Reading time 5 minutes
As of writing this blog, Brexit is just over three months away and there is so much confusion with the politics, it is really hard to understand what it all means to one’s business. As I am in the UK this week, it has been the perfect opportunity to “take-the-pulse” of the moment and break it down into the practical implications for our Amazon Sellers.
Disclaimer: This blog is given as general information and understanding of the subject and should not be used as a substitute for competent advice. You should seek appropriate assistance for your own situation.
On the 29th of March, 2019, will the UK leave the EU on good, bad or indifferent terms? It’s far from clear. After two years of negotiations with the EU, with each side trying to improve their own terms, UK Prime minister, Teresa May, has finally returned at the eleventh hour with “a Deal”. May insists that it’s “This Deal, No Deal, or No Brexit”.
Option One: Teresa’s Deal
Her deal would keep the current trade agreements with the EU for the foreseeable future, so Amazon Sellers on both sides of the channel would breathe easy. However, now it’s coming time to seal the deal, the PM doesn’t seem to have the majority vote on her side.
Option Two: No-Deal
What’s a No Deal look like? It’s the UK tearing up their EU agreements, paying a hefty fine for leaving, and going forward by the WTO trade rules, outside the EU. “No-Deal” forces customs and tariffs at the English Channel, the borders of Gibraltar, and of Northern Ireland. This scenario would mean buyers on both sides of the Channel could expect long delivery times and tariffs, which would be passed on in increased item prices. Different rules and tariffs will be applied by each country a product passes through.
Amazon impacts: An EU buyer doing an Amazon search for an item might tend to favour an EU marketplace store with a lower price and shorter delivery times over one in the UK. UK customers will also tend to purchase within a lower price range and shorter distance to home. As a result, the Amazon UK marketplace could become more insular.
Option Three: No-Brexit
What’s no Brexit look like? The UK decides to stay in the EU, which the European Court of Justice has recently decided is possible, as if Brexit never happened, together with all the pre-existing conditions and opt-outs.
Why Supply-Chain Realities are a Real Issue for Amazon Sellers
Commerce within the EU is dependent on a seamless “just-in-time supply-chain”. Every manner of goods and services, digital or otherwise has a common expectation of a two-day-prime reality. Any alteration of the current well-oiled mechanism will bring on-the-ground delays.
Many UK corporations are pre-empting the March 29th deadline by stockpiling, which is not a long term solution, or moving operations. From Bloomberg’s Suzi Ring, “Nearly one in seven EU companies with U.K. suppliers have moved some of their business out of Britain. Almost a third of U.K. businesses with suppliers from the bloc have increased prices. This is not surprising, given the obvious lack of any solid agreement in the negotiation process at this point.
UK Seller Marketplace Reality – No Deal
Amazon has a central UK Fulfillment Center in Rudgley, Staffordshire, which will be a real boon to UK Sellers selling to buyers in the UK, especially if they’re trading “home-grown” goods. For imports, though, supply-chain delays will inevitably influence FBA stock-on-hand. There could be a complex trail of customs assessments and red tape.
Example: a Seller based in Dublin purchases a carton of 24 incense burner boxes made in India. If this carton comes into the EU via France, then on into the UK FBA (leaving the EU), then is sold in Ireland (EU) delays are likely. For the last four decades this path through the EU was routine and unhindered.
Where do your products come from? What import paths do they take?
Many Amazon Sellers are tied to delivery-as-needed approach, yet adaption depends on investigating alternative routes for supply chains that would be impacted by no deal. As the Brexit or no Brexit uncertainty progresses, the need to establish some certainties to stay in business will increase.
Action Steps If you’re an Amazon Seller doing business with or from the UK:
- Watch your customer feedback for complaints about delivery delays
- Consider added-value options and offerings to offset the inconvenience of delays, such as box subscription buying, bundling multiples for discounts. These options can allow for more time to to deliver products, create more consistency in sales, and move more product.
- Evaluate the advantages and disadvantages of your product in different FBA locations using A2X Inventory Locations and determine best market positioning of your product for fastest delivery.
- Use Amazon Inventory’s “Manage FBA Shipments” to move inventory to more advantageous locations.
- Identify what’s profitable, what’s moving, what’s not? (eg marginal/ low markup items that reap the least profit)
- Talk to A2X experts in the UK who can outline how A2X can support your business during this time of change
The Right Tools: Use This A2X Feature to help you oversee your inventory:
Under the A2X Inventory Tab, click on “Monthly Summary” to see what stock is in which country at end of month.
Is there more or less than you expected? Are they were you want them positioned?
Have there been delays on FBA transfers? How do you find out?
Compare the A2X Monthly Summary to the shipments you initiated in Amazon Seller Central “Manage FBA Shipments” under “Inventory”. Sort this report by newest to oldest, and then check the shipped vs received list for any discrepancies. If the received counts are zero and it’s been a couple of weeks then definitely start to investigate these. Reach out to Amazon to find out why shipments are delayed.
Use this technique to keep your finger on the pulse as the impact of Brexit unfolds. Again, seek advice if you think you’ll need help understanding what’s going on!
My Crystal Ball
Ah yes, my Crystal Ball! Well, it’s murky waters I’m afraid! Brexit’s outcome is uncertain, and we all hope for a workable situation soon afterwards. In short, it’s by no means clear how Brexit will play out, or how it will eventually impact Amazon Marketplace activities in the UK or the EU.
Trade and our Social DNA
However, consider this: trade is a natural part of our being, our social DNA, from primitive barter to algorithmic commerce. It’s inevitable that we will do business, and we will find a path to make profitable transactions. In 2017, 44% of UK exports went to the EU and 53% of all UK imports came from the EU, so there’s plenty of incentive to make it happen!
In this crazy, flawed, yet brilliant world of e-commerce, agility and flexibility are powerful business attributes. Insight is crucial in times of change, and here at A2X we provide Sellers with the automated tools to see into their Amazon world.
The Brits are fond of quoting the slogan -“Keep calm, Carry On”. Not bad advice for these times either, and oh – don’t forget the strong cup of tea! Thanks for reading, be well!
Quick Links about the “divorce”
Facts vs Fear – Brexit Pundits Revealed
It’s going to cost some too.
Could the UK still remain in the EU – (revoke Article 50)?
What Happens if MPs Reject May’s Brexit Deal?
Whitehall No Deal contingency plans codenamed Operation Yellowhammer
What about Brexit’s Effect on The US of A?
UK’s EU membership dues 37p/day/person
Brexit and small to medium enterprises businesses.
U.K. businesses with suppliers from the bloc have increased prices