The UK is one of the big players in the e-commerce business. At the same time, the use of fulfilment services in this area is increasing more and more. As the UK is now treated as a third country, Brexit also has immense consequences for freight forwarders and online retailers. This is especially important for EU-based companies, as about 11% of British online purchases originate from the EU.
So what are the obstacles that online retailers and freight forwarders face in fulfilment between the UK and EU now after Brexit?
Changes in Shipping and Customs
Probably the most important point that has changed in fulfilment since Brexit is shipping and the associated customs effort. When shipping fulfilment from the EU to the UK, certain information must be provided to the customs office there. The commercial invoice must contain, among other things, information on the HS code, country of origin, and the value paid by the end consumer, up to the British EORI number and the British VAT number. The problem is often the inadequate IT systems of the carriers and/or the sellers. This usually leads to delays in customs clearance, which in turn affects customer satisfaction and buying behaviour.
How to Tackle These Obstacles:
- Find out about marketing-, labelling- and marking-standards
- Check commodity code, customs, and VAT rates
- Get a UK EORI number
- Get an AEO status for a simplified declaration procedure
The safest option is to work with a trained customs agent or even better - a reliable fulfilment provider who also takes care of customs matters. Take advantage of this expertise and prevent errors and at the same time a delay in the delivery of your products.
Higher Costs Due to Brexit and Fulfilment Being the Solution?
Brexit has also increased costs for sellers and consumers. This is because shipping and changes in the VAT to be charged mean that prices have to be raised here. This leads to many Britons deciding on buying locally. Shipping surcharges also go both ways - from the EU to the UK and vice versa. On both sides of the Channel, fulfilment service providers and online retailers are having to rethink their approach to avoid overcharging the end consumer and themselves. But how can you continue to keep your costs low?
Advantages of Using a Fulfillment Center in Great Britain
The solution to the problems that arise with shipping and taxation is primarily to use a fulfilment centre and possibly an online marketplace in the destination country. The latter can be helpful, but only with reservations.
Goods Value under 135 GBP
If you sell your goods to private customers via an online marketplace in the UK and the value of the goods is less than GBP 135, then the marketplace must also declare the VAT on the product and transmit this tax to the state. This means that you are not directly affected by this. If you also supply your products to a fulfilment centre there, this is not taxable in Germany and ensures shorter delivery times for your customers. Only customs duty and import VAT are due. If you operate your own web shop, you must declare your VAT in the UK on a quarterly basis.
Goods Value over 135 GBP
If the value of the goods exceeds GBP 135, both import VAT and sales tax must be paid at the point of sale. It is therefore advisable, especially if there is no branch in the UK, to make sure that the fulfilment provider's forwarding agents work with the Incoterms DDP. This way, the costs of VAT are pre-financed by the service provider and do not have to be passed on to the customer, which could lead to high customer dissatisfaction. In addition, in a scenario with a goods value of over 135 GBP, it makes no difference whether you sell the products via your own web shop or via an online marketplace. However, the cost saving of having a fulfilment centre or fulfilment warehouse in the UK remains, as bulk shipments alone are cheaper than shipping products individually.
So What Does Brexit Mean for Fulfilment Services?
In the future, fulfilment providers will have to do more and more and cover additional areas. Only then is it possible to offer customers what they need. Many have successfully taken on these tasks and can thus represent a clear added value for your e-commerce. It is only important to find the right fulfilment service provider for your company.