Guest blog from Linnworks
How to manage supply and overcome challenges
An overview of Brexit’s impact on UK businesses
Six months on from the end of the Brexit transition period, there’s no doubt that Britain’s divorce from its EU peers has impacted ecommerce businesses in the UK.
According to a recent survey by the Institute of Directors for the Financial Times, nearly one-third of British companies who trade with the EU have seen a decline in business since the post-Brexit rules took effect on January 1.
The survey also found that 17% of UK companies who had previously traded with the EU have stopped since the start of the year – some permanently, others only temporarily.
The final-hour Trade and Cooperation Agreement formalised between the UK and the EU on December 24, 2020 left little time for retailers and brands to react. Although it confirmed zero tariff, zero-quota trading between Britain and the EU, ecommerce companies have been faced with a host of new obligations when trading across the UK/EU border. These have proved confusing, costly and time-consuming.
The creation of the new customs border between Great Britain and the EU has had several implications. At a basic level, it means that the same customs and excise rules that have been in place for goods moving between Great Britain and non-EU countries now apply for goods moving to those countries in the EU (where previously sellers could freely ship products).
Major changes include the fact that exporters now need to make customs declarations, which must include several, as well as new rules around VAT and further obligations from July 1.
Complications around delivery, border delays and unexpected taxes have undoubtedly impacted business. But that doesn’t mean that the opportunity isn’t still there for those brands and retailers prepared to overcome the challenges of Brexit and restore consumer faith in buying internationally.
The challenges of Brexit
So what should retailers do? Firstly, they need to understand the challenges that Brexit has posed.
One of the biggest of these is how they manage inventory and where their products are located, to help minimise delays. This impacts customer experience and satisfaction, as well as increasing the need for customer service as customers try to track their parcels. All of which adds extra strain and increases costs for already struggling retailers.
Confusion around pricing is also impacting purchases since the extra duty, value-added tax and shipping costs have seen prices for goods rise too. There can also be additional, unexpected costs for the consumer on the arrival of their goods.
Legal Obligations
Brands and retailers must ensure they are on top of their new legal obligations – of which there are many
1. Customs Declaration
Merchants must provide a full customs declaration, which includes everything from VAT details to country-of-origin information. It is the accurate completion of this which is essential – including the correct classification and description of goods. Mistakes, such as not correctly applying the rules of origin, could mean additional duties, tariffs and delay or even confiscation at Customs.
2. EORI
New responsibilities also include the registration and provision of an Economic Operators Registration and Identification number (EORI), required on the customs declaration for the UK and any EU country retailers will be shipping goods to. It comprises a country code of the issuing member state – for example GB for the UK — followed by a code or number unique to the member state. It is assigned, upon request, by the customs authority of the relevant EU country.
3. VAT
There are further obligations around VAT too, with additional changes introduced from July 1 that are designed to simplify the collection, reporting and payment of VAT but which must also be considered.
How to succeed even with the challenges of Brexit
It might sound daunting, and the figures quoted from the Financial Times survey show that for many it has been just that, but there are steps that ecommerce businesses can take to:
- Minimise the disruption caused by the Brexit trading arrangements
- Overcome the disruption
- Exploit the opportunity of trading in the EU
1. Better managing inventory is key
Many retailers have looked to revamp where their stock is located. For some, that means delivering stock directly to the UK, with sellers dictating that a proportion of their inventory be delivered directly to fulfilment centres around Europe. Larger retailers are going one step further where they are shipping a higher proportion of goods to one region by investing in their own European warehouses.
2. 3PL partners
3PL partners can also help with the general transportation of goods and customs on a retailer’s behalf. These partners can also set up European warehouses for British retailers. However, it’s important to clarify contracts between the retailer and the 3PL so that each side is clear on their responsibilities.
3. Transparency
When it comes to ecommerce, customers have always preferred transparency and this is especially true when it comes to shipping times. Retailers need to take this customer need information into account and be open and honest about the potential of longer shipping times and take a proactive approach to customer communications around where their purchases are.
4. Customer service
Doing so can help to minimise customer contact. However, customers will still have questions and so retailers also need to ensure that they are investing in customer service processes so that they can answer questions from customers as quickly as possible – whether that’s about the cost of cross-border delivery or chasing a parcel that’s taking longer to arrive than expected.
5. Shipping management software
Control of inventory and shipping is made easier with a total commerce platform like Linnworks. Linnworks’ automated shipping management software allows multichannel sellers to ensure fast order fulfilment and secure the cheapest shipping rates. The ability to manage the entire shipping and order fulfilment process from one centralised location gives the improved control and visibility during the disruption that Brexit has caused. Similarly, inventory management software allows retailers to connect sales channels and synchronise stock and enable control of inventory at any time and from anywhere in the world.
Find out more
Navigating Brexit isn’t easy. But for the ecommerce businesses that manage to find their way, the rewards will be evident. To learn more about navigating Brexit, download this guide to Brexit for ecommerce businesses from Linnworks.