Keep calm: your online sales will carry on after Brexit

For now let’s all keep calm: even though the UK may leave the EU soon, realistically for the next two years it will still be part of it. And even after this period … not much can actually change.

There are many questions to be answered but if you’re expecting a big revolution in trade, you may be disappointed. It’s likely that Brexit will have no significant impact on trade.

The Brexit referendum result attracted the attention of eCommerce sellers

The news on Friday morning 24th June sent shockwaves across the globe. Britain officially announced that its people want out of the European Union. Shocking, unexpected, unsettling news. Millions want to believe this happened in a parallel universe or was simply a bad dream.

The Brexit news put international online sellers on the alert. The economic earthquake on June 24th unleashed a torrent tidal wave of anxiety and panic.

Some reactions were really strong with sellers contemplating increasing their prices in the UK or even to cease trading with the UK altogether. Many questions are being asked:

• Should I increase prices for the UK market?
• Should I stop selling items in the UK?
• Will exchange rates ruin my margins?

But here’s the deal….

Brexit doesn’t equal the end of international eCommerce.

There is no need for panic. There is no definite need to increase prices for the UK market. And definitely there is no need to close the market!

Is there really no reason to worry?

Yes, there’s no reason to worry. But the general feeling of uncertainty seems to make things look worse than they actually are or can become. Of course, you can’t predict the future but there’s enough evidence to keep calm & carry on: 

• The UK is a gateway to Europe and its special status will keep it in the trade loop.
• The UK is the largest eCommerce market in Europe and the eCommerce success story.
• The UK shopper spends more money per capita online than in other countries.
• The UK is an English-speaking market, which facilitates labelling.

And…

We need to wait at least two years before the UK actually leaves the EU!

You must have heard about Article 50. When the (in)famous Article 50 is triggered, a given member state officially notifies the EU of its withdrawal to start the exit process. If Britain does exit the EU, there is a minimum 2-year negotiation period.

Negotiations will cover all essential economic aspects, e.g. commerce, trade, immigration or employment law. In the meantime, all EU laws are still valid for the UK and … business and life will carry on as normal.

The value of the pound plummeted but remember … Sterling is a strong currency

After the Brexit referendum, the pound collapsed against the dollar, plunging to its lowest level since 1985. The British Sterling may have seen better days. Yet bear in mind: it’s a strong currency and it should eventually settle.

Of course the falling pound will have an impact on prices. British companies buying from Eurozone vendors may see prices go up. Also, products priced in American dollars are likely to become more expensive for British consumers.

When it comes to purchases from British companies, a devalued Sterling will make goods cheaper when payment is made in a different currency. This is good news for EU citizens importing goods or services from the UK. However, with a low pound there is a risk UK buyers will spend less on shopping in foreign online shops.

It’s impossible to predict currency fluctuations and upcoming events that can change the course of history. But for now … again there’s no need to panic and…

… there’s especially no need to make rash decisions but we can make informed ones instead.

Brexit implications for marketplace sellers

So how about Brexit implications for marketplace sellers? A few facts…

• Unless you’re registered in another country site, marketplace fees are still generally paid in Sterling. What can possibly change is the VAT. eBay and Amazon fees may be charged with 20% UK VAT instead of the current 15% VAT.

According to Tamebay …

… this might look like an instant 5% discount for VAT registered sellers, but in the past fee increases have soon swallowed up any potential VAT savings.

• A more problematic issue may be small businesses having to register for VAT in EU countries.
• Fulfilment by Amazon (FBA) may become more complex. At present you can hold stock in a UK Amazon warehouse and fulfil sales through other Amazon EU country sites from your UK stock.
• When it comes to PayPal and Payments, PayPal knows how to move money around the world. So it shouldn’t give you any reason to worry. Other companies offering similar services can also become more competitive in the case of fluctuating exchange rates.
• As to online advertising, according to the consulting firm L2, online ads/digital products shouldn’t be impacted by Brexit, because the EU doesn’t impose tariffs on intangible goods.
• As far as couriers go, customs barriers will potentially add paperwork and cost, increase import/export duties, and could cause shipping delays. This depends on future agreements, but it will likely take months for such changes to happen.

Brexit and Webinterpret customers: rest assured!

If Article 50 is triggered, the existing trade agreements with other EU members will definitely have to be renegotiated. However, the UK’s economy is the most competitive in Europe and its negotiating position is strong.

So the UK is too big a player to be isolated from the rest of Europe. The British also belong to the best online shoppers in Europe and it’s unlikely Brexit will change this.

Hence, we don’t expect any big changes for our sellers trading across Europe. Since Friday June 24th we’ve received many questions about ‘’what happens next?’’. We want to assure our clients that there is no reason to believe in doom, gloom and worst-case scenarios.

How about exchange rates updates? Webinterpret is prepared for Brexit.

Euro foreign exchange rates are updated daily at 15.00 CET by the European Central Bank. Webinterpret monitors these updates on a regular basis and automatically adjusts rates for its clients.

We thoroughly go through all items: if the current exchange rate changes an item’s price by more than 1%, we will adjust the price. This regular synchronisation takes place to make sure you make the best possible deal.

Additionally we offer our clients the possibility of increasing or lowering prices for all items on specific markets if they wish to do so. Hence, rest assured, rapid currency changes are constantly monitored by us and there’s no reason to believe that Brexit will have a significantly negative impact on your sales.

For the majority of our customers, Brexit will have no impact either short- or long-term. We are keeping an eye on the situation and in the unlikely event there’s a need to accommodate the process thus far, we will notify you in advance.

We want our customers to feel confident about their sales figures, especially now after the historic referendum. But the good news is: we’re on it!

Brexit, the EU and Cross Border Trade across the globe

If you’re an international online seller, you’ve probably sold your items to places with which your country has no trade agreements at all. So you know that such cases may be more complicated, but definitely possible. No trade agreement doesn’t mean no trade.

It would be sensible for the UK to keep access to the single market once Article 50 is triggered and avoid imposing tariffs. New trade tariffs and border delays are against the interests of both the EU and the UK.

It will not be possible to leave entirely. The European Union is more complex than we may realise. It consists of multiple agreements all contributing to a more open market, for example the European Free Trade Area (EFTA), the European Economic Area (EEA), the European Union (EU) Customs Union (CU) or country-specific treaties for trade.

This means that even though the UK may leave the EU, it will remain part of the EFTA, EEA and CU. This is needed for a single market to function smoothly.

It’s too soon to say how exactly Brexit will impact trade within the EU or outside of it. It’s still up in the air when the UK will officially leave and what trade deals will be introduced at that point.

For now we’re seeing currency fluctuations. We’re also speculating a lot, but the fact is … we don’t know if there’s really anything to worry about.

At the moment we need to focus on solutions. At the end of the day we need to move forward successfully within the new political and economic reality.

This is Britain

The post-imperial UK has always felt different to continental Europe. Pounds, stones, inches… The imperial remnants may still make Great Britain somewhat different from the continent.

Brits may drive on the left and have weird electrical sockets, but … in terms of the European and World economy, their country is a big player. Hence, Britain will continue to co-operate with Europe, whether it’s officially part of the EU structures or not. And Europe can’t survive without Britain either.

So commerce and collaboration between the UK, the EU and the rest of the world will continue. It may start off with a period of disruption and a degree of chaos within the market, but it will work in the long-term.

The best thing you can do at the moment is not overreact and calmly watch the situation unfold. The UK is still in Europe and it will not be relocating to the USA or Australia any time soon.

As of now, this referendum has changed absolutely nothing.

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Further Reading

United Kingdom: top online market and eCommerce success story