After years of confusion, Brexit is now a reality. Retailers can no longer bury their heads in the sand and pretend it’s not happening. Brexit will have a tangible impact on the day-to-day operations of UK businesses. Recent reports of border delays causing concern for fresh food delivery is just one example of many that are already possible. A strong Brexit strategy for retailers all boils down to preparation. However, many businesses are still unsure how Brexit will impact them and the changes they’ll have to make as a result. But, how can companies plan for what they don’t know?
Documentation and procedures
I have no doubt Brexit will surely see the end of free trade movement in the EU for the UK, and when that significant change occurs, alterations to paperwork and procedures will follow. Reforms to trading will be a cause for concern for unprepared retailers and their delivery companies, both practically and within documentation. Post-Brexit legislation will mean they need to update their processes in order to be compliant depending on the EU country they’re delivering to. With that in mind, retailers need to ensure the delivery companies they work with go paperless with their admin to prevent costly clerical errors.
Following the introduction of laws and regulations, there will be plenty of red tape, and storing this information on paper will create a logistical nightmare for organisation and compliance. By adopting a paperless clearance system, expensive delays caused by misreading handwritten customs documentation are avoided. Submitting documents electronically to customs also eliminates the need to print and manually attach them to shipments, saving paper, time and hassle.
It’s also important for retailers to take note of some of the extra information they’ll now need to provide at customs, post-Brexit. For example, customers will need to present a European Union Registration and Identification Number in order to ship to the EU versus just a UK VAT number. And this will need to be checked and enforced to prevent failed deliveries. An 8 or 10-digit HS code will also have to be supplied to support efficient customs clearance and enable accurate duty and tax calculations are added for all products.
Supply chain delays
When trading with EU nations, British retailers will notice additional border checks, and major delays to their supply chain. This is something that needs to be built into every delivery company’s forecasting going forward.
Above all, communication is key. Operating transparently will ensure consumers receive order notifications, keeping them fully informed throughout the process. Retailers will need their delivery providers to keep them abreast of how long a delivery’s going to take in real-time, so they can set expectations with shoppers accordingly and ensure customer satisfaction doesn’t suffer. Further to that point, ecommerce businesses will need to adapt their delivery promises on their websites, as opposed to simply updating customers via SMS. This needs to be calculated accurately so retailers aren’t made to seem dishonest or ill-informed.
What’s more, delays in the supply chain, caused by custom checks, will lead to retailers being forced to hold more stock in their supply chain than they’re used to. This will have a direct financial impact on those businesses, who’ll either need to expand storage capabilities or hire more staff to cope with the increased volume of stock.
Totally transparent duties and taxes
The most obvious obstacle that Brexit poses on delivery companies and retailers, is the duties and taxes added to product prices depending on the shipping destination. With extra costs now attached to trade goods between EU countries, the overall cost of delivery will go up, and it’s on retailers and their delivery provider of choice to consider who’ll pay that extra fee.
With the cost of delivery in the EU rising, delivery companies will likely need to reflect that in their price, so the added cost doesn’t fall to them. That means that duties and taxes will likely be passed onto retailers, and retailers will inevitably be forced to pass that fee to customers, rather than absorbing it themselves.
Ecommerce retailers will need to communicate these new duties and taxes to consumers at the point of checkout so they’re aware of the charge prior to, and at purchase. Unexpected fees will simply lead to cart abandonment worsening or goods being refused at the border. In the grand scheme of things, duties and taxes will make UK retailers less competitive versus those based in the EU, and that will directly impact on export revenues.
Scaremongering in the media would lead some retailers to believe they can’t prepare for Brexit due to a lack of clarity on its impact, but that’s not true. In fact, the route to success in a post-Brexit world, is for those retailers to prepare ahead of time. What should be abundantly clear is that the choice of delivery provider for retailers, will impact their strategy, and ultimately their success.
Brands need to find a partner that gives them access to the breadth of carrier services available but through one multi-carrier delivery partner with multi-carrier services and technology that can be accessed through a single relationship and single, one-off IT integration. This will be key to navigating the early changes Brexit will enforce.
Daniel Ennor, Chief Commercial Officer, Global Freight Solutions