Dan Ennor: Tariffs, Duties and the impact Brexit will have on delivery
The further delays to the Government’s Brexit proposal in April, resulting in an extension until October, came as a shock to no one, but the knock-on uncertainty around duties and tariffs remain a huge barrier for UK exporters. And a lot of retailers are still unsure as to exactly what impact it will have on their business. They know they’ll have to navigate new duties and taxes, but haven’t worked out how to relay that to consumers, transparently. Put simply, consumers don’t like unexpected costs when buying online. If customers can’t transparently see what duties and taxes they will pay, brands can expect cart abandonment rates to rise. A lack of transparency and options will cost companies business.
The reality of post-Brexit tariffs
Historically, Britain is one of the biggest importers of eCommerce goods, but from an exporting perspective we’re only the third largest. Moreover, with the potential removal of the Irish trade backstop, the UK could be stuck in World Trade Organisation (WTO) trade tariff land. Essentially, WTO-level tariffs create variable duties and taxes per country. And the last thing a customer wants is to purchase an item from another European country and get unexpectedly stung paying extra tax to receive the parcel. This is a problem that retailers need to tackle head on in order to prevent disgruntled customers, and losing business.
Preparing for a hard Brexit
Preparing as though we’re entering a hard Brexit is the only solution for retailers. The UK’s industry association for online retail, the IMRG, has revealed that one in two consumers abandon an online purchase because of delivery related reasons. So, the checkout is something retailers need to get right, regardless of the outcome of trade negotiations. That means fully transparent pricing to show delivery, duties and taxes at the point of purchase, with the option to pay immediately or delay until the parcel arrives at their door.
Investing in checkout technology
Companies should be looking to technology that can help navigate the problem of unexpected duties and taxes. Technology now exists that can present the full landed cost for online purchases anywhere in the world, which saves businesses from having to make those calculations themselves. By outlining the true and total cost of an order, your customers can buy with confidence without fear of any unexpected fees and charges.
UK-based Hattons Model Railways invested heavily in their approach to international growth as a result of the Brexit challenges. With the help of GFS, they’ve been able to expand into three international marketplaces and are currently trying to further penetrate the EU, too. They’re now able to offer consumers more delivery options and transparency when it comes to the communication of taxes and duties. Which means a breadth of choice for consumers and an opportunity to reach new marketplaces with UK exports. Companies such as Hattons act as an example to other SMEs that they can be successful in spite of Brexit, if they make the necessary preparations.
According to recent UK retailer data from Tamebay, respondents showed a clear ambition to want to grow international sales significantly – 76 percent of UK retailers expect to increase international revenue over the next few years. However, 52 percent of UK retailer respondents said calculating duties and taxes was in their top 3 barriers to international growth – an increasing problem as Brexit trade negotiations continue. The reality of post-Brexit tariffs is a tumbling block for businesses but there’s no use in burying your head in the sand. Retailers need to act immediately in order to combat the changes Brexit will bring.
By Dan Ennor, Commercial Director at Global Freight Solutions