Brexit is a fact, and the time has come. As of January 1st 2021, the UK is no longer a part of the EU and any trade deal between the UK and EU will come into full effect. However, no agreement has yet been reached. We are most likely facing a no-deal scenario, or perhaps a symbolic agreement.
So, what happens now?
Whatever the outcome of the negotiations with the EU, UK businesses (and really anyone selling anything in, or to, the UK) must adjust to meet the new trade regulations. E-Commerce teams all over Europe (and the world) are now working tirelessly to adapt to the various new restrictions. It is time to prepare to declare, so to speak. Here is what you need to know.
What Brexit Entails for E-Commerce
Starting January 1st, 2021, all goods must be declared to Customs in the UK. This is required regardless of the agreement the UK and EU will negotiate and agree upon; all goods (imported or exported) between the parties after the transition period must undergo customs clearance, even in cases where no customs taxes will be levied for the goods.
This is the same process as for all other non-EU countries (with a few exceptions: Noway, Iceland, Switzerland and Liechtenstein).
At the moment, there is no agreement in place, and we are most likely facing a no-deal scenario. It is likely that the EU and UK will not come to a written agreement, but rather a symbolic agreement to adhere to.
But what impact will Brexit have on e-Commerce? To understand, we need to take a look at the numbers:
- During 2020 (alone), more than 32,6 million consumers are estimated to have made a cross-border online purchase worldwide
- Roughly 30% of UK shoppers have shopped more online due to the coronavirus pandemic
- 45% of all UK online shoppers made at least one return in the past year
What Brexit Requires From e-Commerce Retailers
- Detailed data will be required to export/import goods
- Customs declarations will be required for each parcel
- Sent goods are subject to VAT (and duties when applicable)
- Inspections will take place on some goods – imported or exported
- Rates will change as a result of customs handling
- Transit times may increase because of linehaul changes and potentially customs checks
What Brexit Means for Reverse Logistics
Returns are an essential part of the overall e-commerce machine. An operation that, if handled well, can secure future sales, save time and reduce costs. Brexit may affect your current returns operation which is why retailers must consider all possible outcomes.
The e-Commerce space is of great importance in terms of Brexit as the return rates average 30% of all purchases, compared to only 9% in brick-and-mortar stores.
Here Is How You Get a Head Start:
- Gather relevant items data. Do any specific rules apply to your products?
- Make sure that you have sent a customs handling authorization to your customs agent (if applicable)
- Stay up-to-date with negotiations between the UK and EU
- Invest in your returns process – save time, money and customer satisfaction
- Partner with a returns management expert – we can help you automate the Customs declaration process.
How Online Customers Will Experience Brexit
Many consumers and companies buy items (imports) from brands, whom often ship items from other countries into the UK. In many cases, because retailers are becoming great at creating a look and feel of a local brand online, the consumer might not even be aware that the merchant or their warehouse is situated outside of the UK.
In the short term, consumer will expect slower handling of orders, refunds and exchanges unless retailers have prepared for Brexit properly. Eventually, we can expect some non-UK based smaller/niched brands to limit their sales effort to the UK until the agreement with the EU is signed.
The returns process will shift towards consumers needing to export their items to its destination, which will require a customs declaration and potentially extra costs, and of course more friction. Leading to more items ending up dying in the back of your wardrobe or on landfills.
How ASKET Prepared For Brexit
Brexit changes will require retailers to adopt a flexible end-to-end returns solution. As every brand and customer is different, a variety of scenarios must be considered. From the moment the customer initiates a return to refund processing and redeployment, Brexit is likely to affect, and perhaps cause disruptions, to your existing returns flow.
ASKET, a Returnado customer, values the customer experience greatly and started preparing for Brexit early in 2020.
ASKET Manages Returns in Returnado
Taking advantage of the power in Returnado, ASKET is ready for what Brexit will bring. Together, we have implemented Returnado’s solution for Customs declarations that will automate the entire process. The solution will automate Customs Declarations for the countries where it is needed; the declaration document is created in Returnado along with the shipping label and automatically sent to the customer.
In order to save a great amount of time (and money), ASKET has set up a local returns hub in the UK where parcels are verified, registered and later shipped in bulk to ASKET’s warehouse in Germany. The local returns hub helps ASKET to enable faster refunds and exchanges, rather than waiting for the returned items to arrive at the warehouse in Germany.
“Brexit will have a profound impact on the way businesses operate as well as the day-to-day life of individuals and households in the UK. For us at ASKET, our number one priority is to maintain the best possible service experience for our customers. To do so, we have been working hard with Returnado and Cycleon to create a return service that ensures we can continue to offer free returns and exchanges as well as a hassle-free customs declaration process,” says Estelle Nordin, Operations Manager at ASKET
Returnado for ASKET
- Automated Customs Declarations for the countries where it is needed. The declaration document is created in Returnado along with the shipping label. Shoppers will experience the return as smooth as before Brexit
- Ensuring the continuation of fast refunds – customers do not need to wait until the return is delivered at warehouse in Germany
- Environmental perspective; it is more efficient to consolidate and bulk goods instead of shipping them one by one
Cycleon – A Returnado Partner
In addition to using Returnado for returns management, ASKET has welcomed one of Returnado’s partners into their ecosystem: Cycleon.
To better adapt to Brexit, embracing local solutions will be key. Avoiding the unnecessary transport of goods between the UK and EU will reduce the chance of shipment delays or issues at customs. Cycleon manages international returns by companies to benefit from combined volumes by utilising their local warehouses to collect returns and transport them in bulk.
Just-In-Time (JIT) – A Service of the Past?
Other parts of the e-Commerce cross-border supply chain are also affected by Brexit; but the magnitude of the effect is still unclear.
The most deeply integrated of all supply chains is the one we know as just-in-time (JIT). Supplies are delivered in very small quantities at very high frequencies from suppliers which are located in nearby regions or countries. As well as reducing costs, a key advantage of such JIT systems is maximising product and service quality.
A great many UK companies depend on JIT systems. However, for JIT to work, the whole delivery system has to be frictionless. Which means, enforcing compliance with EU requirements will make cross-border JIT systems almost impossible to operate.
Even if it only takes 30 seconds per truck to enter the UK, the lines would be several kilometres long.
In Any Outcome – We Are Here to Help!
Contact us to learn more about how Returnado and our experts can help you to navigate and secure your returns operations.
- Exporting from UK: https://www.gov.uk/prepare-to-export-from-great-britain-from-january-2021
- Importing to UK: https://www.gov.uk/prepare-to-import-to-great-britain-from-january-2021
- Brexit Information: https://www.dpd.com/group/en/expertise/brexit/
- JIT Systems: https://ukandeu.ac.uk/could-brexit-spell-the-end-for-just-in-time-production/