Sample: Brexit and its Impact on eCommerce in the European Region

The controversial exit of Britain from the European Union (EU), or Brexit, has cast a shadow on various industries operating across the European continent. 

For the uninitiated, Brexit is a portmanteau word for ‘Britain’ and ‘Exit’. This event reported a major setback mainly for the eCommerce sector. This indicates that the UK harboured a dominant eCommerce market for the EU.

To further add insult to injury, the No-Deal Brexit, which symbolises the absence of any formal agreement between the UK and the EU, has led to far-reaching consequences. Firstly, because the UK will now directly adhere to the rules amended by the World Trade Organisation (WTO) for business, and will have to bear some of the EU’s tariffs. This has also given rise to higher prices for consumer products like foods and automobiles imported into the country. Likewise, few of the UK-produced commodities would be prohibited in the EU, prompting manufacturers residing in the UK to relocate to the EU to mitigate the chances of any shipment delays.

The enormous influence of Brexit on eCommerce merchants

The Brexit has affected these eCommerce vendors who bore the brunt:

• British companies engaged in cross-border selling outside the UK

These eCommerce firms will now have to adhere to new regulations when shipping merchandise in and out of the UK. This move is anticipated to bring in restrictions, sometimes prohibitions like trade barriers on their products, along with the ordinances of new tariffs as well as import duties.

• British companies engaged in cross-border selling in the EU

These enterprises will be subjected to new tariffs to ship commodities into the EU, and are most likely to incur various shipping restrictions and regulations. This would adversely affect their merchandise prices and lead to potential delays while shipping to their esteemed EU customers.

• Companies operating overseas selling in Britain and Europe

These foreign-based organisations will have to work on aligning their shipping and selling policies with the specified frameworks of a newly formed and independent UK, post Brexit. 

Repercussions on regulations and directives

In the wake of Brexit, the UK is most likely to embrace more business-friendly legislations while placing considerable emphasis on the following,

• Consumer Rights Directive (CRD),
• General Data Protection Regulation (GDPR),
• regulation on cross-border parcel delivery, and
• directive banning geo-blocking.

Other impacts

• The promulgation of more stringent custom regulations for shipping between the UK and the EU;
• stretched shipping and transit times;
• the imposition of differing tariffs by both the UK and the EU;
• potential risks of a trade war; and
• significant implications on VATs (value-added taxes) across both the UK and the EU on account of the No-Brexit Deal

Resulting outcomes

• Considering the imposition of high tariffs, severe customs regulations and economic uncertainties, most eCommerce businesses would be obligated to leave the UK and shift their operations elsewhere.
• The formation of new tariffs and customs regulations may lead to the pound’s fluctuating and depreciating value.
• The UK is most likely to exhibit economic independence and enhanced domestic manufacturing activities, paving the way for fewer imports into the country
• The significantly stretched-out waiting periods for delivering high-priced merchandise are expected to encounter some unhappy consumers in the EU. This would impact the declining number of exports leaving the UK.

The emergence of many regulatory changes could force product-based giants like Nissan and Sony to operate outside the UK as their imports and exports will be substantially impacted.