what is the impact on e-commerce, six months later?

The end of the free movement of goods and customs formalities, the new way of collecting taxes, the departure of the United Kingdom from the European Union have disrupted the procedures of international e-commerce.

The UK left the single market and customs union on 1 January 2021, and the effects of Brexit were immediate. According to the British Office for National Statistics, foreign trade activity in the United Kingdom has been affected since January. Exports of goods fell 19.3% due to a 40.7% decline in exports to the European Union. As for imports of goods, they fell by 21.6%, imports from the European Union fell by 28.8%.

Declaring goods to French customs in both directions, control of trucks heading to the United Kingdom, entering into force Brexit is really bad news for e-commerce. “We have moved from the absence of formalities to be completed in the context of intra-EU trade to the obligation to file an import or export declaration accompanied by possible payment of duties, customs registration formalities , setting up a bond, etc. ”, refers to JDN’s French customs, which continue to support e-merchants.

However, the digital maturity of the United Kingdom places it as the first e-commerce market in Europe and third in the world, after the United States and China, according to Business France. How did French e-merchants come to terms with these new rules?

VAT: new deals

As a first step, and following Brexit, UK tax authorities changed VAT rules on imports of e-commerce products into the UK. Imports of goods valued at less than or equal to 135 pounds (157 euros) are subject to VAT on sales rather than import VAT. Problem is, VAT on the sale must be charged to the seller’s UK consumer (regardless of nationality) when paying. The seller must then report and pay VAT collected through a regular UK VAT return. Not to mention the simplified but still required customs declaration.

Goods higher than this value are subject to import VAT. Upon delivery, the carrier requires the British customer to pay VAT in order to receive their package. In this case, the seller should not charge VAT on the sale, at the risk of his customer paying twice the VAT …

If the 135 pounds threshold is easily reached in the luxury or fashion sector, the rest of e-commerce records a lower average basket. “This amount of the limit raises the question about the amounts excluding taxes and all taxes imposed on consumers, underlined Romain André, e-commerce project director at Synolia, an e-commerce and CRM web agency. Despite the educational efforts of our e-merchant British Customers, the bad surprise created a significant level of dissatisfaction. ” In fact, British customers usually pay for their order plus all taxes and the import VAT at the time of delivery interferes with these gains.

laborious methods

Between the long and tedious process on the seller side, combined with the poor user experience on the British consumer side, Brexit tested e-commerce activity across the Channel. Six months later, some merchants chose to burden VAT on imports rather than on their customers, even if it meant increasing their fixed costs.

A decision that not all e-merchants can afford. British customers of the Avril organic cosmetics brand have to pay customs fees and higher delivery costs of 15.95 euros, compared to 8.85 euros before Brexit. “Custom formalities are complex to manage for a company like ours where there is no export department,” said Manon Delhaie, customer service and sales administration manager at Avril. In concrete terms, Avril’s resellers and professional customers must take steps to obtain “Responsible Person” status in the United Kingdom. Again time consuming steps. “Professional clients are discouraged to work with us because of costly and laborious procedures”, stressed Manon Delhaie. For these reasons, Avril thought of leaving the British market for a while before changing its mind and mobilizing its quality department in this aspect.

Leave the British market?

If Brexit greatly aggravates commercial activities between the European Union and the United Kingdom, should this market be abandoned? This is the approach developed by 3 Suisses, which is however structured in an import department. “Following Brexit, we stopped our shipments to England. More importantly, we are a French e-merchant operating in France,” the merchant site told us.

If the British market has undeniable potential with rapid ROI, Brexit will require an increase in fixed costs. “There is a slight lack of interest in the United Kingdom in favor of French-speaking countries and of Southern European countries,” Romain André said. Undeniably, this new context is reshuffling the strategy cards of e -merchant around the world. ” Although it is too early to compare the evolution of trade volumes between the United Kingdom and France according to French customs, which have only been compiling this data since January 1, “it should be noted that, s About in e-commerce, some shipments are not, until now, subject to the filing of a customs declaration as are e-commerce purchases sent by mail.The only thing left is to wait for the first anniversary of Brexit, if when customs and carriers can show its quantitative impact for French e-commerce.

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