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How Will Brexit Affect Ecommerce: Will Cross-Border Ecommerce Slow Down?

When it comes to e-commerce the United Kingdom is the absolute leader in Europe. It is the largest e-commerce market and a success story. UK e-shoppers shop more and spend more compared to other EU countries–86% of internet users shopped online in 2017 (Eurostat). Now that the e-commerce leader is leaving the European Digital Single Market, it brings uncertainty for online sellers and buyers.

What will Brexit bring for the domestic e-retailers? How will it affect international sellers? Will sellers have to comply with new regulations? Will UK e-shoppers buy more from domestic online sellers as taxes and customs will apply when ordering from other EU countries? When visa requirements are up what will be the challenges for cross-border e-commerce players who until now have freely hired employees from other Eurozone countries?–these are only a few of the questions that concern online retailers.

In the search for answers, or better-said opinions and predictions from reliable sources I turned to the European e-commerce and omnichannel trade association (EMOTA). EMOTA is the European level umbrella federation representing online and omnichannel trade across Europe. The main mission of EMOTA is to promote eCommerce and help policymakers remove any barriers to trade. I asked Maurits Bruggnik, the secretary general a few questions concerning the implications of Brexit on online sellers inside the UK as well as cross-border e-commerce.

Brexit attracted the attention of many international online sellers. Is there room for panic?

“In case of a hard-Brexit, which seems to me the most likely scenario, we will see serious disruptions in cross-channel trade since all products will have to pass customs, product conformity procedures, and other disruptors. This means long waiting periods for consumers waiting for their parcels to be delivered. With some product categories having return rates of up to 50%, the issue of delays will be even more important. This will quickly lead to a serious downturn in e-commerce.” tells Maurits.

According to the IMRG MetaPack UK Delivery Index, the orders of UK retailers increased a few months after the Brexit referendum due to the drop of the pound against other currencies. But the newest data published in December 2018 indicate that the retail slow-down spreads to online as well. What will be the implications of Brexit on cross-border e-commerce in Europe: customs, delivery times, competitive prices, convenience?

“The drop of the Pound Stirling will not off-set the tremendous loss in shoppers convenience with long parcel delivery times. If a shopper is willing to wait long for a parcel delivery because of the price difference, the UK will always lose to China. Moreover, shoppers will also have to pay customs duties, which can for some product categories be very important. The number 1 e-commerce product category is clothing and that is an area where high customs duties still occur.” Bruggnik explains.

Which regulations and directives will be affected?

“Many important pieces of EU legislation affect e-commerce. Some of the recent ones: Consumer Rights Directive (CRD), GDPR, Regulation on Cross-border Parcel Delivery, Directive banning geo-blocking, etc. The UK will not change all the EU laws it has transposed into national laws. Take for example CRD, which gives consumers a 14-day cooling off period. There is no benefit for the UK to change this. However, over time, I expect some legislation to become more business-friendly in the UK. Legislation that would restrict the web shop’s use of cookies may pass in the EU, but unlikely to be embraced in the UK.”

And finally what will be the biggest implications of Brexit on UK marketplaces and e-retailers?

“UK marketplaces and retailers will find it difficult to trade with EU customers if they do not address the delivery and duty issues. I see the larger ones opening fulfillment centers in the continent and the smaller ones having a hard time.”
After all, the situation still remains uncertain. When the time comes businesses will find their best way whatever the future brings.