Britain exited the European Union (EU) at the end of 2020 and UK retailers are quickly learning how to adapt to keep selling to the 27 countries of the EU as they have become part of ‘the rest of the world’. Leaving the EU customs union has led to more complex administration when exporting goods. While no one can deny that this is a significant change to how companies across all sectors in the UK trade, online retailers are especially primed to adapt to this new reality.
Adapting to new conditions
The added complexity of exporting to the EU has led many UK retailers to consider establishing a separate EU business to continue trading as they did prior to Brexit. Retailers selling direct to consumers in the EU via their own website are faced with the prospect of multiple VAT registrations and substantial costs for managing tax obligations in individual EU countries.
For marketplace sellers, the initial challenge has been to continue providing a good customer experience despite added customs regulations. To avoid customers being faced with additional customs charges, many sellers have opted to ship their orders Delivery Duty Paid (DDP). At Fruugo, we recommend shipping DDP and we can help sellers recoup the additional cost involved.
As online marketplaces have grown in significance and scope over the past decade, more and more small and medium-sized British retailers have been able to expand their sales not only online but to new markets more seamlessly than before. Many retailers, ranging from pure-play to shops whose e-commerce sales amount to a smaller share of their overall sales, are currently trading cross-border to both the EU and non-EU markets.
At Fruugo we have seen this development over recent years, with 85% of our sales being cross-border and a significant share involving sellers or customers in markets outside of the EU such as the US and Australia. While many might find engaging in this trading daunting at first, a great majority are able to adapt their businesses to this swiftly and painlessly with almost immediate results.
With this in mind, it is very important that smaller merchants with international ambitions should try not to be discouraged by Brexit. It does not necessarily mean that cross-border trading has stopped, or that there aren’t opportunities to sell to consumers in the EU – far from it. Despite the added effort of new paperwork, significant sales opportunities remain across European markets. More than half (60%) of EU citizens shop online and it is predicted that 2021 will see £300 billion generated through e-commerce sales.
Regardless of Brexit, the opportunities offered by e-commerce are growing and due to COVID-19 the openness among consumers to shop online skyrocketed in 2020. The progress that has previously taken years occurred in just months in the spring of 2020, and while some will be rushing back to the high streets as soon as it is allowed, it is likely that many consumers have changed their behaviour for good. Crucially, this is a global trend, meaning the opportunity for UK retailers to generate sales abroad should continue to grow.
The role of marketplaces
Marketplaces play a very important role in making sure retailers can benefit from cross-border sales, notwithstanding bumps in the road such as Brexit or other changes in trading conditions. By automating a lot of the tasks involved in marketing products to other countries, such as translating copy and converting currencies, and guiding the merchant through the necessary paperwork, platforms can help make sure that selling and shipping a product to a consumer in the EU post-Brexit will still be a viable option for British online retailers.
If 2020 has taught us anything it is that we cannot predict what challenges our economy will face in even the near future. What we do know however is that the shift to digital shopping is a steady and long-term trend that will likely continue and that focusing on expanding sales online and across borders is one of the best ways to strengthen your business and boost the chances for it to not only survive but potentially thrive even under challenging circumstances.
Blog post by Håkan Thyr, Chief Revenue Officer at Fruugo