After the Brexit referendum on 23 June 2016 caused a huge stir worldwide, the UK formally left the EU at the beginning of 2020. However, in the current transition period, which ends with the last day of 2020, uncertainty remains among businesses and institutions as there are currently no trade agreements with other countries and negotiations are still ongoing. This is due to the fact that consultations have been put on the backburner in recent months because of the coronavirus pandemic.
Now that the end of the year is approaching, e-commerce retailers and logistics companies are preparing for the time after Brexit . One of the biggest challenges is related to the logistics and fulfillment process, which requires a change in strategy for many companies.
In this blog post we will explain why you, as an online retailer, should adjust your e-commerce fulfillment strategy to continue selling successfully in the UK after the end of the transition period.
The importance of the e-commerce market in Great Britain for European retailers
The e-commerce market in the United Kingdom is a major milestone for the expansion of fast growing e-commerce merchants. This is because the country has the highest e-commerce penetration rate and is the largest online retailer in Europe. In fact, 87% of households in the UK made purchases online in 2020.
In addition, the effects of the coronavirus pandemic have further strengthened the trend towards online trading. As a result, the share of internet sales compared to total retail sales was 32.8%.
Due to the high potential among British online buyers, many European online retailers export their goods to the UK. 11% of all purchases made by British buyers are made in other EU countries, with Germany, France and the Netherlands being the most important countries.
How will the sale and shipping of your products to the UK change?
At the moment it is very easy for your e-commerce business to deliver to the UK as there are no complex requirements:
- No need for customs formalities
- No proof of origin of goods
- No customs payments for goods from third countries
- No duty on UK or EU goods
- Duty-free trade under all EU free trade agreements
Unfortunately, this will change in 2021 when the transitional period ends and the UK will no longer be part of the EU and the single market.
In the future, selling and delivering goods to your UK customers will present challenges. The exact framework will depend on the outcome of the final negotiations.
However, you will probably have to meet the requirements for shipping to a third country outside the European Union. As a result, most shipping companies recommend that you prepare for this now by following these four steps:
1) Gett you an EORI number for the export of goods
An EORI number (Economic Operators Registration and Identification) is assigned to companies that export goods from the European Union or import goods into the European Union. This identification number is required for customs clearance.
2) Classificationt yours Products with customs tariff numbers
The eight-digit customs tariff numbers serve the purpose of classifying the goods and are specified in the customs declaration. In this way, the customs authorities know which products are included in the shipment and which import duties and taxes must be levied on import.
A list of customs tariff numbers for products can be found here.
3) sitet sure that their provides the following data required by EU customs authorities for exports and imports
- Name and address of the sender and recipient
- Recipient's telephone number (make sure that the recipient's telephone number has the prefix +44, otherwise the parcel will be rejected by customs) and e-mail addresses of the sender and the recipient
- Description of goods
- Value of goods
- HS code for export (consists of eight digits)
- Country of origin
- EORI number
- Value Added Tax-Identification number (if the recipient is a company and it is a B2B shipment, the recipient's VAT number must also be provided)
- Incoterms: To regulate the payment terms for the recipient. These depend on the order value.
4) Enclose the following required documents with the consignments
- Commercial invoice: This is required if the goods within the consignment have a commercial value.
- Pro forma invoice: Must be enclosed if the goods have no commercial value.
How the changes in the e-commerce fulfillment process will affect your conversion rate
The changes in the logistics process resulting from Brexit can have serious consequences for you as a retailer.
It is expected that delivery times and shipping costs will be significantly extended or increased. As these are key factors in the discontinuation of purchasing processes, it can be assumed that the new regulations will have a negative impact on the conversion rate of European online shops selling to the UK.
In fact, studies have shown that 61% of UK online shoppers abandon their cart without purchasing if delivery costs are too high, and in another survey, 41% of respondents said they don't continue shopping online if delivery times are too long. Consequently, this means that you should change your e-commerce fulfillment strategy to continue to be successful in the post-Brexit era.
Cross-Border Fulfillment for optimized e-commerce shipping
As a European webshop that sells several hundred shipments to UK online shoppers every month and does not want to lose its existing customers, you can optimise your international logistics with cross-border fulfilment . By storing your goods in a local logistics centre in the UK, you can be closer to your end customers to benefit from reduced shipping costs and shorter delivery times.
You still need to ship your products to the UK, but early delivery of pallets in larger quantities enables smooth B2C fulfilment processes and is more cost-effective. One of the reasons for this is the reduced workload for customer support, who don't have to worry about orders that have got stuck in customs.
By working with a 3PL (Third Party Logistics Provider), you can keep your fixed costs at a comparatively low level. Another advantage of having a fulfillment warehouse in the UK is that you can offer local delivery options to suit your customers' needs, further improving your conversion rate. In this blog post you can learn more about the top UK delivery service providers.
If you work for an EU-based e-commerce company and ship to the UK, you should take steps now to avoid any potential negative impact, even if the outcome of the Brexit negotiations is not yet entirely clear.
Selling to your UK customers will definitely be more complicated than it is now, but rethinking your supply chain and fulfillment strategy will help you succeed in the long term.
About the author:
The modern e-commerce fulfillment service provider byrd offers access to an international logistics network in 5 countries via cloud-based software.
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