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Increasing cross-border sales is an antidote to Brexit anxieties

British merchants are buffeted by many headwinds at present. The strongest of which is the uncertainty surrounding Brexit, which is undermining both consumer confidence and the ability of retailers to make informed strategic decisions about their business.

Proof of the former comes with the latest British Retail Consortium figures which show the lowest ever recorded high street sales for May, excluding Easter distortions. The impact on retailers is shown by Global-e’s commissioned independent research into the experiences and attitudes of 200 UK retail decision-makers.

Since the 2016 EU referendum, our research shows a third of retailers surveyed have experienced a fall in sales. The uncertainty has left more than half (54%) of retailers with a range of Brexit concerns, from anticipating a collapse in consumer confidence (49%) to worries about difficulties in sourcing products or goods (43%) and the impact of currency fluctuations (52%).

Brexit timing does cast a shadow over the final quarter of 2019. The UK is set to leave the EU at the end of October – possibly with a ‘no-deal’ – as the trading period gets into full swing with Black Friday imminent on 29 November. Is the leave date a chilling Halloween omen of a scary future? That depends on your perspective. More than a third of UK retailers (38%) do think the delayed Brexit date will affect online trading, with larger retailers (more than 250 employees) voicing greater concern (56%) versus SMEs (34%).

To stay positive, UK retailers need to look at the bigger picture – the opportunities presented by the international online market. UK retailers have embraced cross-border eCommerce and of the 67% that sell to shoppers online internationally, 38% have enjoyed an increase in cross-border sales. Yes, post-Brexit selling to international shoppers may become more complex but 57% of retailers are confident that their cross-border business can flourish after Brexit.

Given it’s now June, retailers will already be planning for the final quarter of the year, traditionally their peak trading period. Recent years have brought the eCommerce cross-border opportunities of this period into focus thanks to the phenomenon of Black Friday/Cyber Monday in driving international online sales. With these events continuing to spread to many markets worldwide, the number of online international orders from UK merchants during the holiday shopping period increased 37% in 2018 compared to the same period in 2017.

International sales can help balance the impact of Brexit on domestic trading, but retailers will need a refined cross-border eCommerce offering. There are specific challenges that retailers will face if a no-deal Brexit becomes reality – there will be extra admin and red tape to negotiate and adopting a new pricing strategy will be paramount. The UK will immediately have to trade with the EU according to World Trade Organisation (WTO) rules, which means applying duty payments and taxes to goods sold along with additional customs clearance costs. No wonder more than half of UK retailers in Global-e’s research study said they don’t know the tariffs EEA customers will have to pay after the UK leaves the EU. This uncertainty makes it difficult to predict what preparatory work will be needed and how retailers can prepare themselves for post-Brexit trading.

If you want to retain the goodwill of European customers, you’ll need to provide them with a seamless, transparent and localised shopping experience. You’ll want to provide a guaranteed final cost, including all relevant duties and taxes, for EU consumers who are unaccustomed to paying duties and taxes upon delivery when purchasing from the UK. Furthermore, sales conversion is more likely if you display a final price on the website and present a ‘no additional costs will be added’ message at checkout. In order to achieve this, pricing should include a 20% coefficient to cover the local VAT that will be added and bring prices in line with those offered in the UK to ensure you are not operating at a loss.

For those looking beyond Europe’s borders, Brexit also presents pricing issues due to currency fluctuation. The pound is volatile, and a no-deal Brexit could prompt depreciation that will hurt revenues. For instance, customers may be returning goods that are worth less than they originally paid, so guaranteed hedging on currency fluctuations would be a sensible move.

These are just a few examples of the hurdles that could lie ahead for those retailers looking to expand their cross-border eCommerce business activities. But the challenges are not insurmountable with careful planning and an experienced partner armed with the technological capabilities and data-driven insights to help with the heavy lifting.

Don’t let Brexit drag down the potential of Black Friday and other key international trading events or hamper your online sales to Europe. There’s still time to prepare but retailers need to put strategies in place now.

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