Will Leaving The EU Impact The UK’s eCommerce Sector?

Written by Phil Birss: Group CEO.
· 4 minute read

Should we stay or should we go now? It’s been the question on everybody’s lips for the past few months, and, quite frankly, we’ve all been a bit put off by the tit-for-tat arguments being wielded by both campaigns. The overriding feeling is that very little is actually known about the impact of Britain leaving the European Union.

If we leave the EU will we require visas to travel in and out of other European countries? Will the UK’s immigration ‘crisis’ be solved? Will the England Football Team now have to leave this year’s European Championships at an early stage? (Let’s be honest, we’ll probably be beaten by the footballing prowess of the Welsh and Slovakian’s before then anyway). Will we still be able to enter the Eurovision song contest?

We feel that these are the burning questions being asked by the UK’s electorate, especially the last two anyway. Now we’re not here to start making impromptu soap box style speeches about which side you should pin your hopes on, as we’re more than happy to leave this up to the so-called ‘experts’.

As a digital marketing agency who specialise in providing eCommerce solutions for a wide range of online businesses, the impact that the EU referendum may have on the UK’s eCommerce sector is an area that we’re closely monitoring.

Britain’s economy is one of the strongest in Europe

In a nutshell, Britain has one of the strongest economies in both the European Union and the rest of Europe, to which even the slightest modification to our political agenda is likely to have an impact on our economic development for years to come. Even advocates of both the leave and remain campaigns have indicated that the UK may require around 15 years to adjust to any change.

Yes, the economy is something that plays a pivotal role in all of our lives, but what if we’re being specific to the UK’s eCommerce sector?

Well, it’s important to remember that Western European markets account for more than 50% of export destinations for the UK’s online businesses. This is a view also supported by the Volo Online Retail Index who claim that exports from UK based eCommerce companies to our European neighbours account for over 20% of the UK’s online retail economy. In particular, it has been suggested that France and Germany, who are both in the EU, make up around 40% of the demand for exports from UK online retailers.

Even if we just look at search volumes in isolation, we can also taste a rather distinctive European flavour with searches for UK retailers from European consumers rocketing by an average of 50% in the last few years.

When it comes to eCommerce sales, there is little doubt that the UK is a world leader. Indeed it has been put forward by Emarketer that the UK’s online retail share on the global landscape will increase from 14.5% to 19.3% in 2019, as consumer behaviour continues to shift towards mobile devices.

So, what damage, if any, is going to happen to these rather glowing predictions and forecasts if Britain decides to leave the European Union?

For most eCommerce retailers who ship internationally, the UK’s relationship with the rest of the European Union is a critical one, so leaving the European Union is certainly going to challenge this in several ways.

For example, opening up new and improving existing trade routes with the USA is going to be extremely difficult for most online retailers. Yes, the large market that America has on offer may appear to be as tempting as diving headlong into a swimming pool on a hot summer’s day, but it must first come with a degree of caution.

Historically, it is far easier, and cheaper, to ship products to your nearest and dearest i.e. France and Germany, to which 61% of UK eCommerce exports currently head across the channel to the rest of Europe, whereas only 20% reach North American shores.

‘The UK’s digital economy is not constrained by national boundaries’

On the other hand, the Vote Leave campaign have argued that the ‘UK’s digital economy is not dependent on national boundaries, as businesses and consumers will continue to trade with the UK regardless of our EU membership…There is a free trade zone and we will be part of that’.

It is difficult to fully understand the total impact of Britain leaving the EU in relation to online retail. At a glance, however, we do understand that any high value eCommerce sales to the EU would be affected, both in terms of cost and shipping time.

Partly due to increased shipping costs, taxes, duties and border delays, it is expected that a 30% increase to the price of any import to the UK is also likely to added if Brexit happens, impacting both consumers within the UK and the rest of Europe. As we understand, tariff limits may even put off European consumers purchasing from UK based online retailers as well.

Only uncertainty is a certainty…

In essence, the only thing that is certain with the UK’s future with the European Union is uncertainty, but from what we can tell already a Brexit would severely damage the future of the UK’s eCommerce sector, not just within the UK and Europe.

We all know that eCommerce moves at a much greater rate of knots than the slurry of European politics, so we’re bound to be in for a large period of unpredictability and confusion if Britain votes to leave the EU on June 23rd.