Brexit Weighs on Global E-Commerce
June 30, 2016
Dire predictions about how the British decision to leave the European Union will affect its broader economy began almost immediately after the results came in. How it might affect e-commerce sales in the country is unclear, but at least one company believes the hit could be massive. Scurri, a software company that automates online fulfillment, said the 10 percent of U.K. e-commerce sales that originate from consumers in other countries “could be threatened or even lost” if those consumers are no longer willing to shop on U.K.-based sites. The converse could also be true. The 2015 report, Key Business Drivers and Opportunities in Cross-Border E-Commerce from Payvision and CardNotPresent.com, identified U.K. consumers as the most likely to shop at foreign Websites (54 percent made at least one such purchase). But, with the British pound losing significant value since the vote, British consumers cannot buy as much with their money abroad. It also could have ramifications for the U.S., according to Gijs op de Weegh, Payvision’s COO.
“The U.K. and the U.S. are strong cross-border trade partners: around half of international U.S. merchants export to the U.K., and just under a third of U.K. consumers purchase from U.S. Websites,” op de Weegh told CardNotPresent.com. “If Brexit also spells the removal of the U.K. from the EEA (the European Economic Area, in which free movement of persons, goods, services and capital is permissible among countries), exporting retailers in the U.S. could find e-commerce between the two countries a more complex and costly affair.”
While the pound’s slump could curtail Britons’ propensity to shop abroad, it could actually be an opportunity for U.K. businesses selling outside the country if regulatory challenges are avoided, according to Ron Van Wezel, senior analyst at Aite Group.
“While the U.K. has a trade deficit with the EU, it has a trade surplus in cross-border e-commerce with EU member states,” van Wezel told CardNotPresent.com. “If a free trade scenario is realized/continued between EU and U.K., and no tariffs are introduced, the balance of e-com trade will depend on the value of the pound sterling against the euro. If the pound devaluates, this could actually stimulate exports to the continent.”