to quantify.
While unfortunately none of us have all of the answers, we believe there are a number of things that you should start to think about, particularly around the Brexit’s impact on cross-border trade.
This will effect your business? Are you buying in $ and selling in £ or €. Due to the current high levels of volatility in currency markets, currency exchange and international payment service providers such as Currencies Direct may be even more valuable for your business.
As part of the EU, Britain benefited from having almost no restriction on the shipment of goods and packages throughout Europe. With the impending Brexit, this will no longer be the case. It is highly likely that all UK packages will now need to go through customs in the recipient country, which will require paperwork and incur additional expense and potential shipping delays. This could impact shipping costs and import/export duties. We know from first hand that shipping to the USA is not that simple! It takes time and patience and plenty of paperwork to complete.
Fulfilment by Amazon
“Within the last year, UK businesses have exported products worth over £1bn through Amazon, while the number of UK businesses using EFN grew by more than 90%.”
If you’re currently using Fulfilment By Amazon (FBA), you will be aware that there are several international programmes, each with different processes for holding and fulfilling your goods. Specifically, with a programme such as their European Fulfilment Network (EFN), your stock is held in a UK fulfilment centre and is shipped by Amazon into Europe. Very little is expected to change with this process, as it is ultimately Amazon’s responsibility to ship the product.
That said it still remains for the UK and EU to negotiate over the coming years, but one possible negative scenario could affect products sold through FBA out of a UK fulfilment centre to customers in other countries, which could face additional taxes. If you are holding stock in an EU warehouse, it is likely that you will face some tax implications that goes beyond the current requirements to register for VAT in the individual country.
There is no denying that the Brexit will have negative implications for cross-border sellers, however it’s important not to forget that many online sellers are already selling to countries around the world, many of which the UK currently have no trade agreements with at all.
In essence things to consider for the future when selling into the EU
- Import duties & VAT
- Product specifications, product origin
- Pricing/ Strength of the £
- Cost of goods/profit margins
- Shipping costs
- Competition within Europe
- EU’s selling policy
The world of e-commerce is fast moving, unfortunately politics is not, with trade agreements likely to take up to 2 years, it is going to be an interesting time for any business selling into Europe!
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