How Will Brexit Affect Online Retailers?

London Skyline with Union Jack Flag

After the Brexit result on 23rd June, many began to speculate what effect it would have on UK businesses. For those who sell online, there are certainly challenges ahead, as the UK looks to leave the EU, but it’s not all doom and gloom. Read on to find out what online retailers can expect to face in the coming months, as well as some opportunities you can take advantage of as we prepare to leave the European Union.

How will it affect sales?

The truth is nobody really knows. Shoppers have appeared to defy predictions, as the Confederation of British Industry (CBI) claims retail sales are currently growing at their best rate for six months. This is most likely due to the rather un-British weather we’ve had this summer combined with tourists eager to take advantage of the weaker pound.

However, some have expressed doubts over the accuracy of the CBI’s findings. Although the UK didn’t spiral into a recession within moments of the Brexit vote, we will have to wait and see whether significant negative effects emerge.

Although there is still uncertainty, the UK is still the leading eCommerce country in Europe, with online making up 15% of all sales, the total of which amounted to £52 billion last year. It’s unlikely that strong year-on-year increases in UK online spending are going to peak any time soon.

Trade costs could increase

One disadvantage UK retailers will likely face following Brexit is that they will continue to be subject to EU controls when selling in EU countries. This could result in higher export costs, such as customs delays, packaging or quality requirements or possibly even tariffs and taxes.

This could prove to be a real thorn in the side for many retailers. and for larger companies that have the resources, it could be worth manufacturing or purchasing inside the EU in order to avoid these controls.

Retailers could have more success selling abroad due to falling sterling

Although some retailers will see a jump in their export costs, others may find that they are selling more as customers from other countries attempt to take advantage of the weaker pound.

Right now, it seems that most discussions surrounding the UK post-Brexit boil down to “wait and see”. For now, it’s a good idea for UK online retailers to take advantage of the weakness of the pound by exporting and gaining new customers abroad, as their currency is worth more.

Additionally, it’s important to continue to focus on improving your customer experience and expanding your business to allow shoppers to buy how and where they want to. With loyal customers becoming rarer in the age of consumer research, customer retention could be the key to success after Brexit. Even if the market is depressed, you can always take a bigger share of it.

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