E-Commerce Impacted by Brexit

The Impact of Brexit on the E-commerce Industry

The international e-commerce market is generally projected to be a big growth driver in future. The union of consumer trends and industry trends is this. Key retailers in different countries are now expanding their option of transboundary shipping and online orders, i.e. those between consumers and retailers are anticipated to double, as are domestic ones. However, last year saw a big international case, which could dramatically alter e-commerce dynamics. Certainly in the e-commerce industry, Brexit has uncertainly caused this. There is the aspect of trade guiding principles that may hamper the flow of commodities between various nations in EU and the rest of the world. Brexit continue to affect e-commerce industry adversely. 

Devaluation of Pound

The pound is likely to devalue. Following the outcome of the Brexit referendum, the pound depreciated to a 30- year old low against the US dollar and Euro. Additionally, there was a massive shockwave in the marketplaces. In the coming months, the pound steadily appreciated however since Theresa May has set of article 50, the pound is likely to fall low again particularly if the United Kingdom finally cut its connections with the European Union.  From e-commerce viewpoint, this might cause issues for clients in the UK who prefer to buy their communities from online retailers as their finances might not be accepted in some European countries unlike before Brexit (Ottaviano 7).  Low pound means excellent deals for commodities for the non-UK consumers especially those in the European Union because of the excellent trading terms.  UK retailers could see an increase in exports to EU nations.

The Impact on UK Consumers

The UK buyers are certainly going to get the worst deals as weak pound means that imports are costly. UK customers might be forced to hold on to their money as the goods and services shall be pricey. Foreign online stores may have to offer discounts to rebuff poor sales.  They can for instance free shipping could be an alternative (Ottaviano 8). Additionally, UK merchants might have to reduce their expenses on foreign suppliers as well as delay ordering new shipments. Online retailers are likely to delay making investments and other business decisions until a clear path is agreed upon by the UK and EU leaders. This is to ensure that they have enough funds to tackle possible economic spiral. 

Challenges of Trade Terms and Regulatory Modifications

There are also long term impacts of the Brexit negotiations, and this will have a lasting effect of e-commerce. The UK shall be unattractive. A majority of the firms outside the European Union who wish to spread out often test it first in the UK and establish their provincial centers there prior to shifting to other nations. This way they would have had a clear comprehension of the EU trade guidelines and business practices. Brexit causes UK to lose its upper hand over other EU nations. Countries in the EU with more developed infrastructure could now become an exciting hot spot, for instance, Netherlands has well-skilled, multilingual labor-force (Aricatt n.p). Across the border, Germany would be more appealing European Nation entry point due to its central locality as well as powerful e-commerce legacy.

Limited Trading Opportunities and Regulatory Compliance

There would also be revisions regarding trade terms that heighten competitive challenges for UK retailers.  To offer the full cost of a purchase at a check-out is an essential requirement for online retailers selling to other countries. Clients are unlikely to discard carts if they buy an item and are to pay 50 percent shipping fees too (Gibson n.p).  The largest UK merchants, John Lewis, has succeeded by removing this issue by offering a flat fee during shipments. This sealed deliveries to different countries. Before Brexit, shipping rates to EU nations were lower than other countries out of EU (Gibson n.p).  Brexit shall imply that tariffs on commodities exported to EU Customers will be imposed. This needs the UK retailers to increase prices or shipping rates.  There could even be additional price raises paramount depending on the kinds of sales done and the tariffs established for those items. Such increases together with the administrative expenses that will be required to evaluate new price systems may likely bring about difficulties to the UK retailers competing with their counterparts in the European Union.

Labor, Consumer and Competition By-Laws and Payment Issues

Regulatory modifications is going to bring problems for payment providers. Payment is a multifaceted feature of cross border e-commerce. To sell in various countries, a retailer has to avail payment alternatives for clients with different currencies and options in different nations. These options differ across EU. There are countries that prefer credit cards or cash upon delivery with some directly using their banks. Brexit might cause UK to revise its fiscal guidelines which might cause it to move away from the EU widely-held practices (Gibson n.p).  Payment providers would need to consider they will offer and be able to monitor changes that may bring about fraud risk.

There is also the challenge of UK retailers selling to non-EU countries likely to encounter problems in hiring workers.  EU nationals presently can reside in and work in any nation in the EU region. UK firms have profited from this since they have increased their skilled labor force. An online retailer requires employees with a range of skills. With the Brexit however, UK firms will need to obtain visas and work permits for European Union labor force. This results in increased costs making UK unattractive residence for EU natives searching for employment. This implies that there is a loss of talent. In fact, some companies with its headquarters in the UK would be forced to shift to other countries.

Consumer and Competition By-Laws

Another issue likely to be affected is consumer and competition by-laws. The by-laws essential for e-commerce are synchronized. The consumer rights directive integrated many consumer protection legislations and recently Consumer Rights Act 2015, ensured that changes in the consumer protection landscape complemented EU by-law. Competition law is also harmonized. Synchronization additionally implies that the influence of the European Court of Justice is acknowledged (Gibson n.p). Shortening the laws and integrating them was helpful in offering globalization opportunities. With Brexit, present laws might not be canceled, however, its interpretation might be not needed to regard the judgments of European Court of Justice.

Conclusion

A Brexit is a loss for both EU and UK. European Union shall lose powerful market specifically since European customers depend on the UK for branded commodities even though innovations are taking place in the United States.  Eventually, with no advantages of the internal market, clients may not embrace the UK, they are likely to search for other options. The UK might be happy with Brexit; however, it ought to be wary of the business opportunities that it would deny them.

(Keyes n.p, “Business Insider UK”)

(Camhi n.p, “Business Insider UK”)

Works Cited

Aricatt, Naveen. “”Business After Brexit: What Changes For UK Businesses?.”” Business.Trustedshops.Co.Uk, 2017, https://business.trustedshops.co.uk/blog/brexit-damage-european-market/.  

Camhi, Jonathan. ””TRUMP, BREXIT, AND CROSS-BORDER E-COMMERCE: Rising Economic Nationalism And The Growth Of Digital Retail.”” Business Insider, 2017, http://uk.businessinsider.com/the-cross-border-ecommerce-report-2017-6?IR=T.

Gibson, Jill F. ””The U.K.’S Role In Cross-Border E-Commerce After Brexit -Digital Clarity Group.”” Digitalclaritygroup.Com, 2017, http://www.digitalclaritygroup.com/brexit-impact-cross-border-e-commerce/. 

Keyes, Daniel. ””The EU Is Set For Impressive E-Commerce Growth – But Brexit Challenges Loom.”” Business Insider, 2017, http://uk.businessinsider.com/eu-set-for-impressive-e-commerce-growth-but-brexit-challenges-loom-2017-6?IR=T.

Ottaviano, G. I. P., et al. “”Brexit or Fixit? The trade and welfare effects of leaving the European Union.”” (2014).