For the last few years, the media has been filled with mentions of Brexit – its political, social, and economic ramifications. You’ve probably already seen countless articles, press statements, opinions, and broadcasts – which in turn, for you as the business owner, have created countless questions.
Will Brexit affect me?
How will Brexit affect me?
Do I need to reassess my eCommerce strategy?
How will shipments and sales be regulated?
Are there ways to recoup any losses after regulations change?
The United Kingdom is the current market leader in Europe for online shopping – with 93% of its residents shopping online, at an average spend of approximately 900 Euros per individual per year – purchasing from stores within the UK as well as overseas. Britain is also the second most in-demand eCommerce destination for the rest of Europe (following China) due to its developed eCommerce resources. Therefore – no matter your political inclinations – Brexit will affect you as an eCommerce business if you are located within the UK, European Union or even located further overseas.
At MyWorks, we understand how stressful such a drastic change can be. Your shipping, tariffs, customs, and warehouse management workflows will all be impacted. While it would be difficult to summarize every policy alteration regarding the Brexit situation, we’ve put together a short ‘crash-course’ on what’s going on, how it could affect you, and ways we can help you pivot your eCommerce strategy to better weather the changing economic climate.
What is Brexit?
You’ve undoubtedly heard the term “Brexit” before, but what exactly does it entail? Well, as of 21 January 2020, it marks a decision by the British people and government to legally separate the United Kingdom from the European Union. Throughout 2020, a transition period was established, in which the UK was absent from the European Union’s political workings, but still formed part of the EU’s customs union and single market. This transition period came to an end in December 2020, and any and all trade over the borders of the UK and into Europe – and vice versa – is no longer subject to EU benefits, but rather falls under terms dictated by the World Trade Organization.
This transition from a European Union deal into a World Trade Organization System indicates several significant changes when it comes to imports and exports, as well as local commerce. Some dire predictions indicate that 70% of European online shoppers may soon stop buying from UK websites, and 69% of UK shoppers could stop buying cross-border altogether (source). The cessation of open British borders also means much more stringent customs processes, resulting in longer shipping times between the UK and Europe – even restrictions or prohibitions on the movement of certain products. VAT Tariffs of between 20% and 30% (product dependent) are now leveled on UK citizens looking to collect their inbound EU products. Though UK vendors shipping beyond their borders may now lower their prices as they won’t have to pay VAT on products shipped to the EU, they can no longer make use of the EU VAT refund system, a once highly useful tool for getting returns on viable tax deductibles, as well as encouraging b2b sales.
How will Brexit affect my business?
If you are an online store currently based in the European Union that sells products to customers based in the United Kingdom, the main change to your procedure is that you will have to file a tax return in the United Kingdom, for which you will require an EORI number. EORI number stands for ‘Economic Operators Registration and Identification Number” and allows for the easy tracking and identification of the goods your company is moving by United Kingdom customs officials. You can find out more about EORI numbers, and apply to get one here. This EORI number will be the identification used to calculate the customs rates, tariffs, and taxes that you now owe for importing products into the UK under World Trade Organization regulations – which will, unfortunately, be significantly higher than those you owed when the borders were still open before Brexit. Global companies that are not part of the European Union will also need to adjust their shipping procedures into the UK under Brexit, as local regulations that differ from those of the greater EU have now been implemented and must be studied and adhered to in order to ensure best practices in importing into Britain.
The United Kingdom-based businesses who import products into the European Union will also need to adjust their shipping procedures, as that shipping into the EU is now a similar process to shipping globally – complete with country-specific legislation, higher rates and tariffs and stricter customs regulations. Even those businesses accustomed to shipping globally will need to make adjustments – as the UK is no longer a member of the European Union, and more than 40 existing trade agreements between the EU and dozens of other nations no longer apply to the UK. Though some trade deals between Britain and foreign governments may arise, restrictions are generally stricter and tariffs largely more expensive than they were pre-Brexit for UK based sellers. If your business is based outside of the UK but imports any of your products or supply chain resources from inside the UK, alterations to your practices will need to be made – mainly with regards to the increased time and expense that will be required to import or produce the same product.
How to adapt your business to function after Brexit
The MyWorks team understands all the obstacles that this development places in the way of you running your operations as before, and we’ve found a popular solution our users are beginning to make use of: using multiple warehouses or fulfillment centers – one inside the UK and one in the EU, and powering your online store with WooCommerce and MyWorks WooCommerce Warehouses (https://woocommercewarehouses.com/).
How will this help you?
1. If you are based outside the UK in Europe or globally – adding a UK fulfillment center will allow you to circumvent the added import tariffs and stricter customs regulations that Brexit may be imposing on your business by selling your products locally rather than shipping them from your EU (or global) warehouse. This also decreases shipping time, makes returns much less costly to you, and greatly decreases the restrictions on what you may sell and for how much.
2. If you are a UK based business, this allows you to the same benefits as above – as well as your products being distributed from within an economic climate with the benefits of open borders, allows your products to fall under EU negotiated global trade deals AND lets you once again utilize the EU VAT refund system.
3. If you previously imported your product from the UK to sell in the EU, creating a fulfilment centre within the UK will broaden your market and allow your product a decidedly more international reach, given the UK’s highly developed eCommerce marketplace.
How can you make that happen?
A large point of hesitation in the establishment of multiple warehouses or fulfilment points for your online store may be the issue of logistics management. And rightly so – eCommerce store owners, specifically WooCommerce and Shopify users, have previously only had access to digital platforms that work from a singular order fulfillment location, with no opportunity to consolidate multiple premises or automatically direct consumers to the correct warehouses that would serve them. WooCommerce Warehouses, however, provides a solution to this.
WooCommerce Warehouses is a tool that extends WooCommerce from the default single inventory field into a consolidated, multi-location platform that you as a business owner can use to simultaneously observe and manage multiple order fulfillment locations. With the WooCommerce Warehouses inventory and order routing solution, your WooCommerce store would obtain functionality like:
- Distributing products seamlessly from multiple different distribution hubs – you don’t have to assess and manually send each order to a relevant warehouse.
- Automatically routing orders to the relevant distribution location through customer IP address tracking, or regional zone assignment, so that when a customer looks at your website, they are automatically shown the inventory or products available at the fulfillment centre that services their area, and their order goes straight to that facility and notifies the warehouse admin!
- If you want to place more control in your customer’s hands, you can disable geolocation, and let THEM choose which location’s inventory they want to view!
- The ability to track your inventory across multiple locations, from one centralized place – with easy access to individual and total stock quantities.
- Setting a default location for certain products – so that all orders for a certain product get routed through that specific location until stock it is depleted.
- Setting different prices for products at each location – which is especially useful if you are selling products in different national currencies.
- Full customizability for the size of your business, your desired user experience, your preferred inventory reporting systems AND access control, so you can assign a variety of warehouse managers or administrators access their relevant warehosue information independently of all of your company’s data.
- The ability to manually edit your location inventory, and to utilize the WooCommerce REST API to update/query inventory levels, and WooCommerce orders by location.
As we transition into 2021 – an already tumultuous time for business owners, pivoting your practices to lean in towards the challenges that Brexit poses towards you may seem daunting, but may also provide new opportunities for success, expansion and the diversification of your eCommerce procedures. MyWorks WooCommerce Warehouses is precisely the tool you’ve been looking for to ease the administrative headache that goes hand in hand with running an online business across fulfillment locations in different countries, and keeps your enterprise going from strength to strength in uncertain times.
If you think our solution may be right for you, click here to learn more about our features, or here to schedule a free demo call with a member of our team – and let MyWorks help you turn your store into a multilocation environment!