What will be the effect of a possible Brexit on ecommerce?

Tuesday, 12. 02. 2019

On March 29 2017, the government launched a rule known as "Article 50", which launched the UK's withdrawal from the EU, which passed through its parliament and enacted that it would be exactly two years when they will be out of the EU.

The main question is: what will the Brexite deal be (and will there be one)?

The short answer is ... we still don't know. Theresa May proposed a "Withdrawal Agreement" with the EU, which set out key facts about how the UK-EU relationship could look after March 29, 2019. She proposed a "transitional period" right after the UK's departure for 2020 which current relations would continue.

Last year's Payvision study showed that British consumers are buying online in cross-border stores the most, with 54% of them making at least one purchase in a foreign online shop. However, with a low British pound value, the volume of purchases abroad is likely to decrease and they will search for goods at local online stores. Therefore, the key to success is the localization on the British market.

But for European citizens, the devaluation of the British pound will make products and services purchased from British companies cheaper if they pay in another currency.

So far, Britain has been in a comfortable position due to the free movement of goods, there were no obstacles in the EU to prevent expansion. However, if the European Union and the United Kingdom were to apply customs duties on each other's products or would only reintroduce customs duties in one direction, this could cause serious problems.

It is very likely that all packages in the UK will have to cross customs offices in the receiving country, which will require paperwork and incur additional costs and possibly delay shipping. This could have a significant impact on transport costs and import / export duties, but the scope of the impact is difficult to assess until coming to an agreement.

However, it is important to note that the UK is still the best choice for e-commerce and remains the largest online shopping market in Europe.

Here's why:

* The UK will remain an excellent choice as a gateway to Europe.

* The UK is the third largest e-commerce market in the world, with Sana saying that online sales are around 15%

* Online customers in the UK spend more per capita than consumers in any other country.

What kinds of duties can we expect?

One thing is clear: online shopping from the UK will become harder and more expensive when the UK becomes a "third country". Price is one thing and tariffs, taxes and duties will inevitably have an impact. Another aspect of trade after Brexite is consumer protection.

If you buy something on the UK website, EU law states that you have the same rights as if you were buying at home country. This means that you are entitled to a 14-day reflection period that allows you to return the goods without giving any reason, expressly entitled to compensation for late shipping or non-delivery, and in particular the right to redress in case of defective goods.

EU consumer protection legislation ensures that consumers across the EU can buy goods and services from other EU countries because they know that protection and safety standards are the same or similar in every EU Member State.

For example, if a UK consumer purchases an item from an EU-based trader and the goods do not come in, or if a problem occurs, the UK consumer may use the right to seek redress from the UK courts and the judgment will be recognized in the Member State concerned.

However, when Britain leaves the EU, its retailers will not be subject to EU legislation, which means these rules may not apply anymore.

If there is no agreement, the consumer will not be able to use the UK courts to solve the problem - instead they would have to go to court in France, Germany, Italy and so on.

The UK will also lose its ability to use digital programs in the Eurozone, the pan-European online store certificate, such as the Ecommerce Europe Trustmark, which will certainly have a negative impact on consumer trust.

Making payments from and to the EU could be slower and more costly. Currently, UK payment service providers have access to central payment infrastructure such as the Single Euro Payments Area (SEPA), which allows customers to make cross-border payments at relatively low cost or even for free.

However, in the "no-deal" scenario, the cost of card payments between the UK and the EU is likely to increase, and these cross-border payments will no longer be subject to a surcharge ban that prevents businesses from charging consumers for the use of a particular payment method.

With regard to UK business fees, VAT is likely to change. It is very likely that we could see eBay and Amazon charges with 20% VAT, as opposed to the current 15%. In addition, small businesses in the UK are likely to have to register for VAT in EU countries.

The online advertising market should not be significantly affected by Brexit, as the European Union does not impose customs duties on intangible goods.

Expandeco's opinion

E-commerce sales in the UK are huge. About 15% of purchases in the UK are online, making it the hub of e-commerce in Europe. And since the decline in British pound value is likely to increase local business, it's a very good time to have an online store in the UK.