How a no-deal Brexit will affect your e-commerce business

The looming Brexit decision is creating a time of uncertainty for all UK citizens, but the uncertainty is worst for those whose livelihood relies on international trade. If you have an e-commerce business, then it’s time to get informed on what a no-deal Brexit might look like for your business.

Regardless of how you voted, you may be worried about the impact of Brexit on your e-commerce business. In the event of a soft Brexit, you can look forward to continuing your trade with little to no repercussions. In the more likely event of either a hard Brexit or a no-deal Brexit it is important you know where you are likely to stand.

Number 1, but for how long?

Currently, the UK is the dominant leader when it comes to e-commerce in Europe. UK shoppers cannot get enough of online shopping, as the poor suffering high street is well aware. We spend more compared to all other EU countries online. In 2017, a Eurostat survey concluded that 86% of internet users engaging in online shopping, and that number is expected to have risen since. It has been a golden age for e-commerce business, but the future is uncertain.

Hard Brexit, hard times

In the event of a hard Brexit, there will be serious disruptions in trade to and from the continent. Products will be held up with additional customs checks and product conformity procedures alongside further bureaucracy. The knock-on effect will be longer wait times for both receiving stock and shipping stock to customers, along with higher transport costs.

While UK retailers ordered more goods after the initial Brexit referendum, rates have now slowed. The biggest threat to e-commerce if hard Brexit hits will be China. If longer delivery times become the norm, UK e-retailers will not be able to price-match China’s cheap exports.

The no-deal Brexit directives

Few of us will forget the avalanche of directives created by the government to inform and educate us on how everyday life will be affected in the event of a no-deal Brexit. But realistically, the scale of the information influx resulted in few of us having the bandwidth to read through the guidance. One of the many documents was the EU E-commerce Directive. For e-commerce business owners this, alongside the associated guidance document* are essential to read.

*UPDATE: The guidance document previously linked has been removed from the HMRC website. We will be looking out for an updated one in the near future.
Brexit for e-commerce
Bruce Mars

Legislation – National or European

According to the Directive, the Consumer Rights Directive and GDPR (yes, everyone’s favourite bit of legislation from last year) will remain unchanged. These are UK laws brought in to abide by European legislation but with no cause to remove them they not be affected. However, the EU is looking to restrict e-commerce cookies, which is unlikely to be picked up by UK courts post-Brexit. This will lead to the first legal divide between e-commerce in the UK and in Europe and will be something those selling internationally will have to be mindful of.

The Country of Origin Principle

The most dramatic shakeup will occur around the Country of Origin Principle in the event of a hard or no-deal Brexit. The principle is dealt with by numerous pieces of legislation, all of which will be removed in stages. There is no word on when or how the move will take place.

According to the government directive: “Once the UK is no longer a member of the EU, and in a no deal scenario, information society services established in the UK will cease to benefit from the Country of Origin principle when operating in EEA states. This means they will be required to adhere to the rules that govern online activities in each EEA state in which they operate, from which they were previously exempt under the Directive.”

In simple terms, the Country of Origin rule means e-commerce businesses within the EU have to abide by the laws of the business’ home nation, regardless of their customers’ location. However, if the UK no longer withholds EU standards then selling to EU citizens from the UK could become a much more complex legal position. E-commerce businesses will need to abide by the laws of the UK and the laws of each nation they wish to sell in.

Next Steps

We are all in a holding pattern until the type of Brexit is confirmed but times are changing for e-commerce in the event of either a hard or a no-deal Brexit. Key areas to focus on will be delivery times to and from the EU and adhering to the laws of each country you sell to.

If you’re looking for guidance for your business through Brexit please get in touch.

The best time to start is now.