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Is BREXIT uncertainty influencing your ecommerce business decisions?

By Dan Wilson August 8, 2016 - 7:14 am

amazon logo homeRecently Amazon attested that they are taking a business as usual approach to doing business in the wake of the UK referendum result to leave the EU. In a statement the company said: “The way we run our business and support our customers and sellers is unchanged.”

It’s good that Amazon made such a statement because it shows confidence and should hopefully encourage Amazon merchants to apply the same approach to business. As it stands, we have no idea what sort of BREXIT deal the government will agree and, in any case, it doesn’t seem that any changes will come into force any time soon. Nothing is certain, but we must be talking about at least 2 years. If it ever happens at all.

Last week, I had a conversation with an Amazon seller I know well and we discussed how the BREXIT decision was affecting his approach to doing business and, whilst not gloomy about the result in general, was concerned about the uncertainty that it engenders.

To compile his concerns in a little list:

– Is it worth investing and growing operations into the EU if there is a possibility that the free movement of people will be limited?

My view is yes, because we have no idea of the timeframes. And Amazon makes it very easy to expand and contract with very little risk. So I suggest ploughing on. What do you think?

– What about currency fluctuation?

The pound has fallen against the dollar and that’s potentially a good opportunity for selling to buyers over to the USA. But for this seller, who sources from China, Sterling’s weakness does make purchasing stock more expensive. What’s your experience there?

– Does BREXIT make it more worthwhile to invest in selling outside of the EU?

I’d say that expanding operations to take advantage of international opportunities is a good thing in general, and it all depends on what you’re selling. But certainly it’s worth considering all the overseas selling opportunities. Sterling’s weakness could have an upside.

– Recession in the UK is a big worry.

For me this is the crux of it and the Bank of England is already thinking down these lines. It’s a strange situation whereby the people of a country make a decision that is almost immediately detrimental to that nation’s economic welfare. But that does seem to have been a result of the BREXIT decision and this seller is worried, first and foremost, about domestic sales. With a recession seemingly on the way, shoppers will have less spending power and that can hardly be a good thing.

How is BREXIT influencing your business decisions?

  • Stuart
    8 months ago

    For us we have seen a 20% increase in prices since the exchange rate change. We are about to pass that on in the Autumn of this year as we have no choice.

    Our focus, as before Brexit, was international expansion, however Brexit has now focused our minds on this as we have already seen falling sales in the UK for the past two months.

    We have also begun to cut back on any expenditure in the UK for the next six months to see what happens to the economy here.

    It’s business as usual, however we have made steps to change it slightly.

  • Bryn
    8 months ago

    When result emerged I was days from signing very large (for us) deal with a bank for finance. Initial reaction was to not proceed but quickly changed my mind and am ploughing on as normal. Its going to be years before any change happens (if at all) and we dont know what that change will be (if any) and doing nothing and putting things on hold is the worst thing to do

    The $/£ rate cost me thousands as had several very large orders to pay for. Going forward am opening Euro accounts in IE and DE so in future can skip the £. Already have a USD account. Most sales are in Euros and all purchases in USD so will move between Eur/USD and ignore GBP

    Having Euro accounts will make it a little easier if and when need to create companies in Europe

  • 8 months ago

    Cut vat, interest rate cuts are a waste of time

  • Alan
    8 months ago

    Not changed prices. Slight decline in UK sales since Brexit (over what was expected, based on last year) but a significant rise in US sales (more than compensating). Raw materials more costly – but overall the effect has been positive – so far. Not too worried (should I be?).

  • SAM
    8 months ago

    Amazon huge FEES for selling on the EU sites do not help, we are like 35% above UK source marketplace now.
    A lot of our stock comes from the EU itself so have “put” prices in the UK up.
    You get a short term benefit with stock you already had but this will not last
    Essentially we have put prices up as costs have gone up. Sales are still pretty even.
    Biggest thing will be if consumers start to feel the pinch.

  • Anon
    8 months ago

    We’re an online retail company. We’ve halted all expansion plans in the UK and are planning to divest out of the two UK service providers we use as we don’t know which companies will survive if brexit goes ahead. We won’t tell them until things are fully set up with the EU based alternative service providers.

    It’s quite possible that brexit won’t occur as the pain will be too great (every trade agreement the UK has – even WTO agreements – will be null and void, and will take years if not decades to renegotiate from a position of weakness, crippling the UK economy for decades), but a CEO would be negligent if they weren’t planning for the worst. Companies have already halted investment, you can expect them to start leaving the UK once their capital investment has reached the end of it’s life cycle, unless brexit is firmly rejected.

    If you’re in online retail, now is a good time to consider relocating to the EU to avoid very unfavourable future tariffs for any international trade and a shrinking UK market.

    • 8 months ago

      It is quite correct for Companies both large and small to look carefully at what the possible results of brexit will be in the short, medium and long term.

      I would suggest that within every Company plans are being made based upon how brexit develops. I was a very small part of the Leave Campaign but even I have concerns. But the chances are that most things will continue as they were before the Leave Vote in the short term and any changes will only become evident in the medium and long term. In fact it is very likely that in the medium and long term the UK economy etc will improve possibly significantly because of brexit.

      So while now is probably the time to keep your eyes on developments. It is almost certainly not time to run scared shouting such as ‘Do not panic. The end of the World is nigh’ as Anon seems to be doing.

      Draw up Plan B’s and possible Plan C’s and D’s as well but the future is likely to be much brighter than the panic stricken Anon’s of this World would have us believe.

      In regard to Trade Agreements etc. There are very important signals from around the World that many Countries want to enter into negotiations with a post brexit United Kingdom,. So it is possible that as the post brexit world develops that the UK could gain significantly from not being tied to a semi derelict EU with a currency that stumbles from one crisis to another. But if Anon was to jump ship it is very likely that in the medium and long term Anon and everything connected with him will be a major loser.

  • Sam O'levski
    8 months ago

    Doesn’t anyone remember the Morgan Stanley predictions of a global recession, published well before this brexit vote which has now been blamed for all the evils in the country ?
    They were not the only ones who, if I remember correctly, advised people to protect capital rather than think about any kind of interest on their investments, so it’s a pity that any financial problems will likely be blamed solely on brexit.
    What is more worrying is that there seems to be a popular move to overturn a democrat decision by the people of this country, especially from rent-a-mob lefty activists – can you imagine if the positions were reversed ?
    Back on topic, my b&m shop is suffering badly due to a lack of footfall, with tourist numbers well down on last year, and nearby towns appear to be fairing similarly, but hard to say exactly what the reason is, as weather plays a big part.
    My online business, although still very small, has seen an increase in costs due to exchange rates, and sales in general are lower, but then my business is not so big that I can draw many conclusions yet.
    I’ve bought quite a bit from a foreign ‘wholesaler’ recently though, as their auction prices are often much lower now, perhaps due to other uk based competitors reducing their spending, but my final bill is rather painfull, as it’s in dollars, so a case of swings and roundabouts for me in that area.
    I have been doing a lot of 99p freepost stuff on ebay, and of course cannot reduce that price which is now more expensive for foreign buyers.
    Overseas sales used to be around a third of my total on ebay, but I think in my case it’s too early to say what effect brexit is having. I can easily afford to reduce prices of my higher priced items to try and boost sales, but that and an increase in costs would mean having to increase turnover by something like 50% just to stand still, and eBay’s fluctuating performance makes everything a bit unknown really.

  • glenn
    8 months ago

    as other sellers have noted , the $ to £ exchange rate has cost me a few £1000 for a small vat registered internet retailer on my oversea purchases from china , i have no choice but to pass these extra costs onto the buyer , very small changes though like £3.75 to £3.95
    if you going on holiday and changing £700 into euros it probably relates to staying in one night but when your a business and sending $30,000 to china to purchase stock it stops you going on holiday altogether abroad and renting a caravan in wales for a weekend

  • Mark L
    8 months ago

    “Anon” – if other sellers do as you advise and exit the UK market, presumably that will mean opportunities for those that don’t.

    Being nimble footed is the way to be. Brexit may not happen – and if it does, change brings opportunities. “It’s an ill wind that blows nobody any good”, as the old saying goes.

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