Brexit for WooCommerce sellers

The impact of Brexit is huge. There are very many implications for those in e-commerce businesses, we can’t cover everything here: this article will focus specifically on the things that UK WooCommerce stores that sell internationally might want to do.

This post is written in collaboration with Irwin Mitchell (a leading nationwide UK law firm). You can find detailed Brexit guidance and information on their website here.

Don’t lose your domain names

If you have a .eu domain name you’ll need to register it at an address within Europe or you’ll lose the rights to it. For individual country TLDs (Top Level Domains) e.g. .it or .es each country has their own rules you’ll need to check.

Action: audit the domain names your business uses (both for front end websites and for any back end or business services like email) and ensure you are compliant with the local regulations of the TLD provider.

Added bonus: create a process around domain name and DNS management to ensure you don’t forget to renew a domain name, leave a registrar account with weak security or overlook implementing DNS-level spam protection.

Don’t lose your intellectual property protection

There are different types of IP rights, the main four being:

• patents;
• trade marks;
• designs;
• copyright and associated rights.

After Brexit, if you have a registered right that’s protected in the EU, you can’t enforce it in the UK and vice-versa. Usually IP rights are territorial in that they only give protection in the countries where they are granted or registered. If you’re worried about your IP and want to look into protecting it, speaking to a lawyer is a good place to start.

Stay compliant with GDPR and UK data protection laws

At the moment if you’re looking at transferring personal information to a non-EU country you have to either be transferring data to a country with an adequacy decision in place or use a document called the Standard Contractual Clauses (SCCs). If a country has an adequacy decision, that means that the EU commission has made a formal decision that their national legislation offers sufficient protections in line with the EU’s expectations around security. Notably, the US does not have an adequacy decision, namely due to the concerns surrounding the reach of their security agencies. The EU has proposed to issue the UK with adequacy decisions, but at the moment these are only in draft form and nothing has been finalised yet. 

If you’re not transferring data to or from a country on the EU’s list, then you need to rely on the SCCs. The SCCs are drafted by the EU and are a prescribed wording that cannot be amended. The EU has just published updated draft SCCs and has suggested that following a period of feedback from lawyers and practitioners that the new SCCs will be adopted some time this spring or summer. 

The issue that UK businesses face is that nothing has been finalised as the adequacy decision is only in draft form. If it falls through, then businesses will likely need to examine and quickly adopt the new SCCs to stay compliant.

Alternatively, this could mean processing EU data within EU hosting and ensuring that any sub-processors you use comply with GDPR.

This plan might be to move your whole site to EU-based data centres, move some of your sites or you may need to create a separate site to deal with EU custom. Here at Angry Creative we are experienced with several WordPress architectures to support all ecommerce internationalisation strategies.

If you run an online marketplace (also search engine or cloud computing service) above a certain threshold you’re also now subject to NIS and will need to follow the guidance here including appointing an EU representative.

Action: Review your current GDPR policies and create a basic contingency plan for if the worst case happens and you need to start processing personal data within the EU (or in another GDPR-compliant manner).

Stay compliant with other laws (EU, individual countries within the EU and other countries outside of the EU)

The process and guidance for exporting to the EU have changed significantly and anyone exporting goods will need to read, understand and follow this guidance to ensure minimum disruption to exports.

One big change is that the eCommerce Directive no longer applies to the UK. This means that UK-based e-commerce companies that sell products or services to the EU will need to check their legal requirements individually in any EEA country. Whilst it’s quite possible that companies will already be compliant, there are two important considerations:

1. Firstly, it is now each company’s individual responsibility to ensure compliance with legislation in each country they sell to
2. Secondly, as legislation is liable to change, ecommerce companies in the UK will need some process in place to ensure that they stay aware of any changes and respond accordingly

In addition to the rules which apply to trade with the EU, UK businesses now have to deal with the individual trade agreements in place with all other countries separately (rather than as a part of the EU). A full list of existing UK post-Brexit trade agreements is available here.

Of course, these agreements and the rules within them are also likely to drift over time, with the onus to stay aware and compliant falling on individual businesses.

Actions: Review the new guidance and legislation. Take professional legal advice and implement any changes needed to maintain compliance. Put in place a process to ensure you stay compliant as legislation drifts over time. Figure out a strategy to stay compliant with your non-EU international customer locations and implement any changes necessary.

Pay the right taxes, duties and charges (at the right time)

The changes to VAT (and from 1st July 2021, the switch to the One Stop Shop system) means that your EU customers may well have to start paying VAT on top of your prices when they never have before. This is unlikely to be popular. UK sellers, therefore, have three options when dealing with this:

1. Fulfill EU orders from an EU warehouse – your own if you have one but if not a 3rd Party Logistics (3PL) provider facility. You can then register for VAT in that country and charge VAT on any sales in that country but you can make use of the EU distance selling regulations to effectively charge 0% VAT on sales to other EU countries.
2. UK shipping / Delivered Duty Paid (DDP) – you ship and take responsibility for all taxes, duties and charges so that your customer only pays the price they pay on your website. This is a non-trivial undertaking as it means that you take responsibility to collect, report and remit all taxes, duties and charges relevant to that specific product for that specific customer. For most SMEs, this is an undertaking that is too complex and time-consuming to take on directly and is better handled by a partner. 
3. UK shipping / Delivered at Place (DAP) – you ship but the customer is responsible for all taxes, duties and charges so will often end up paying more and may suffer delayed delivery. In our experience, however clearly and often you warn customers about anything like this, you’ll still get a significant number who don’t read or understand that message and will be unhappy leading to complaints and a higher customer service load.

There are multiple implications for any of these routes – too much to go into in this article. But things to be aware of include customer messaging, tax and duty calculations, shipping and returns policies and integrating all of this into a good user experience. We recommend checking out AvaTax for WooCommerce as a potential solution.

Don’t forget about the impact of returns either – with rates running up to nearly 20% in some industries, you definitely don’t want to end up with the liability of refunding DAP charges incurred by your customers!

Actions: Select and execute an option for managing taxes, duties and charges. Make changes to your store to communicate to your customers and team and then implement your solution. Check your shipping and returns policies. 

Review your fulfillment options

Somewhat related to (3) above is to ensure that your overall fulfilment process is optimised for both internal UK customers and external trade including those in the EU. If you’re currently undertaking all tax and logistics internally, this is probably a good time to look at partnering with 3PL providers who can untangle the mess of taxes, duties, customs agents, documentation and labelling requirements, returns implications and of course the actual business of getting your goods into your customers’ hands (with tracking, insurance, reporting and all the rest of it).

If you do decide to continue with internal fulfilment, there are a few specifics to dig into:

1. You can find out if you can make use of Union and common transit through the Transports Internationaux Routiers (TIR) system to simplify process and postpone duty payments
2. You’ll need an EORI
3. You’ll need to check the rules and licenses that apply to your goods and their labelling
4. You may end up appointing an agent to handle customs to keep on top of everything, it’s worth starting to research these now so you’re not pressured later on
5. There’s lots more documentation you’ll need to produce and include
6. Be aware of potential delays to shipping caused either by your own mistakes with the vast amount of new information and documentation required, or the knock-on effect of general friction 

Actions: Review what’s on offer from 3PL providers (ShipStation, ShipBob, etc) and compare to your current processes, costs and customer experiences. If you decide to partner, there will be some integration with your website (WooCommerce offers plenty of plugins to help here) or CRM and you’ll need to review and update your policies and provide internal training.

Review your own supply chain

All of the Brexit implications in this post also apply in reverse to anyone looking to import goods (and services) into the UK (more here). If you need to import directly, you’ll need to work with your supply chain to ensure you both stay compliant and are working around any obstacles such as fulfillment times and taxes. For example, if you’re importing chemicals you’ll need to register on the REACH scheme.

If you don’t import directly but still have non-UK supply chain partners, it’d be prudent to plan for impacts to price and availability at least in the short- to medium-term as the new status quo settles down.

Actions: review your upstream supply chain for risks and mitigate those. Factor in tax and duties charges and refunds into your cashflow forecasting.

Review your pricing

Firstly: Forex implications. If the pound fluctuates or slides, how can you mitigate the business impact? Some ideas include:

1. Review your supplier costs to ensure you have as much wiggle room as possible
2. Review your pricing and maybe include a currency conversion margin
3. Investigate working with foreign currency brokers to give yourself fixed conversion rates
4. Consider allowing customers to pay in their own currency (especially if you also have costs in that currency that you can pay through a foreign currency bank account and thus help cover any Forex fluctuation)

Secondly, customer pricing impacts. If you’re unable or unwilling to prevent taxes and duties from being passed onto your customers, consider how could you help soften the blow of that extra cost? One idea is that by using geo-targeting, you could offer your non-UK customers a unique discount code – either permanently or until you have implemented a 3PL/DDP solution.

Actions: Review your pricing strategy and create contingency plans.

A few final thoughts

• Customer service! Throughout all this, don’t forget to communicate with your customers! Whilst many will likely be unhappy about any cost increases or shipping delays, you may be surprised about how loyal many of your customers and how understanding and sympathetic they will be. Customer experience is vital. If you’re not sure which routes are right for you with some of these changes, doing some customer research could help you decide.
  
• Train your team! Your role may require you to be across all of these implications and changes and to be making some tough decisions, but don’t forget the impact to everyone on your team too. There will likely be an increase in customer service volume with many new questions to answer. Especially with the lockdown and homeschooling in the UK, your team may need extra support to ensure that they can be successful in their roles and help support your business success.
  
• Consider other markets. If Brexit makes it less attractive for you to do business in the EU, look further afield. The same applies to any supply chain impact too.
  
• Review and test your customer experience. Many of these changes will have a significant impact on your customers’ experience – whether that’s the website experience, the price they pay, how long shipping takes or even just the packaging and labeling they receive their goods in. As with any changes, it’s important to test that everything is working as expected. This can take the form of good website Quality Assurance, using friends and family (or very loyal customers) to personally test out the new overall experience and also keeping an eye on your key metrics (conversion rates, sales volumes and customer NPS) as you introduce these changes.

In conclusion, whilst many of us here in the UK are appalled over Brexit, it is now a fact of life. Certainly there are signs that Brexit is simply going to be a bad thing for UK businesses. However any change creates opportunities too and there are definitely businesses who are benefiting from the changes to logistics or the forex implications of a weaker pound. Two things will likely prove true over time. Firstly, there will be winners who take a phlegmatic approach to the changing landscape. Secondly, WooCommerce (and Angry Creative) will support whatever changes your business needs to make to survive and thrive through Brexit and beyond.

About Angry Creative

We are a top tier specialist agency globally with WordPress and WooCommerce. Our reputation is built on reliable delivery and partnership, creative thinking, and deep expertise. Top brands across the world trust us to deliver and support business-critical sites for them.

About Irwin Mitchell

Irwin Mitchell is a full service law firm in the United Kingdom, established in Sheffield in 1912. The firm offers legal and wealth management services from its 15 offices, and employs more than 2,500 people. In 2018 the company was ranked 21st largest UK-based law firm in terms of worldwide revenue. You can find their extensive and freely-available Brexit resources here.

Sources:

• https://www.webinterpret.com/uk/blog/brexit-ecommerce-uk-sellers/
• https://www.webinterpret.com/uk/blog/tag/brexit-ecommerce-uk/
• https://www.gov.uk/government/collections/retail-sector-and-the-eu 
• https://www.avalara.com/vatlive/en/vat-knowledge/brexit.html
• https://www.gov.uk/government/publications/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021/changes-to-vat-treatment-of-overseas-goods-sold-to-customers-from-1-january-2021
• https://www.mollie.com/en/brexit-bulletin
• https://www.irwinmitchell.com/news-and-insights/in-focus/brexit/business