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How will Brexit Affect your Cross Border E-Commerce- Alexandre Grela

Brexit is provoking a lot of uncertainty in cross-border e-commerce all over the world. There are three possible scenarios- but what will happen is unknown. How to prepare your e-commerce for business after Brexit.


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How will Brexit Affect your Cross Border E-Commerce- Alexandre Grela

  1. 1. ECN What will Brexit Mean for your Cross- Border E-Commerce? Author: Alexandre Grela
  2. 2. ECN Technological Innovations Brexit shook up the EU market in several industries. With e-commerce booming across the Schengen Zone, many people asked what would happen in cross- border e-commerce. Let’s examine three possibilities, and how to prepare: Soft Brexit Mid-range Brexit Hard Brexit The EU represents about 50% of the UK’s imports, and the UK represents 17% of the EU’s imports.
  3. 3. ECN Soft Brexit While a soft Brexit doesn’t seem likely, if it does happen, it will result in the UK joining the EEA (The European Economic Area) The UK would pay an access fee They would agree to all legislation passed by the EU They would need to respect the 4 freedoms The would need to accept the jurisdiction of the European Court of Justice If this were happen, not much would change for UK sellers or other EU sellers moving products into the UK.
  4. 4. ECN Mid-Range Brexit A Mid-range Brexit would lead to an EFTA-style (European Free Trade Agreement) situation and negotiations would likely take nearly a decade to complete. This would act as a safeguard to EU and UK sellers until the negotiations were finished. The UK won’t be able to pick and choose which parts it wants to follow The EU wouldn’t grant passporting rights to the financial services industry The UK would be granted access to the EU VAT area
  5. 5. ECN Hard Brexit A Hard Brexit means that the UK would now be following WTO (World Trade Organization) rules: Application of tariffs up to 30% Product norms could change, leading to the necessity of two different products.
  6. 6. ECN What will this mean for your E-Commerce? Many EU & UK businesses won’t be affected- obviously those who sell significant products to the UK and vice versa may be a lot more affected. EU sellers will have 27 other partner countries to fall back on, whereas UK sellers may need to refocus on local markets. Laws & Regulations: Likely to be a transitional period for everyone to adapt, regulations may apply up to 4-5 years after Brexit is negotiated. Supply Chain Management: Could be a major issue, as EU companies could source products from anywhere in the EU. Brexit may disrupt these processes due to borders. Trade Relationships: With the implementation of tariffs, levies, and the end of passporting rights will definitely have a significant impact on trade relationships.
  7. 7. ECN Cross-Border Transactions With cross-border e-commerce, Brexit may prove tricky in terms of VAT as the UK may no longer be in the EU VAT area nor the Customs Union. In this case, cross-border transaction VAT will be paid in the country of supply, thus making products more expensive. This is likely to impact larger players in the e-commerce industry, like Amazon.
  8. 8. ECN Conclusion While Brexit won't be taking effect for another few years, it’s important to prepare yourself, regardless of what side of the border you happen to be on. Check out more of Alex’s articles: How to Make Multilingual Search Work for E-Commerce Are Micro-Markets a Good Opportunity for Cross-Border E-Commerce? More on Brexit: How to Adjust your E-Commerce to Brexit’s Side Effects Read the Full Article Here
  9. 9. ECN hello@ecommerce-nation.co Contact us Whitney Blankenship International Director whitney@ecommerce-nation.co Alexandre Grela Founder of Europa DSI grelaalexandre@gmail.com