Getting products into warehouses then out to customers has been a difficult challenge due to ever changing geopolitical events. Could technology play a part in changing behaviours?
In this series of features – originally published in the 2022 Global Ecommerce Region Report – DeliveryX looks at ecommerce logistics on different continents.
The UK, France and Germany are Europe’s largest ecommerce markets and between them, in 2021, they totalled €477bn in ecommerce revenue. UK retail businesses alone receiving £2.8bn worth of website orders from EU-based customers in 2019, according to the Office for National Statistics.
This was, of course, prior to Brexit. Experts in the industry are now seeing the negative impacts of the UK leaving the EU. The ending of VAT exemption on low value goods, increased paperwork requirements and rules of origin issues have all taken a toll on ecommerce logistics.
“For ecommerce sellers, Brexit basically means more bureaucracy and tax,” says Richard Asquith, global vice-president of Indirect Tax at Avalara.
Commercial property consultancy Knight Frank describes Brexit as creating “competitive challenges for UK ecommerce retailers selling to the EU and vice versa.” It predicts tariffs and taxes will result in higher prices for crossborder ecommerce transactions.
Furthermore, delivery delays caused by the additional paperwork, border checks and stricter regulations are causing headaches for e-tailers. A recent survey by fulfilment firm Shipbob found that UK brands saw post-Brexit red tape on EU shipments as a key risk to their growth.
Such hurdles are already putting businesses off exporting between the UK and EU. German logistics firm Codept has reported the UK’s total exports to the EU fell by 40.7%, while imports from the EU declined by 28.8% when comparing January 2021 to December 2020 figures.
The additional charges, admin and delays will drive many shoppers to stay local, in turn driving retailers to think more about manufacturing and shipping bases closer to home. While Brexit may slow cross-border trade, it does provide an opportunity for domestic ecommerce to grow in the long-term.
This feature originally appeared in the 2022 Global Ecommerce Region Report.