Bracing for Brexit: The survival guide for online retailers

Brexit in a nutshell

After 4 years of uncertainty and confusion, the dreaded Brexit deadline is fast approaching. At midnight on the 31st December 2020 the UK is set to leave the European Union’s single trade market and customs union effecting over 200,000 UK business. If the UK and EU fail to reach a free trade agreement, then the UK will automatically operate under the World Trade Organisations rules and regulations. If you’re a UK registered ecommerce business that currently sells to countries outside the EU, then the same rules will now apply for trading with the 27 EU countries. Below we’ve put together a guide on how eCommerce retailers can help reduce the potential impact of long delays, heavy fines and everything they need to do in preparation for the 31st of December.

How can my eCommerce business prepare for Brexit?

There are three main options for eCommerce business to consider when planning for the end of the transition period (31st December). These include the following:

Option 1: Blockading European sales

In the short term, blocking sales to EU countries would save your online business a lot of necessary costs when exporting to the EU. Shipping costs, customs tariffs and distribution delays are all likely to increase and cause chaos at the borders which will cause a knock-on effect of disappointment for your customers. However, in the long term this will limit your commercial growth in the UK, reducing your competitiveness and growth as a business. Alternatively, you can continue to export to the EU and leave the import VAT to your customers who will have to pay these fees upfront before they can be released for delivery. However, this is likely to result in complaints and loss of repeat business from EU customers. Additionally, if you’re an Amazon FBA Seller you must pay import VAT and be registered for EU VAT or face being banned from their services.

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Option 2: Setting up shop in the EU

fulfilmentcrowd has been operating in the EU for over 12 months now with fulfilment centres in The Netherlands and boasting two sites in Bocholt, Germany. Our EU VAT registered clients benefit from close access to large ports and transport links to the European market and the same reliable order fulfilment service that we operate in the UK. In these circumstances’ businesses will also benefit from distance selling thresholds which are due to be stripped from UK businesses at the end of the transition period. This means increased access to EU markets that we benefit from now. We work with a large number of online retailers who have made the move and have contacts in the Department of International Trade who can help advise on the transition of moving stock into the EU. Joining fulfilmentcrowd also gives online retailers the added benefit of splitting their stock between multiple international locations without comprimising on service quality. If you’d like to know more about this, please get in touch.

Option 3:  Continuing to export to the EU

As scary, confusing and complicated as it might seem, the UK government has set out clear guidance for UK businesses to follow in order to prepare for the end of the transition to continue goods flowing in and out of the EU. Customs declarations will now be mandatory as part of the Single Admin Document C88, which must be supplied with all imports and exports manually or online through HMRC CDS. The transition checklist includes:

• Applying for new EORI number: All UK business will require two EORI numbers (Economic Operator Registration and Identification) one UK and one for the EU. UK EORI numbers are already being automatically generated by HMRC, but businesses will need to apply for an EU EORI number in order to be compliant at EU borders.
• Correct Commodity Codes: These are needed to make sure your goods are compliant with EU regulations. If businesses already have EORI numbers they can apply for binding commodity codes through HMRC that last up to 3 years.
• Appoint a Fiscal Representative: 19 of the 27 EU countries require foreign businesses to appoint a local fiscal representative to manage tax reporting and have a shared liability for payments. Typically, these can be very costly, however, without one businesses can face heavy fines.

What help can I get with Brexit?

fulfilmentcrowd are working closely with our clients and integrated carrier partners to ensure a smooth transition into the new year.  Our award-winning platform already has the power to simultaneously connect your online marketplace and chosen carriers under one roof to give you complete clarity on the progress and reporting of your order fulfilment. In the very near future, our platform will automatically retrieve customers data and send an electronic invoice to your carriers. Help can also be found via the UK government who are offering training grants for small businesses to learn about customers declarations and help with tariff calculations. Find out more here. The government have also introduced Transitional Simplified Procedures that allow business to postpone duty payments for several months to allow time for them to adjust to a no deal Brexit.

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by Cameron Mitchell on 09/12/2020