Since the Brexit referendum result was announced in 2016, the impact of it on businesses has been unclear. For years, we’ve been kept in the dark while successive governments tried to come up with a deal. And although this saga is finally over, e-commerce businesses are now trying to find their feet in this new post-Brexit world, manoeuvring the requirements of different clients across the continent.
So, the time has come for you to re-evaluate your own company’s strategy. To do so effectively, we have put together some factors to consider.
1. Clear your inventory for customs
The UK leaving the customs union means that, well, customs between the country and EU need to be factored in. As fulfilment experts at Bezos.ai explain: “Shipping across the border is a slow process and delays at customs give European customers a terrible delivery experience that can impact your brand.” A major part of this is paying the necessary duties and taxes. Whatever you do, you want to avoid customers finding out about incurring any resulting costs themselves upon the arrival of their products — this is terrible customer service. In order to circumvent this unfortunate scenario, you can notify them at checkout that there may be customs fees to pay. This is probably the easiest thing to do and will temper expectations, but it still leaves a lot of unknowns for a customer who may opt not to bother with their order as a result.
The more preferred alternative, however, is to store your stock in both the UK and the EU. This allows you to clear it for customs in advance, taking away the cost from your client (as well as making shipment a whole lot quicker). Some fulfilment centres give you this option, so it’s worthwhile to take a look at their offering. These are facilities that store your inventory until an order has been placed, and then handle anything about the shipping process, from packing to delivery to returns.
2. Choose zero-rated exports or register for VAT in the EU
You’d be happy to learn that from 1 July 2021, there’s no longer a requirement to register for VAT in each individual EU country, but rather declare through the OSS (one-stop-shop) as a Non-Union taxpayer in a member state of your choosing. This clearly makes the process easier, as you’re only required to do this once.
However, you may elect to treat your sales as zero-rated exports instead. If your customer is registered for VAT in an EU country, the zero-rate sale would basically mean you charge a VAT of 0% instead of the UK VAT. Unfortunately, that means your customer would have to pay VAT in their home country upon delivery according to the law there. The simplest option by far, though, is to hold some of your inventory in an EU country, which will avoid the individual calculation. No matter what you end up choosing, it’s always good to consult with an accountant or lawyer to make sure you’re doing everything right.
3. Take advantage of the increase in online sales
Continuing to sell to EU customers is not just about the shipping, but also your overall strategy. Among the many impacts of COVID on our lives is the changes in our behaviours, especially shopping trends. Gone are the days (well, almost gone) of going to a big shopping centre or browsing the inventory of countless physical stores. Even our most well-known brands, such as Topshop, went under only to be bought by online retailers. This is not just a pointed fact — in 2020, global e-commerce sales grew to $26.7 trillion, becoming 19% of all retail sales. Of course, as things are opening up, we’re going to see some return to their endless window-shopping. However, people who used to be scared of buying online have had their fears cured, while many have seen the convenience of the practice. Even after COVID, it’s likely that we’ll see a rise in e-commerce sales, so take advantage of this new hope by investing in your marketing, UX and making your web-store as attractive as possible.
4. Revisit your T&Cs
Every legal change, and especially as big as Brexit, should trigger your own legal audit. No one wants to go through the most boring document of all — your terms and conditions — but unfortunately, it is essential. Ensure your T&Cs clarify where your products will be sent from and what legal system they are based in. Check if they have any references to EU legislation that need to be amended or removed altogether. If there’s any mention of currency fluctuations, it might be worthwhile to emphasise them even more. It’s also important to review your definitions and legal terminology to see if it still applies post-Brexit. In general, if you haven’t done so already, now is the time to harness the help of your favourite solicitor and have them go through your contracts and T&Cs with a fine-tooth comb.
5. Put transparency first and reassure you customers
We live in the age of transparency, and people no longer want to see big corporations acting like mobsters. They’re now looking for smaller, boutique companies that put their money where their mouths are, support the environment, and treat their customers as their community (rather than an asset that needs to be squeezed out of any spare change). So, if you made a mistake, own up to it. It’s a confusing time for all of us, and clients prefer to know you’re accountable even if you’re not always right. Make sure you clarify your processes, explain why prices have gone up if they have, (for example, due to extra fees or currency fluctuations), and overall make your clients feel like they’re in good hands. That could be the difference between an EU customer choosing to stick with you or find a local alternative.