In case you missed it, this time last week Britain voted to leave the European Union, the first country to do so since its inception in the 1970s. With the referendum came a lot of uncertainty as to what would happen to Britain, from our economic prosperity, the effect on our global influence and overall how it would change our nation.
One of the biggest worries is the effect on our economy. As a Digital Agency we are on the pulse when it comes to eCommerce, but what does Brexit mean for the growing digital side of our economy?
The actual exit from the European Union won’t actually happen for at least two years, once Article 50 is enacted, allowing us to enter into negotiations to leave. However, we are already seeing some impact, particularly economically, with the sterling crashing to its lowest value in over 35 years, so, what impacts may we see as we move towards the European exit door?
The power of the Sterling
The initial impact has been on the sterling. As I said, after the referendum the sterling plunged whilst investors and financial institutions panicked whilst trying to understand what an exit meant. This will affect all businesses, including eCommerce. If the sterling remains unstable people will more than likely be more cautious when buying from foreign retailers. If you are an overseas retailer you may see less traffic from the UK until things settle.
On the flip side we may see more businesses from overseas for British eCommerce businesses. Savvy users may see the opportunity to buy online from UK retailers whilst the sterling is low, creating more sales against a struggling Sterling.
Single Market Access
The single market is one of the main pillars of the European Union. The single market allows quick and easy trade throughout the European bloc. It also cuts down the amount of red tape.
Recently, the European Union have put a lot more focus on the “Digital Single Market”. The Digital Single Market helps keep shipping more efficient, simplifies vat and provides a fairer system across the whole of the EU. When the UK leave the EU, we will lose access to this single market. British politicians, such as Boris Johnson, have advocated to keep the single market, but this would more than likely involve keeping the free movement of people, which is something a lot of British people rallied against during the referendum. The likelihood of us taking a deal like this would be low and would again cut our access to this single market, both digitally and through trade.
A lack of access to the Digital Single market would make things much more complicated for eRetailers. It’s quite likely taxes and tariffs will be put on products, shipping would become more complex and possibly more expensive also. This could all add up to make it more difficult for British eCommerce stores to compete on price.
What happens to big eCommerce?
The bigger companies, particularly those from America, set up a lot of hubs within the UK to access Europe. Our strong financial sector, sharing the same language and geographic location made it the best place to set up shop. However, when we leave the EU, logistically bigger businesses may look to relocate to gain better, cheaper access to the EU. Countries such as the Netherlands have been touted as the place to gain the most from our exit.
Do we really know what will happen?
The simple answer at this moment is no. Obviously the Sterling has dropped, so the effects from that are already happening, However, no one really knows what will happen with regards to Single Market Access and the effect on eCommerce and business in general until we walk through the exit door. It is however important that eCommerce businesses keep in mind that we are heading in that direction and make sure you are as prepared as you can be and know how things may change for your business in the future.👇 Like what you read? Share what we said! 👇