Close this search box.

Trading across EU borders after Brexit

Chloe Rigby looks at what’s changed for UK ecommerce retailers in 2021 at a strategic level as a result of the post-Brexit free trade agreement with the EU

On 1 January 2021, the UK started to trade with the 27 members of the European Union on new terms. The UK is no longer a member of the EU but is now a third country, trading with EU countries through the new free-trade UK and EU Trade and Cooperation Agreement. That deal, agreed on Christmas Eve 2020 and approved by the UK Parliament on 30 January, just one day before it came into effect, allows for zero tariffs and zero quotas on goods produced in the UK and sold to Europe – and vice versa. Nonetheless, there is now more form filling for UK retailers selling to the EU as well as the delivery companies carrying goods. This extra paperwork covers issues that include VAT, customs codes, product origins and, in the case of those selling animal-based products, extra phytosanitary checks, when goods are permitted to be imported at all from outside the EU.

The cost for UK companies of selling into Europe is therefore rising, with some ecommerce and multichannel retailers of all sizes rethinking their approach as a result.

Some have taken the decision to stop delivering abroad entirely, with leading UK department store John Lewis terminating its international delivery business before Christmas. It did not mention Brexit as it set out its new strategy of focusing on the UK market. Fashion retailer Jigsaw, for example, says it is no longer shipping to the EU, while a number of specialist European retailers have said they will also no longer ship to the UK. For others, this is a temporary measure. Upmarket grocer Fortnum & Mason is among the retailers that has suspended deliveries to the EU while it puts new processes in place.

Retailers and brands now face a choice of whether to keep selling to Europe or not, given the change in systems and extra costs. Ultimately, the choice is a strategic one and one that will reflect whether the revenues available from selling to Europe outweigh the costs and complexities of doing so.



These changes come at a time when UK retailers have been selling across borders more than ever. The latest IMRG/Global-e Cross Border Index suggests that cross-border ecommerce sales grew by 57% in 2020 for the 270 retailers that trade on the Global-e platform. Across the peak trading period, which this year marked not only the run-up to Christmas but also the final months of the UK’s membership of the EU Single Market, sales were up 42% on the same time last year.

Neil Kuschel, chief executive of Global-e in Europe, says that cross border trade between the UK and the EU grew quickly in 2020 as shoppers were more prepared to buy from overseas sellers. He believes it will continue to be important in 2021, although Brexit now presents a challenge to that. Kuschel says that brands that are absorbing the new costs themselves are not seeing significant changes in their order levels from the EU. However, he notes that, “Many brands that have passed that on to the consignee in Europe are having challenges, where customers are experiencing being charged on arrival”.

Retailers that remain committed to making it work include those that already have large global or European businesses, including fashion retailers Next, Asos and Superdry, and sports business JD Sports. Next, which already traded through its own bonded warehouses, has said that having prepared for the changes, it is not now seeing any problems. “We have not experienced any disruption as a result of Brexit and all our new systems required for Brexit have been implemented and are now operational,” it said in a Christmas trading statement published in January 2021. “We do not anticipate that Brexit will have a material impact on our ability to import and export stock in the year ahead.” It also said it did not expect any increase in customs duty costs in the coming year.

It’s also so far, so good for smaller business footwear retailer Vivo Barefoot, which shifted its distribution operation into the EU before the deal, moving its stock to the Netherlands. “It has made a lot of difference not transferring from outside the UK into the EU,” says Paul Walker, commercial director at Vivo Barefoot, speaking at an IMRG virtual event in January. Retailers taking this approach, however, need to consider whether they still need to run a UK warehouse, as well as whether they can afford to double up on warehousing costs.

Meanwhile, David Kohn, customer and ecommerce director of Top500 furniture retailer Heal’s, said at the same IMRG event that while it had been fearful of the costs of Brexit and rising shipment costs, these had not yet materialised. “Should price increases come through – and there’s very little evidence of that so far – it will be the standard question of whether we are able to pass it on or if we have to take it on the chin ourselves,” he says. Yet others see sizeable challenges ahead. Asos anticipates £15m in extra costs in its current financial year as it pays tariffs to meet the country of origin rules that now affect British businesses, while Superdry says that despite ensuring that its inventory management and stock intake processes were up to speed before 31 December, it will still take its Brexit internal working group some time to get to grips with the full implications. “Superdry is a global business with corporate and operational capability both in the UK and mainland Europe, which means that we are well-equipped to deal with the challenges of Brexit as we can service EU customers from within the EU and to as a UK-only organisation,” it said in its half-year results statement, published in January 2021. “However, though this diversified distribution centre network has allowed us to mitigate many of the potential costs, there are now additional considerations and frictional costs of relocating inventory once it has been received into the business.”

Global-e’s Neil Kuschel says that help is available for retailers and brands looking to understand how they best approach trading after Brexit. Sources for this information include the Department for International Trade, local chambers of commerce and industry bodies. He also notes that it’s important, at a time when cross-border trade is increasing, for retailers to stay in the market if they can, since British goods are still very desirable and the appetite for shoppers to buy across borders is increasing. “Being an optimist, I think that in six months’ time, brands will have got their heads around how to manage shipping across borders into Europe,” says Kuschel. “People will have forgotten and got things back to normal. The challenge is that in the next six months, since the online consumer is so fickle, if you are a brand and you lose your customers because you struggle to get it right, you will have to spend a lot of money to get them back. You have to get it right now and a lot of businesses already have. Even brands that haven’t got it right yet, if they get the right advice it doesn’t take too long to get it right.”

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on