How Brexit Will Affect Online Retailers In The UK

Throughout history, Europe has always been the primary trading partner of the UK. And in this age of online retailing, this is more true than ever. But the country recently voted to leave the EU, a move that has aptly been named "Brexit." And it might come at a great cost to the online retailers in UK, who like the rest of the country, have a future of uncertainty, with currency fluctuations and the possible introduction of new tariffs, taxes and rules, to deal with.

Online retailers in the UK, like the rest of the country, have been wondering what Brexit will mean to their business. WTO figures from 2014 show that before the referendum the UK enjoyed an import tariff of 0% on goods from other EU countries, in contrast to a 5.3% tariff had they been imported from the rest of the world. Will a new tariff be issued to goods being imported from the EU? The bloc's vast single market of 500 million consumers is definitely not something British leaders are willing to give up on. And some are looking towards Norway, which broke away from the EU in 1994, as a possible model.

Now the UK is yet to invoke Article 50 of the Treaty on European Union, which would actuate Brexit. But Repercussions are already visible in the UK, in the form of currency fluctuation. As the strength of the pound continues to fluctuate, some online retailers like fashion brand Tom Cridlan, which attributes 30% of its sales to Europe, have already seen an increase in the cost of production. Lesley Batchelor, director general of the Institute of Export, says that should Brexit go ahead, there would most likely be a change in the regulations for online retailers. The UK leaders that chose to support Brexit have many years of hard negotiations ahead of them.

Millions of European customers flock UK based online retail sites everyday, some with meticulously collected coupon codes, others with their hard earned Euros. Volo, a community of multichannel sellers, estimates that western European markets account for more than 50% of all exports by online retailers in the UK. Even a small tariff could have a devastating effect on most of these businesses, both big & small. However some pro-Brexit analysts have suggested that Brexit could actually be beneficial to online retailers. Professor Joshua Bamfield of the Center for Retail Research has predicted that online retailers could see a boost in their overseas sales, thanks to a weakening pound. And believe it or not, there are actual data to back this up. Popular online wine retailer Baacco has reported an improvement in sales following the Brexit referendum. Co-founder Tai Alegbe says that due to the weakness of the sterling, some of Baacco's most expensive and sought-after wines have become more attractive to international buyers!

And while most online retailers are hoping that their government can negotiate to maintain the status quo in regards to having no trade barriers or surplus taxes, and preserving free movement of goods and labour with the EU, Professor Bamfield yet again argues that Brexit could actually offers online retailers in the country a new degree of freedom, especially in regards to the supply chains. He says that in theory, leaving the EU would mean that retailers can buy from the cheapest market in the world. The UK could lower international tariffs, perhaps even more so than the EU tariffs. This could in effect actually see an improvement in the average online retailer's business.

Brexit is still a long way being actuated, and in the mean time, other than having to deal with (or in some cases, make the most out of) a fluctuating pound, things will carry on as usual for online retailers across the UK.