According to the Centre for Economics & Business Research, 40% of UK businesses that sell online are trading internationally and 86% of these are trading with European customers. So what are the opportunities now and opportunities post-Brexit?
The Opportunities NOW
Expected growth in the European eCommerce market in 2018 is estimated to be 13.8% (14.2 % for 2017). 2017 revenues from eCommerce business are already over €265 billion… and with an annual revenue of over €77 billion UK businesses are Europe’s eCommerce leaders.
British retailers are innovative and have embraced the online marketplace more rapidly than other European countries to date; however other European markets are now growing strongly with Spain showing the strongest growth at 19% in 2017, followed by Poland, Netherlands and Germany, all with a growth of over 16%.
Apart from the UK and Germany, market shares are comparatively low in many European countries so it is clear there are significant growth opportunities in Europe for those that wish to expand and grow their international customer base.
With the recent devaluation of Sterling, UK based retailers are currently also able to sell goods into Europe more competitively than their European rivals or maintain their prices and increase their profitability.
Success internationally depends on getting the supply chain right: sourcing of goods, warehouse locations, and the quality of the fulfilment & returns services.
Most UK retailers currently ship inventory to the UK, and then, pick, pack and dispatch their goods to European customers as individual orders.
However, by using a European fulfilment centre, stock consignments can be shipped directly to the European warehouse and then picked, packed and dispatched to the end customer with much greater speed and efficiency. International returns can also be managed more effectively and in a timely manner.
For UK retailers supplying the European market, a European based fulfilment operation improves delivery time and international returns management significantly.
With dense and multimodal transport connections, qualified and multilingual staff, well-developed freight networks and its central geographic location, Belgium has become one of the most important logistics hubs in Europe.
The Opportunities Post-Brexit
Given the volume of eCommerce trade with Europe, it is vital that UK businesses are still able to trade competitively, and are given opportunities post-Brexit.
eCommerce retailers selling their goods from the UK into Europe are hugely dependent on efficient customs processes, shipping and logistics to help them deliver to their customers quickly and in line with their expectations.
The opportunities post-Brexit will depend on the outcome of the UK and the EU reaching agreements on trade processes, including VAT rules, customs duties and regulatory standards. If they don’t reach agreements that support frictionless trade, goods sent from a UK fulfilment centre are likely to see an increase in costs and red tape, resulting in longer delivery times and less reliability. (The number of customs declarations processed is expected to increase five-fold!)
At a time when delivery pressures are increasing, and markets increasingly competitive, this is not good news for retailers.
Utilising a European based operation will enable retailers to simplify the customs process – clearance will take place once – at the time of inventory import. Goods are stocked, fulfilled and despatched from within Europe, therefore no customs uncertainties creating delivery issues and, in addition, retailers will be able to take advantage of the location for faster delivery times into their key markets.
By using one fulfilment provider for sales into UK and Europe, there is no need for retailers to risk choosing one jurisdiction over the other. They can simply distribute from both centres as suits their market, and a 3PL partner means there is no need for significant investment in warehousing and staff, and they can focus on their European wide customer services team.
Businesses can also reduce their currency exposure, by matching the currency of their fulfilment costs and sales revenue.