August 17, 2016 Last updated August 17th, 2016 1,378 Reads share

How Can UK Ecommerce Sites Cope with Brexit Implications

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Before Brexit, the UK had the biggest e-commerce market in the EU. Of all retail sales in the country, 14.5% comes directly from online transactions that amount to roughly

Here is a closer look at the further Brexit implications in the UK e-commerce industry:

More Expensive Deals for UK Shoppers

Of course, the decline of the British Pound means pricier overseas purchases for UK consumers. The same goes for local e-commerce businesses with established relationships with foreign suppliers. Furthermore, suppliers with EU-wide distribution rights may no longer choose to sell to UK retailers due to the altered rights. Should they want to keep selling to the UK, they—along with their UK-based buyers—will almost certainly have to deal with additional costs. On the other hand, e-commerce stores that depend solely on UK manufacturers are less affected.

More Bargains for Non-UK Buyers

While UK shoppers are faced with more expensive deals from foreign stores, the rest of the world gets to enjoy better deals when purchasing from UK-based companies. If the weakened British pound does not recover soon, UK-based businesses may continue to receive more orders from foreign consumers for the rest of 2016. Customers may also take advantage of UK-based parcel forwarding services like MyUKMailbox.com for more affordable shipping rates. These services work by consolidating multiple orders into one shipment and then forwarding it to the foreign customer’s mail.

Manpower Becomes an Issue

Aside from the new trading restrictions, Brexit also introduces changes in immigration policies and the rights of EU citizens to work in the UK. Consequently, UK-based e-commerce businesses now have less access to EU’s talent pool and may face staffing problems. Bear in mind that EU employees may soon be required to obtain work visas for UK-based positions. With the additional costs and hassle of complying with the new requirements, less people will be willing to pursue working opportunities in the UK. The distribution and packaging areas of e-commerce are more likely to be affected since UK citizens are quite hesitant to take on warehouse staff positions.

Uncertainty and Delayed Growth

As of now, the rippling effects of Brexit in the UK e-commerce industry remain shrouded in uncertainty. As a result, UK companies may delay their plans of entering the e-commerce market despite the existence of e-commerce platforms like Shopify that ease the process of digitalizing a store. Besides, companies are probably more interested in maintaining a financial cushion in case of an economic downturn, which is highly possible early on post-Brexit.

Lastly, cross-border payment regulations are subject to significant changes. That is why e-commerce stores need to observe policy changes in their chosen payment providers to make sure they can still offer flexible payment options to online shoppers.

Less Ecommerce Startups in the UK

In the past, companies from different regions of the world tended to set up shop in the UK as an entry point to the EU market. But since the UK is no longer a part of the EU, the UK e-commerce industry will probably experience slower growth. In fact, UK-based businesses may even choose to leave British soil and move their headquarters elsewhere. Even big companies like Vodafone are threatening to go out of the UK now that it’s no longer a part of the European Union. On the other hand, countries like Germany and Netherlands offer more promising conditions for interested e-commerce investors.

Coping With the Changes

It may take a while before the local e-commerce industry stabilizes. In the meantime, it’s best for local businesses to adapt and loosen their dependency on EU-focused suppliers. Pay close attention to how your suppliers will react to see whether you need to negotiate new agreements. One strategy that e-commerce businesses should consider is to open up new supply chains with UK-based companies, which will help them avoid the increased costs of importing from the rest of EU and the US.

Focusing on selling to the local crowd is also becoming a reasonable option now that trading overseas has become a lot less favorable. Should you choose to sell more to UK consumers, you can leverage mobile e-commerce platforms to increase your market share. According to statistics, 51% of online transactions in the UK come from mobile apps. That means more than half of the local market will be unreachable to your brand if you don’t have plans of utilizing mobile technology.

Apple once again ushers innovation by launching the Apple Pay for the UK. There is no question that the mobile app payment system will do and has done wonders for UK e-commerce. But with Brexit and its implications taking place, it is good for brands to find a way to leverage Apple Pay and its ilk into helping convert users int customers.

Also, e-commerce businesses may also need to adjust the salaries of menial positions to attract more workers. Bear in mind that the available workforce for menial UK jobs is already insufficient even before the Brexit vote was cast. It either raises the salaries to attract more applicants or start depending more on automation to fulfill key roles.

Ultimately, e-commerce businesses may need to shift their focus and test the waters in other regions like Canada, Australia, and the US. Now is a good time to tip the scales in your favor and leverage the demand for UK manufacturers’ products to start selling more. Digital innovators must take the stage and explore new strategies to remain comfortable beyond Brexit. For existing UK-based e-commerce brands, a drastic shift in their business model must be considered particularly with their pricing structures.

Conclusion

Always remember that a company needs to make the most out of every situation. During major events like Brexit, you need to maintain a clear head and focus on what can be leveraged. And if you manage to identify opportunities despite the uncertainties associated with Brexit, then it is safe to say that you can overcome these challenges and still turn a profit with your e-commerce site.

Image: Green overhead road sign with a Brexit Next Exit concept against a partly cloudy sky background.

Christopher Jan Benitez

Christopher Jan Benitez

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