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Strategy Centre

Brexit - Friend or Foe for Ecommerce Companies?

  
02 June 2017
  

Brexit - Friend or Foe for Ecommerce Companies?

The results of the EU referendum are clear. The implications for business are not. Online retailers, like many in the business community, are trying to understand what the decision to leave the EU will mean for their economic future.

One company seeing mixed results for its clients is IRP Systems Integrator, Export Technologies. This Belfast-based company has more than 15 years online trading experience and, via the IRP international ecommerce platform, has transacted more than £1 billion online for UK and Irish retailers, manufacturers and distributors. The company says that the effects are already noticeable, not least because of the depreciation of the pound.

“Overall sales on the IRP platform increased by 40% from June to December 2016, and the weaker pound after the Brexit result played a significant role in the increase,” said Chris McEldowney, VP of Client Operations at Export Technologies.

“This was because our UK-based clients, using IRP technology to sell products online into Europe, instantly became more competitive against international competition, thus increasing share in their respective markets. We were able to use this boost to our advantage by ensuring all client websites and marketing channels had country-specific customised messaging highlighting the cost savings to be had.”

However, he feels this growth won’t continue in the long-term. “This exchange rate boost is short-lived and the negative effects will be seen by clients later in the year when they buy new products from European suppliers. Their margins will become squeezed and future buying power with the suppliers will be reduced due to the weak exchange rate.”

Fears over potential changes to rules and regulations on the transportation of goods through Europe are also very real and something that worries one of Export’s clients — global manufacturer, Penn Elcom.

Penn Elcom CEO Robert Platt, said, “Having our online presence in the UK and selling through Europe means we currently do not pay import duties on products that are transported to Europe, however this may change due to Brexit.

“Going forward, local VAT and import duties may be charged on items and this will vary widely depending on the types of agreement that have been set up with the country. We won’t know what they are until trade agreements have been confirmed.”

However, it is not all bleak as there is still serious money
to be made online for companies who embrace the challenge and
are flexible with their targeting of customers, especially outside Europe.

Mr McEldowney continues, “We specialise in optimising ecommerce sites to make them more attractive for international shoppers. The IRP platform can generate traffic to a website and convert them to customers, as well as handling the languages, currencies and localised markets in a systematic way. This has helped considerably with generating significant sales, as shipping, currency and customs are the main blocks to sale in international markets.”

This has proved particularly effective for Export’s clients who use the IRP platform to sell into international markets. They have seen a significant spike in combined overall sales in 2017 to the Far East, Australia, Saudi Arabia, the USA and Nordic countries.

Using February 2017 as an example and comparing figures year-on-year, one client selling jewellery saw sales to Macau increase by 1900%, by 900% to Hong Kong and 340% to Saudi Arabia.

Nordic countries also saw an increase in year-on-year activity, with another client seeing 1000% increase in sales of its pet grooming products to Sweden and an increase of 960% in product sales to Switzerland.

Canada also performed well with one client selling electrical equipment seeing an increase of 3500%, while sales of fishing equipment increased by 460% to the USA for another County Fermanagh based client.

Mr McEldowney said, “There is still an enormous opportunity for online retailers who adopt a global approach to ecommerce. With the right technology and strategy in place, it is possible to sell anywhere — Brexit will not change this. We can’t predict the future, but if Q1 is anything to go by, the next few months will be pretty significant for our clients in terms of sales and global reach.”

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