In Part 1 of this blog post we looked at general trends in ecommerce for 2020 and how technology will continue to drive the direction and speed of change in the race to better serve the online customer. We geared our content to the medium-to-large multi-marketplace seller, and we noted that we needed to make these trends real for you in terms of how you can capitalise on then. The good news is that if you’re trading on the dominant marketplaces like Amazon then those marketplaces are probably developing or actively using the technologies that will matter in 2020. This may also be true for some of the web commerce platforms like Magento, and if you run your own web shopping platform then you have some tough decisions to make to keep up.
We also promised to address the B-word, and that word is Brexit. In the days following the referendum to exit the European Union and its economic framework in June 2016, the Volo Commerce blog attempted to make sense of the impending uncertainty and ramifications, while making some recommendations to help spread the risk. Another attempt now, in the wake of the General Election seems timely.
First, however, here’s a development we didn’t touch on in Part 1, and it’s originating away from British borders but is well worth keeping an eye on. Back in June 2019 Shopify announced its Shopper Fulfillment Network. It bought a large fulfilment house in order to offer the equivalent of Seller Fulfilled Prime and meet Amazon head-on in this area. This will enable Shopify to provide sellers of all kinds with FBA-quality fulfilment while ensuring it doesn’t directly enter the selling business. It’s a great alternative for sellers and a powerful value proposition, especially if it makes a similar acquisition on this side of the Atlantic and expands the offering to the UK. It’s also a development worth following.
Now, back to Brexit, and of course, there’s nothing worse for confidence and planning than uncertainty – uncertainty for the markets, for consumers and for you as sellers in established online businesses in the UK. Wind the clock forward a little over three-and-a-half years and there’s a new prime minister in power, with a new mandate and a healthy majority to push for a transition plan and certainty as soon as possible. At least that’s the plan.
In fact, you could view Brexit as an example of a global trend towards protectionism, and in these kinds of trade-constraining situations an understanding of cross-border fulfilment and product data becomes more important. It becomes more complicated to import and data quality is key to meeting delivery expectations.
Your own level of nervousness around Brexit is probably proportional to how much business you do beyond the UK borders. If you do quite a bit, then you’re probably already adept at managing your regulatory obligations and sales tax commitments with the US or Australia, for example, and the EU will be another ‘foreign body’ to add to the list.
At some point Brexit will impact, without question, logistics around the importing and exporting of goods across borders, principally in the areas of duty and tax. The risk is around shipping speed and carrier fulfilment, so that packages don’t get held up across borders, hurt the buyer experience and damage selling ratings.
Let’s confine ourselves for now to what could happen this year, 2020. On the one hand, many observers are breathing a large sign of relief and arguing that for the time being it’s business as usual, at least until the 31st December 2020. They anticipate no changes from the 1st of February 2020. Are they right to think they can push the need to do something another few months down the road?
On the other hand, we’ve already been seeing carriers expecting packages to be ‘Brexit-ready’ by 31st December 2019, 31st January 2020, and other dates besides. By Brexit-ready we’re mainly talking about electronic pre-advice information and shipping labels. Electronic pre-advice information is the details a seller provides electronically about itself, the receiver and the goods it’s sending abroad within a single package. Carriers and customs bodies have access to this information, in case they need to contact the receiver, and also the information is required to be printed on the shipping label.
Whether the carriers will really enforce these deadlines in 2020 remains to be seen, but many countries are already stating that they will prioritise parcels with electronic pre-advice information. Furthermore, the US is also talking about provision for the right to refuse parcels at the border if they don’t have the necessary information. It’s in the interest of all players in the ecommerce sector to pay close attention to this during the coming weeks and months.
All the recent signs – including this recent interview with the UK home secretary promising no alignment with EU rules – point to Brexit being the most significant macroeconomic event in the lifetime of most UK online sellers, again, depending on their level of international exposure. Regardless of when Brexit happens, or whether it happens, and to what degree, we are looking at the end of a cycle and the beginning of another. For this reason, we think 2020 will be a year of business consolidation.
So, what should sellers do against this background? That’s the topic for another post. Contact us to discuss your plans for 2020.