Brexit: how online retailers can prepare for all scenarios

A map of the UK and Northern Europe - a metaphor for Brexit

We’ve written and spoken about the impact Brexit could have on us in the past. With the UK potentially leaving the European Union (EU) within the month, here we outline our contingency plans and what retailers can do now to prepare.

There are currently three potential outcomes for Brexit (if we set aside, for now, the possibility of a second referendum that overturns the first).

1. The UK leaves the EU on 29 March 2019 with a deal

Prime Minister, Theresa May, is currently negotiating amendments to the withdrawal agreement with the EU. Assuming she’s successful, the updated agreement will be put to a vote in Parliament on 12 March 2019. If that vote passes, the UK will leave the EU on 29 March 2019 with a deal.

What does that mean for retailers?

A deal would mean that the UK stays in the Customs Union and Single Market until December 2020. During this “transition period”, a future trade deal between the UK and EU would be made.

For retailers that import into and export from the UK, little would change during this transition period. They’d still enjoy frictionless trade with countries that are both within the EU and have trade agreements with it.

The transition period should give everyone more clarity on the future and longer to prepare for it. But, of course, negotiations could be left to the last minute yet again.

2. The UK leaves the EU on 29 March 2019 without a deal

If the 12 March vote fails, then a second vote will follow on 13 March, to see whether Members of Parliament are open to a no-deal Brexit. If that passes, the UK will leave the EU on 29 March 2019 without a deal.

What does that mean for retailers?

The UK would leave the Customs Union and Single Market immediately, without any trade agreements to replace them. This would be bad news for retailers that import into and export from the UK, with products subject to delays at borders, while checks and taxes are applied.

What’s our contingency plan?

If no-deal Brexit happens, we’ll open a new fulfilment centre in mainland Europe. Like many other companies, we’ve been assessing locations in the Netherlands for it. This would enable our clients to ship their stock in bulk to the EU. They could absorb customs delays and taxes themselves, in order to maintain a frictionless experience for European consumers.

Due to the innovative processes and technology we use across all of our facilities, we’ve been able to open new fulfilment centres in a single weekend, without any disruption to clients. So we’re confident that, if we need to activate our no-deal contingency plan, we‘ll be able to do so quickly and set up a new EU location within weeks.

3. The date for the UK leaving the EU is delayed

If the 13 March vote fails, yet another vote will follow on the 14 March, to see whether Parliament is willing to delay Brexit. If that vote fails, then a no-deal Brexit on 29 March will follow. But if that vote passes, then Brexit will be delayed, most likely until the end of June 2019.

What does that mean for retailers?

If Brexit is delayed, then political turmoil is likely to ensue, with no-confidence votes, a second referendum or a general election all possible. The only certain outcome for retailers is continued uncertainty.

So what can online retailers do now to prepare for Brexit?

GOV.UK has published reams of advice to help businesses prepare for Brexit. It covers everything from employing EU citizens, to using personal data, to protecting intellectual property. But the area of most immediate concern to retailers – and us – is likely to be exporting, importing and transporting products or goods.

First, it’s worth noting that the majority of retailers who use our UK fulfilment centre already do the following:

1. Import products, in bulk, from outside the EU

To do this, our clients usually use a courier (for boxes and cartons) or a freight forwarder (for pallets and containers). These organisations clear the stock through customs and deal with the payment of taxes on behalf of the client, before it arrives with us.

2. Export products, in small orders, to outside the EU

To do this, we complete a declaration about each order, which contains information about what’s inside, its value, and who and where it’s come from. This is submitted electronically to couriers or placed on the outside of the package. A CN22 is used for consumer orders under £270. A CN23 or airway bill is used for wholesale orders over £270.

When the order reaches its destination country, the information in this declaration is used by customs, to clear the goods and charge appropriate taxes to the recipient.

What does this have to do with Brexit?

After Brexit, importing from the EU into the UK and exporting from the UK into the EU will follow the exact same process outlined above.

So if you’re a retailer that’s already trading globally – for example, buying stock in China, storing products in the UK and shipping orders to the US – you may already have everything you need in place to trade with the EU after Brexit. If not – or if you’re simply unsure – there are a few steps you should take now to prepare yourself…

3 things you should do  now

1. Apply for an EORI number

At the moment, businesses that are outside the EU and trading with it (and vice versa) need to have an Economic Operator Registration and Identification (EORI) number. If no-deal Brexit happens on 29 March, then UK businesses will be outside the EU.

It can take up to three working days to get an EORI, so apply now.

2. Register for simplified imports

The UK government recently announced “transitional simplified procedures”, for UK businesses that import from EU suppliers. In the event of a no-deal, these will allow you to bring goods from Europe into the UK, without having to make a full customs declaration or settle import duties immediately.

Not all companies need to register, however. Find out more and apply.

3. Update your product information

In the event of a no-deal Brexit, you’ll need to complete customs declarations for every order that leaves the UK bound for the EU. To complete these, you’ll need to know:

  • Your EORI number (see above)
  • Your product harmonised / commodity codes (check them here)
  • Detailed product descriptions
  • Product weight
  • Product value
  • Country of origin
  • The recipient’s EORI number and contact details (for wholesale orders)

At James and James, we automatically generate these declarations based on information held in ControlPort – our order fulfilment software platform. If you’re a client of ours, you can update your order and product settings to include these details now. We’ll be adding functionality to ControlPort before 29 March, to allow you to add your EORI number as well.

So when your first, post-Brexit order from an EU customer comes in, you’ll be good to go.

We hope this post has helped you understand the current situation with Brexit and what you can do to prepare. If you have any further questions, contact us and we’ll try to help.