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Brexit: what do European etailers think?

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CHRISTOPHER FURLONG / GETTY IMAGES


By Rianne Klein Geltink, sales director at B2C Europe.

As the name of the company suggests - B2C Europe’s network of operations and customers is international, with most of our work focused across Europe. For this reason, we have been paying particularly close attention to the Brexit debate, not only how Britain’s departure from the EU might affect UK business and consumers, but also what it would mean for our European counterparts.  

We have our own thoughts about the issue, but what really matters to us is our customers’ opinions. What would be the ideal outcome for them and why? What worries them about a British exit and how might it change the way we work with them? Rather than ponder, we decided to ask two of our European customers that have operations across the continent and are growing quickly within the UK.

Ana Webanck, who works for an online beauty retailer in France explained how important international expansion will be to her business:

“We are a French start up with operations and staff in France, Japan, the UK and Germany. For the last year growing internationally has been one of our main objectives, particularly within the UK and Germany. Currently, UK customers make up over 10% of our business and this is increasing. The possibility of the UK leaving the European Union is a little nerve-racking for a start up like us that is just starting to see growth in the UK.”

Her first concern about the UK leaving the EU relates to potential delays:

“70% of our business is made from subscriptions of monthly health and beauty boxes. Therefore, our customers expect us to deliver at the same time every month. If the UK were to leave the European Union there could well be delays at the border, which might mean that we need to restructure our deliveries arriving into the UK. The problem is that at this stage we can only speculate on how long the delays might be, and whether our customers would be waiting days or even weeks longer for their products.”

She then explains what the consequences of the Brexit going ahead might mean for the actual products she is selling into the UK:

“As well as preparing for the delays we might need to reconsider the content of the boxes. We have already had problems shipping products that contain a certain level of alcohol into the UK. If the Brexit were to go ahead, we cannot tell what restrictions we will see on other products within the beauty and food sector.”

Ana’s biggest concern is the possibility that she might lose UK customers:

“The final blow would be to our customers who might start to incur the costs of customs charges. This would damage our relationship with our UK customers who are used to paying around £15 a month (including postage and packaging) for the beauty boxes. This is a reasonable price but if customs charges were added we worry that a lot of our UK customers will cancel their subscriptions.”

If the UK did leave the EU, Ana describes some of the changes that she might need to make to her business:

One thing we might need to consider to avoid the delays and charges would be to actually have a physical warehouse in the UK. This would mean that we could package and distribute from within the UK, as we do for Japan. But the costs and time involved with this would be extremely high.”

Summing up her thoughts, Ana concludes:

“Hypothetically speaking, let’s say the Brexit had already been passed before we began our operations in the UK and Germany. If we had been forced to choose which of the two regions to target first, there’s no doubt that we would have focused our efforts on Germany rather than the UK. The potential customs clearance and delivery delays would have meant that it just wasn’t worthwhile.”

Willem Bontrup, founder of Dutch organisation Bontrup Media, operates an online business called VisDeal that offers daily discounts on fishing products. He explains why some of the Dutch population supports the Brexit:

“The main issue with the Brexit is that no one knows for sure what will happen and how things will change – or if they will at all. I have seen various reports in the Dutch media indicating that some people here support the Brexit - solely to find out what will happen to the UK. The UK is seen as a test. When we find out what the consequences of leaving are for the UK we will know if it is the right thing to do for other countries within the EU including The Netherlands.”

Willem then tells me of his worries for his business if the UK left the EU:

We operate from The Netherlands and ship to the UK as well as other European destinations. The business has been growing at a good pace and I fear that if the UK were to leave the EU, growth for us within this market could be halted.

“Our USP is that we can offer excellent deals and discounts on fishing products. The delivery costs depend on the size and weight of the order, but even so, the deals we are able to offer make it worthwhile for the UK consumers to shop through us. If the UK left the EU, products being shipped into Britain could incur additional costs at customs. This cost would need to be paid for by the UK customer, which might result in us losing business as it will be cheaper for them to shop at home. If that happens, it would affect a lot of other European ecommerce businesses that sell into Britain, which in turn would affect growth. For this reason, I think it is important that the UK stays in the EU.”

I understand why business owners are worried about the Brexit. There is a huge amount of uncertainty associated with it. Just turn to any British news outlet and audiences are bombarded with contradictory arguments about the possible outcomes: will it be good for us or not? This, I am sure, is also the case with many of the European news outlets.

For what it’s worth, my opinion is that whatever the outcome, when it comes to trade between the UK and EU I do not foresee a lot of change. Many UK retailers already have a strong foothold across Europe and vice versa. Just look at EU retailer H&M. It opened its first UK store in 1976 and now has 264 outlets across the UK with sales exceeding £1.3 million in 2015

However, the mid-smaller sized businesses that do not have as an established presence in the UK may feel the effect slightly more than the big players. Ana and Willem are right to be concerned about slightly longer delivery times and increase in costs due to customs charges.

If the UK did leave the EU, one way to reduce costs and time for businesses would be to work with suppliers that have a local presence within the countries the business sells to. This means that international orders could be shipped through local carriers using domestic delivery solutions to lessen the cost and increase access to different countries.

However, I do not expect the waits and costs to increase hugely. It’s certainly unlikely that they will reach the point where growth in the UK is unattainable. The UK and the EU will always be keen to encourage trade across borders and I fully expect that even in the event of a British exit, both sides will do all they can to maintain growth for businesses of all sizes. 

Rianne Klein Geltink is the sales director at B2C Europe, a company that offers cross border shipping solutions.

 


[1] Source: http://about.hm.com/en/About/facts-about-hm/fashion-for-all/sales-markets/hm-worldwide.html

Published on Monday 13 June by Guest Piece

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