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The effect of Brexit on B2B ecommerce

prepare for Brexit

Whether your business is based in the UK, the European Union (EU), or anywhere around the world, the effect of Brexit on business-to-business (B2B) ecommerce sales will include new everything: regulations, customs arrangements, duties, data handling and recruitment rules will all have shifted in the aftermath of the changes of January 1st 2021. 

Even in June of 2020, many UK businesses were unprepared for the country’s departure from the European Union. Internationally there are currently many bridging arrangements and provisional agreements in place that will take some time to resolve. 

From January 1st 2021, customs borders with the EU were reinstated and new rules for imports and exports will certainly lead to more bureaucracy. Understanding the compliance requirements and creating cost-effective ways to streamline processes will help to keep your B2B ecommerce business ahead of your competitors; failing to respond could undermine your competitiveness.  

Where could the pain points be? 

Supply chains The first obvious challenge will be the added complexity of moving products across borders. It’s expected that supply chains will be under pressure, at least during the adjustment period.  

Sellers, shipping companies and border agents are adjusting to new checks, protocols and customs clearances. In a July 2020 survey around a quarter of respondents thought that delivery of goods would take more time although there was still confidence that UK products will continue to be good value. 

Costs Changes have led to increased administration for businesses affected by Brexit. In some cases EU documentation and regulations might need to be duplicated, adding significant costs. Businesses are deciding whether to absorb these costs or pass them on to customers.  

This might encourage more UK businesses to buy locally or it could reduce demand for UK products overseas. Some companies have already added charges for shipments between the EU and UK and others are refusing to ship to the UK

Details are important. For example, B2B ecommerce companies buying goods of £135 or less will have to account for the VAT. The business receiving the goods must provide their VAT number or the sale will be treated as a B2C transaction with VAT applied at the point of sale. 

Alongside these practical challenges, we are still a long way from understanding the economic impact of the coronavirus pandemic. It will be difficult to analyze how the predicted economic downturn will affect post-Brexit ecommerce.  

Business processes Cross-border administration will certainly take some time to settle and complexity will increase. Effective business systems will be high on the list of priorities, enabling automation wherever possible. Terms and conditions, shipping and product return policies will all need to be updated. 

There’s a transition period while data protection and privacy rules are maintained to support the free flow of data under the terms of the general data protection regulations (GDPR). This is pending a further ‘adequacy’ agreement that would allow the continuing free transfer of personal data without additional safeguards in future. 

Standards Products developed and manufactured in the EU might now need additional approval and certification for sale in the UK, and vice versa. Different labeling and marketing rules could also apply. 

The UK and European ecommerce  

Despite the potential challenges of this shift in UK and European relations, the UK will continue to be a major force in the global ecommerce market.  

UK ecommerce currently represents almost 8% of gross domestic product (GDP), roughly twice as much as France which ranks second in the European region. UK B2B and business to government (B2G) ecommerce amounted to over £165billion in 2019, with manufacturing and wholesale accounting for the largest proportion, so the UK will remain at the forefront of B2B ecommerce around the world. 

International B2B customers, always looking for a good deal, could see Brexit uncertainty as an opportunity for hard negotiations. At the same time, the UK could position itself as a more liberated business environment promoting the ‘Made in Britain’ brand.  

The European Commission’s Digital Single Market Strategy is intended to digitally support the EU’s single market freedoms. It was designed to reduce or remove barriers all over Europe. With Brexit, the UK has stepped away from this initiative to create a single digital market in Europe for retail and B2B ecommerce. The UK will need to manage the trade-off between checks and balances across the European market with its new flexibility and independence. It will take some time to see how this will affect the B2B ecommerce environment. 

Post-Brexit B2B ecommerce winners  

B2B companies that deliver exceptional, trustworthy and reliable online experiences that simplify processes and overcome potential barriers will reap the rewards of Brexit.  

Customer experience continues to challenge product quality and price as a key differentiator in the marketplace. Smart, technologically-driven solutions will be a key part of post-Brexit growth strategies.  

Simplifying complexity through investment in enterprise (ERP) systems and customer relationship management (CRM) tools that work seamlessly with your chosen ecommerce platform will give your buyers and decision-makers a reason to continue working with you.  

You will be able to automatically handle payments in different currencies, set the appropriate tax codes and shipping costs, and manage returns through your integrated system. With fewer steps in the process and less manual intervention needed, there will be less errors. You can speed things up and improve customer satisfaction at the same time. 

If you are based in the UK and planning to set up warehouses in Europe to overcome some of your post-Brexit challenges you can create multiple B2B and direct-to-consumer (D2C) ecommerce channels from a single platform. You can create multiple sites to support local languages, currencies, storage, distribution and taxation requirements.  

Work with a trusted partner 

Choosing a business partner that has international experience of delivering leading-edge ecommerce solutions will be a pivotal decision for your business. Cloudfy is that partner. 

For advice on developing your B2B ecommerce response to a post-Brexit market, talk to one of our experts about switching today.  

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