What will a hard Brexit mean for you?
We are finally in March, but still no closer to finding out what Brexit will actually mean for the world of eCommerce. Whilst we hear every twist and turn of the negotiations, it is tempting to delay scenario planning, but can online retailers really afford to be coasting until they find clarity regarding an eventual outcome? The reality is no. UK-based companies simply cannot afford to take this attitude and any who do will face considerable disruption.
In short, extreme difficulties. If the UK leaves the customs union and tariffs are imposed on EU good and services, businesses will have to secure hundreds of thousands of both import and export licences. There will also be an increase in customs checks which would result in logistical delays once these licences have even been secured, so companies need to be ready with an adequate response. The eCommerce sector is particularly vulnerable to shocks in the supply chain because of the sensitivity of its clients to delivery times, especially as customer expectations move towards next-day and even same-day fulfilment. This has to be mitigated against. A hard Brexit may also result in higher costs for eCommerce firms: for example, in the UK the price of warehouse space has already soared, as businesses act on contingency plans and stockpile goods for fear that the post-Brexit disorder could impact their logistics networks. Price competition is especially severe in the e-tail world, and Brexit could shake up the relative pricing advantages of different eCommerce providers.
It is important to undertake scenario planning and detailed risk assessments especially when it comes to payment transactions post-Brexit. Merchants should ensure that they are equipped to continue to seamlessly service their customers by determining which legal entities they will be using to process these.
Increasing Stock Levels-How much extra stock do you think you’ll need if we leave the EU without a deal and the borders jam up?
Engage with your suppliers and get to know how Brexit-ready they are. From this you can assess your supply chain risk and evaluate any changes you might need to make I.e. diversifying.