Brexit to impact US retailers? Not so fast

 

An astonishingly poorly researched piece of nonsense offered by BusinessInsider claims that:

When the UK does leave the EU — which may not be for one to two years — it will be harder for US retailers to reach British shoppers. That’s because the UK will no longer participate in the EU’s free-trade zone.

I'm going to be kind for a moment and assume that some robot cobbled this since the article cherry picked bits and pieces, but I am not so kind when it comes to the matter of innuendo based upon suppositions that don't hold up and/or which have not been tested.

Yes there is uncertainty following Brexit, but there is no suggestion in any of the serious journals that the factors BI clams to have identified play any more part today in what will happen than was the case pre-Brexit.

The thrust of the argument is a recasting of content from Internet Retailer which is far more cogent but still errs. It is true for example that the recent fall in the value of GBP to the US Dollar makes imports from the US more expensive, but then that is also true for the US selling into the Euro zone, albeit not to the same extent. Therefore, singling out the UK alone for currency fluctuations is wrong.

It is also true that imports from Europe become more expensive for British buyers for the same reason but not to the the same extent, unless of course they're also being shafted by the UK banks at rates of anywhere up to 4.5%. HSBC springs to mind. That's a market problem not a consequence of Brexit problem, which, by the way has not yet happen and will not do so for at least several years, not the one or two that BI claims.

Second, Internet Retailer quotes Eric Heller, founder of MarketPlace Ignition, a consulting firm that advises retailers and brands on selling on web marketplaces, including internationally.

Today our clients can land anything in any Amazon fulfillment center in the EU and be eligible for Prime shipping anywhere in the EU,” Heller says. “It’s a shame that eventually goods will have to be sent separately to the U.K. This will make reaching that market a little more complex than it is today.

Eh? Amazon has fulfillment centers in the UK already so why would it organize to land in Europe and then trans-ship to the UK? It doesn't make sense when the UK represents its largest market in Europe and for which facilities already exist. And does Heller seriously think the UK and EU will tear up trade treaties such that fresh barriers to trade will be created? No-one I know seriously believes that is likely, although I will concede that anything is possible in these strange times.

BI goes on to claim that:

Online retailers may not be able to collect as much data on UK consumers. Right now, the UK has data sharing laws that are compliant with the EU. But new laws under the General Data Protection Regulation concerning how and when technology companies can collect data on users, as well as what they can do with this data, are supposed to come into effect in 2018 for the entire European Union.

If the UK does not remain compliant with these new data regulations it could prevent online retailers from collecting personal data on consumers, which they do to inform advertising and marketing efforts. That said, many believe that the UK will stay compliant even if they leave the EU before the 2018 start date, The Register reports.

Dear reader, that's 105 (I counted) wasted words. The implications of GDPR are crystal clear and apply to ANYone wanting to do business in the EU. Does the writer genuinely believe that the UK will not be in compliance when its largest set of trading partners is setting regulation? The UK may be in political turmoil today, but I don't see anyone deliberately sabotaging regulation which is settled among all the states. It makes no sense. And in any event, there is that pesky 'right to be forgotten' thing inside GDPR for people to consider anyway.

Finally:

Of the top 500 retailers in North America, slightly fewer than half offer shipping to the UK. Those retailers now face the uncertainty of UK’s economy and policies affecting businesses of commerce.

There is no policy uncertainty. Nothing has changed and will not change for some time to come as it relates to the US.

If anything, a smart UK government (which is something of an ask at this point in time) might reasonably amend arrangements to make it easier for US companies to ship to the UK. But that is many years away. As it is, there are numerous goods that are available in the US that will never be sold in the UK, principally those that work on 110v electricity and which cannot be switched to 240v. Product regulation makes some goods unavailable so no change there unless subsequent regulators choose to amend.

And let's not forget that Amazon, often seen as the internet benchmark, doesn't ship the Echo to the UK yet. That is of its own choosing for reasons that are not entirely clear,

I agree with InternetRetailer that there is opportunity for vendors to ramp their digital game and I don't see any real impact (other than currency swings) for digital goods. I can't for example see a $9.99 e-book suddenly becoming a nail biting decision when the impact of buying said book is £0.62p based upon swings in the last week. That may change if GBP takes another nose dive but you can't build business decisions based upon what may never happen.

The best one can do is extrapolate based upon what we see in front of us. If anything, I would expect retailers to double down on predictive sales modeling technology such that they can gain a better insight into what the future could hod and plan accordingly.

In short, US retailers may well have pause for thought, but any warnings about supplying to the UK outwith changes in demand arising from market conditions, is playing into FUD of a kind that is unwarranted and un-necessary.