I am in a slightly odd position when it comes to Britain's exit from the European Union.

Among the various roles I currently hold, most will be strongly impacted by Brexit in one way or another:

  • I am an independent consultant, and have worked with numerous ecommerce companies across Europe & the world (as well as publishers, tech startups, etc).
  • I’ve had a couple of specific projects that focused on helping companies to meet the requirements of new EU directives.
  • I am also CMO of a multinational ecommerce business based in Germany, where the UK is one of our strong markets.
  • And I also have a software as a service tool (measuring & improving customer satisfaction for ecommerce businesses) for which most development takes place in Gibraltar.

I’ve also done a tiny, tiny bit of work with the EU, and I’ve been running my own polls each month on the likely referendum outcome since it was announced.

So I do not necessarily have expertise to predict what will happen next, but I do have a strong interest from various angles.

There is a huge amount that could be said on this, but I will simply focus on a handful of issues in three categories: Likely Positives; Likely Negatives; Possible Opportunities.

To begin:

Likely Positives

1. The Cookie Directive, Ecommerce Directive, etc. came from the EU.

These are the ecommerce/digital-specific laws that form a strand among the legal influence that most ‘Brexiters’ indicated was their #1 issue for choosing to leave.

By opting out, in theory we would not be required to implement legislation like this.

You could argue that as positive or negative; I think most retailers see a lot of the legislation as a cost with little benefit (one friend told me recently it’s easier for him to sell to Saudi Arabia than to continental Europe due to VAT law).

On the other hand it has helped us to a massive extent in various ways we take for granted – the most obvious being roaming charges, which now cost me £3 per day for 500mb, whereas a friend from the US still has a second SIM to avoid his network’s standard $2 per/mb charge.

2. A weak pound is very good for selling overseas.

It's quite possible that some retailers immediately became much more profitable (i.e. selling at the same €/$ price, with higher margin), or much more competitive (ie. lowering their €/$ prices in line with the change in the pound) on the basis of the drop in the pound vs. other currencies.

3. A double-edged impact on jobs.

If larger organisations pull out of London, this may bring quite a lot of experienced people to the job market.

Likely Negatives

1. Money.

Currency fluctuations have a negative effect, as well as positive.

I've worked across dozens of ecommerce sites, and cannot think of any in the last couple of years that haven't used US software in some form or other (whether it be an abandoned basket tool, or hosting provider, or the platform itself).

In some cases these companies charge in pounds; in most cases they charge in dollars, meaning an immediate increase in costs when the pound is weak.

For physical retailers this is also a double-whammy in some cases, as many buy their products from overseas (i.e. both cost of goods and operational expenses go up for some).

As one specific example of this: Many tech startups are built on top of Amazon Web Services’ technology infrastructure – a drop in the pound for them instantly means increased costs of 10%.

2. Legislation.

As much as people complained about the Cookie Law, the Ecommerce Directive, and other similar initiatives, one reason these came out of the EU is that the UK Government is simply not proactive enough to have even really looked at the issues.

The EU is very big on pushing ‘digital’ (and even ecommerce specifically within that).

There are formal and semi-formal groups looking at, and working on almost every aspect of this. Sat outside the EU, we of course do not benefit from this combined investment.

3. Confidence.

It’s perhaps an obvious one, but confidence among consumers is a massive thing.

If consumers do not buy, ecommerce businesses make less revenue. Less revenue usually means less absolute margin.

Less margin means less opportunity to hire talented people, less opportunity to grow by investing in marketing, less opportunity to build and innovate.

There is also ‘confidence’ from a hiring/geography point of view. Most technology companies are fairly location-independent now: It is not hard to move a fully digital company from one country to another.

You only have to go to a handful of events to see that the ecommerce world is full of people from all nations.

If the UK does not attract those people, if the UK does not appear to be the best place to act as ‘home’ for your technology business, other countries will.

Possible Opportunities

1. UK as the global heart of ecommerce.

There is a big, obvious opportunity for the UK to push itself forward as the world’s leading ecommerce nation.

We are advanced for numerous reasons:

  • English speaking.
  • Familiar with dealing in the complexities of selling across multiple currencies & multiple languages.
  • Strong B2B & B2C history.
  • Geographically small so almost everyone knows almost everyone else in the ecommerce industry, etc.

The thing that has been lacking has been any sort of formal push to position us as the world leader, or to build any incentives/regulation/tax/skills/assistance framework for that to happen.

We have some excellent retailers, including brands who’ve managed to push themselves forward globally via ecommerce alone. There is little reason not to pursue this.

2. UK as the home of technology businesses.

Another possibility that would take a good amount of foresight & leadership: The UK could attempt to become the destination for technology companies more generally.

Google has largeish offices here, Amazon has built up its presence here, Microsoft, Samsung, and others have good-sized teams in the UK.

Google's London office

Technology providers worry about Europe a little. Google has had its run-ins with the EU, as have others.

Whether those worries are real or not, they leave the possibility to present the UK as the doorway to the world, with a technology-friendly culture, legislation, etc.

It needs vision and planning, and execution (actually, probably all it needs is for someone to step up and decide this is the priority and push as hard as they can for it).

You only have to look at Ireland to see that there are lots of possibilities around this kind of thing.

Not a ‘quick win’ by any means, but it seems foolish not to aim for something like this. 

3. An odd, final note: No negotiations have taken place with the EU yet.

It would be silly for the UK not to try and retain some sort of involvement in the EU’s digital initiatives.

And, if we don’t retain those ties, it would be foolish not to start being a bit more proactive in putting together our own home-grown digital legislation.

If you work in ecommerce, do nudge for this where you can:

  • Tweet/email relevant MPs asking them what they’re doing about it.
  • Read up on what’s happening and get involved if it makes sense for your company.
  • Ask why technology journalists never talk about it.
  • Highlight the hurdles you face as a retailer that could be fixed by the government, etc.

If you do have any thoughts on any of this and want to chat, or want to tell me that I’m wrong, please do - @danbarker on Twitter is possibly the easiest place to do so.

For more on this topic, read: How will Brexit impact digital businesses and marketers?

dan barker

Published 27 June, 2016 by dan barker

Dan Barker is an E-Business Consultant and a contributor to Econsultancy. He can also be found on Twitter and Google Plus

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Comments (5)

Pete Austin

Pete Austin, CINO at Fresh Relevance

The biggest positive for me is if we actually get a “fair and balanced” immigration system. My company would very much like to recruit non-Europeans in exactly the same way as Europeans. Currently the process seems to be deliberately made difficult. And I personally hate all the the dawn police raids on Asian-owned businesses. For example:
http://www.southwales-eveningpost.co.uk/mumbai-latest-indian-restaurant-swansea-raided/story-29187677-detail/story.html

The biggest negative is all the uncertainty, following the two most dishonest political campaigns, on both sides, that I've seen in my lifetime.

over 1 year ago

Mark Pinkerton

Mark Pinkerton, Director of Optimisation at Practicology

Hi Dan
re: UK as the home of technology businesses
Many US businesses have chosen us for their European hub as we are both English speaking and have access to the EU market. If the second of these goes, that has to effect the UK's viability for those US firms with significant EU exposure.

over 1 year ago

Rob Fernandes

Rob Fernandes, Payments Product & Strategy at WePay Ltd

Agree with Mark - single market access for US/ROW businesses headquartering in London will be a major negative for Brexit unless access to the market/passporting is maintained.

There are plenty more negatives, it seems like a pretty simplistic list. Having worked with ecommerce merchants for over a decade, the desire for European trading was/is huge.

Retailers (clothing in particular) are desperate to expand their markets into Scandinavia and western Europe as a minimum (look how quickly ASOS went European / Global).

To call unified European legislation like Cookie Law a negative misses the point. It will still be required to do this cross-border trade - surely better to do everything under one regime.

To have a UK ecommerce industry with an objective to trade pan-European but then have future divergent law making and compliance following Brexit is unhelpful to say the least.

Having read some of the more recent EU recommendations I'm not as cynical either. They are looking for legislation to further simplify cross-border payments and logistics costs.

Shame for UK ecommerce not to be part of that. Yes we're biggest ecom market in Europe (& third biggest in world) and can still think bold, but big fish small pond vs big fish big pond.

One other thought - I assume digital commerce cross-border will still be responsible for VAT MOSS (another EU law). Is it not nicer all round if that's a uniform and reciprocal process?

over 1 year ago

Richard Protheroe

Richard Protheroe, Marketing Executive at Veeqo

Interesting article Dan! I spoke to a retailer recently who was really impacted by Brexit as they import flowers from Holland and it isn't a product involved in the UK. Interesting they used a financial hedging instrument to guard against the weakening of the pound: http://blog.veeqo.com/brexit-now-means-uk-sellers/

over 1 year ago

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Ed Shutenko, MD at Alfa Marketing

Are there more opportunities for local producers?

over 1 year ago

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