Retailers, carriers and customers feeling the Brexit pain
It is now just over a month since the UK and EU went their separate ways. But many retailers, carriers and others involved in the world of cross-border ecommerce, may well feel that they have aged considerably more than just a few weeks.
The 1st of January 2021 brought not one major change, but two.
- Brexit Day
Brexit Day saw the UK now being treated as a ‘third country’ by the EU and vice versa in terms of the UK’s relationship with the bloc’s 27 members. This has resulted in the need for much higher threshold of compliant data for customs clearance including full product descriptions, HS6 codes, shipper and consignee details, accurate values and country of origin.
- VAT Changes
Alongside Brexit Day, the 1st of January also saw the UK introduce significant changes to VAT including the removal of the low value consignment relief (LVCR) on goods with a value of less than £15. It means that all goods worth £135 or less are liable for VAT at the point of sale. Online marketplaces are therefore responsible for collecting and accounting for VAT on sales. If no marketplace is involved, then the responsibility lies with the overseas seller to register in the UK.
There is no question that it is those businesses involved in B2C cross-border trade which have been rocked the most by the 1st of January changes.
B2B trade has, in the main, been business as usual with the exception of the need for much greater levels of paperwork and duty to be paid on EU goods not meeting the complex rules of origin requirements.
The real shockwaves have been reverberating in the fast-moving world of ecommerce, adding further pressures to a supply chain already reeling from the challenges of Covid-19.
We know that some of the bigger brands have been desperately trying to recruit customs specialists to help them navigate the changed world and the extra layers of documentation now required. But the problem they have found is that the vast majority of those workers are already employed elsewhere with salaries seemingly increasing daily.
What we have also discovered is that the companies already used to trading globally have generally fared better than those companies whose businesses had been based solely on trading within the EU.
The upshot has been stories of retailers and brands suspending trading either UK to EU or in reverse and some carriers also temporarily suspending activities while they race to update their systems to capture accurately all necessary data.
Caught in the middle of the resulting chaos has inevitably been the consumer with resulting horror stories of parcels not arriving and, in many cases, them being confronted with the doorstep shock of being asked to pay additional charges to cover VAT and customs clearance fees and, in some cases, import duty.
Unquestionably, more could have been done over the last 18 months or so to prevent the fallout we have seen from Brexit and the UK VAT changes.
For many retailers and carriers, sorting out their processes and systems so that they can get back to frictionless cross-border ecommerce trade is a non-negotiable – it is simply too important a part of their revenues and growth plans.
But until they do, those companies that remain unprepared may find that they are leaking sales to their competitors who are able to provide them with a greater level of customer satisfaction.
Brexit Pain assistance for your ecommerce business
To find out more about what makes best-in-class cross-border ecommerce, download Hurricane Commerce and Tamebay’s white paper ‘Cross-Border the Easy Way’.
You can also register to attend Tamebay’s webinar with Hurricane Commerce entitled ‘US STOP Act, EU VAT, ICS2, Brexit and Northern Ireland – why complete and valid data is vital for cross-border eeommerce success’.