BREXIT... and sending parcels to the UK.

Scotty # · 09-10-2020 10:16am #1

I'm amazed that with only two months to go there aren't more active threads on Board's business section or even a sub-forum dedicated to Brexit discussion and it's implications to small traders in ROI shipping to the UK.

Anyway, I have a small business based in Ireland. As part of that business I have a UK ecommerce website that's been running about 10 years. We send between 5 and 15 parcels a day to the UK (currently using DPD) with an avg order value of about £250.

We sell both B2B and B2C. If the purchaser is VAT reg'd in the UK we get their VAT number and apply Intra-community Supply (0%VAT) and submit to Revenue through VIES. For everyone else, we apply Ireland's VAT rate.

We already have an EORI as we have shipped some orders outside the EU in the past.

My brother is Operations Manager in Ireland for a large global freight company and he's taken on 12 extra staff to deal with Brexit. They charge €90 for each customs clearance processed.

So really I'm wondering, do other small exporters to the UK believe it'll still be worth it to keep exporting after 1st January considering the amount of extra paperwork and hoops we'll have to jump through? Do you for see a huge cost increase in shipping to the UK?

Luckily we don't depend on UK sales to keep us afloat but I wouldn't like to lose them either. I just can't see it being worth out while come January. Anyone else in the same boat?

Of course, after 4 years, and with only two months to go, this could all change as there's still no agreement set in place between UK and EU.

tacofries · 09-10-2020 2:07pm

Uk fulfillment centers offer great deals. I get UK postage for £3.55 including courier (Hermes admittedly), picking and labelling. Would it be worth your while sending stock over in bulk?

Scotty # · 09-10-2020 2:42pm

Hmm, good idea but how will these work post Brexi for non UK businesses?

Won't the goods have to clear customs before going to the fulfilment centre? Who is the importer then? and liable for the duty? I'd imagine this could be even more cumbersome than for those of us who ship straight to the importer.

My products are large and many are bespoke so it's not really an option for me anyway.

I wonder what Amazon and other large UK retailers who sell direct into Ireland are going to do? Will it be down to the postman/courier to collect the duty like it currently is for USA/China purchases?

I recently had to pay €9 on a US purchase to the DHL courier. The admin fee to collect the €9 was €14.

tacofries · 09-10-2020 3:44pm

I imagine you would have to get them through customs and pay the duty but at least it would only be for one bulk shipment rather than loads of individual orders?

Amazon was looking for an Irish warehouse early this year so who knows what they'd be up to- I hope to god they never actually follow through with it as retailers will be put under even more of a strain.

Darc19 · 10-10-2020 11:23pm

Scotty # wrote: »

I wonder what Amazon and other large UK retailers who sell direct into Ireland are going to do? Will it be down to the postman/courier to collect the duty like it currently is for USA/China purchases?

I recently had to pay €9 on a US purchase to the DHL courier. The admin fee to collect the €9 was €14.

DHL charged you €14 to do the customs entry paperwork, makes no difference whether it's €9 or €900

Large companies will do preclearance and charge you an inclusive price.

The leaders in this is based in Swords eshopworld - all done automatically.

Scotty # · 11-10-2020 10:29am

I'm familiar with eshopworld, old family friends, but there's still going to be customs charges, duty, and related admin fees no matter who processes the sale. Cost to the consumer will have to go up no matter what. This is going to be disastrous for thousands of small Irish businesses who sell into the UK. And, we'll have the reverse for all those UK retailers selling into Ireland, Screwfix, Sportsdirect, Boohoo, etc, etc...

The only positive I can see is that it may encourage Irish consumers to look for Irish retailers. Currently, for every €4 spent online, €3 is spent outside Ireland. It's a MASSIVE amount of wealth leaving our economy every day.

Darc19 · 11-10-2020 1:49pm

Scotty # wrote: »

I'm familiar with eshopworld, old family friends, but there's still going to be customs charges, duty, and related admin fees no matter who processes the sale. Cost to the consumer will have to go up no matter what. This is going to be disastrous for thousands of small Irish businesses who sell into the UK. And, we'll have the reverse for all those UK retailers selling into Ireland, Screwfix, Sportsdirect, Boohoo, etc, etc...

The only positive I can see is that it may encourage Irish consumers to look for Irish retailers. Currently, for every €4 spent online, €3 is spent outside Ireland. It's a MASSIVE amount of wealth leaving our economy every day.

Get over this bs of thousands of small Irish businesses selling to the uk and dependent on it. It doesn't exist.

A couple of hundred possibly, but I even doubt that.
A family member has an online business and they sell more to Slovakia than the UK. I think the UK is in the bottom 5 of countries she ships to (her online turnover is about €2m)

If people open their eyes, it means that all those uk companies they are competing with suddenly have barriers for both Irish consumers and European consumers. That's a phenomenal positive.

I know my sister is taking extra warehouse space as she expects to be selling a lot more to other eu countries once brexit is finalised.

People have to get over this dreadful irish trait of glass half full.

antoinolachtnai · 12-10-2020 11:29am

The OP is sort of in the bracket where things will be difficult. These sorts of trades would have been very difficult pre-single market. It is good that you have B2B customers. If you had regular customers that are in your 'trade', the least capital-intensive way to do this would be for an existing B2B customer to act on your behalf. They handle the import technicalities for you and then ship on to the actual customers.

You might even be able to find someone who will 'buy' your UK trade off you in one form or the other. Whether this is worth your or their while at this scale is another question. Depends on the margin I suppose.

Obviously the costs of this will either have to be passed on absorbed. And for bespoke items it is going to increase the lead time. But this is the case no matter what way you do it.

There might be some way to easily access the GB market via a northern ireland intermediary. Who knows? That is politically up in the air.

My suggestion would be to talk to as many potential partners as possible.

Whether brexit opens up potential gaps in new markets beyond the UK is an interesting question, but a separate question.

Scotty # · 12-10-2020 8:01pm

Darc19 wrote: »

Get over this bs of thousands of small Irish businesses selling to the uk and dependent on it.

A family member has an online business and they sell more to Slovakia than the UK.

2019 Imports From Ireland
Slovakia - $128M
UK - $17,000M +

The vast majority of Irish companies who ship to consumers abroad do so to the UK. That's what the thread is about.

Scotty # · 12-10-2020 8:10pm

antoinolachtnai wrote: »

You might even be able to find someone who will 'buy' your UK trade off you in one form or the other. Whether this is worth your or their while at this scale is another question. Depends on the margin I suppose.

This is something we've looked at before (pre-brexit) and may be something we look at again but I don't think the margins are there.

GLS sent out some info over the last few days. Here's a screenshot of their new system for UK parcels showing all the info you'll have to submit...

You can opt to assume all charges or let the receiver pay. They don't say what the extra admin charges will be though. Tariff codes are a pain in the ass too as one order might need several codes.

Any price increase or reduction in margins will make the UK unprofitable for me. Thankfully it's only a very small part of the business. Not one I'd like to lose all the same.

Scotty # · 12-10-2020 8:14pm

tacofries wrote: »

Uk fulfillment centers offer great deals. I get UK postage for £3.55 including courier (Hermes admittedly), picking and labelling. Would it be worth your while sending stock over in bulk?

I looked into this a bit more. Whoever you use will have to be 'bonded'. You should check that whoever you're using is.

tacofries · 12-10-2020 8:18pm

Scotty # wrote: »

I looked into this a bit more. Whoever you use will have to be 'bonded'. You should check that whoever you're using is.

Interesting. Are you sure that I need a bonded warehouse as we have a UK vat number?

Darc19 · 12-10-2020 8:20pm

Scotty # wrote: »

2019 Imports From Ireland
Slovakia - $128M
UK - $17,000M +

The vast majority of Irish companies who ship to consumers abroad do so to the UK. That's what the thread is about.

This thread is about a small online business sending parcels to the uk post brexit.

If it was a general brexit business thread, you'd be correct. But there are not a huge number of UK dependent small online retailers here.

tacofries · 12-10-2020 9:26pm

Darc19 wrote: »

This thread is about a small online business sending parcels to the uk post brexit.

If it was a general brexit business thread, you'd be correct. But there are not a huge number of UK dependent small online retailers here.

In fairness I would be very confident in saying that the vast majority of small Irish ecommerce companies sell much more to the UK than they do to Slovakia or most other EU states.

Scotty # · 12-10-2020 10:00pm

tacofries wrote: »

Interesting. Are you sure that I need a bonded warehouse as we have a UK vat number?

No. I suppose it depends on what way you run the business. Are you importing from the EU into your UK based business or are you exporting from the EU just to store it until sale? If your just storing it then as far as I can tell, you'll need to use a bonded warehouse.

I never registered for a UK VAT number although I'd be well over the threshold but it's never been questioned. If my customer is not VAT registered I charge them VAT as normal and if they are VAT registered they can enter their VAT number during checkout and I'll submit it to VIES.

Darc19 · 12-10-2020 10:57pm

tacofries wrote: »

In fairness I would be very confident in saying that the vast majority of small Irish ecommerce companies sell much more to the UK than they do to Slovakia or most other EU states.

That would be true, but the poster said that it would be "disastrous" for "thousands" of small Irish businesses.

That is a wild exaggeration and nothing from any source gives any credibility to this statement.

tacofries · 12-10-2020 11:10pm

Scotty # wrote: »

No. I suppose it depends on what way you run the business. Are you importing from the EU into your UK based business or are you exporting from the EU just to store it until sale? If your just storing it then as far as I can tell, you'll need to use a bonded warehouse.

I never registered for a UK VAT number although I'd be well over the threshold but it's never been questioned. If my customer is not VAT registered I charge them VAT as normal and if they are VAT registered they can enter their VAT number during checkout and I'll submit it to VIES.

Is it not mandatory to register for vat once you're over the threshold!? I'd be careful and double check.

3% difference in vat between the 2 countries so if your doing a good volume it could beworth your while especially if your using Facebook ads to drive sales.

Scotty # · 13-10-2020 12:37am

Darc19 wrote: »

That is a wild exaggeration and nothing from any source gives any credibility to this statement.

From the Central Statistics Office, 2017 (LINK)

There were 6,719 enterprises who exported goods to the UK in 2017, 78% of the total number of exporters. 3,214 enterprises, almost half of the enterprises who exported to the UK, traded with the UK only.

Approximately 50% of the total value of exports to the UK in 2017 was from SMEs, with a value of €8.1 billion. Large enterprises exported €7.6 billion of goods to the UK.

SMEs make up the large majority of the number of enterprises exporting to the UK, at 97% of the total number of UK exporters. Micro enterprises alone make up over half the number of firms exporting to the UK.

Exports to the UK in 2017 were €16 billion in total.

Exports-to-the-UK-by-size-of-Enterprise-CSO-Central-Statistics-Office-2020-10-13-00-14-50.png

Exports-to-the-UK-by-size-of-Enterprise-CSO-Central-Statistics-Office-2020-10-13-00-14-50.png

No wild exaggeration. Almost 6,000 small and micro businesses export to the UK.

Scotty # · 13-10-2020 9:27am

tacofries wrote: »

Is it not mandatory to register for vat once you're over the threshold!? I'd be careful and double check.

3% difference in vat between the 2 countries so if your doing a good volume it could beworth your while especially if your using Facebook ads to drive sales.

Mandatory is a strong word. I'm supposed to but I'm not sure if I'm legally obliged to. The threshold is £85,000 and I'd be well over. I'd rather charge the VAT in Ireland and give it to Irish Revenue. I've been submitting VIES figures to Revenue here for 10 years and they've never mentioned it. I'd imagine most Irish companies selling direct to the end user in the UK are not VAT registered there.

Regardless, that will all change on the 1st January and we'll have no choice but to allow UK Revenue to collect it.

Scotty # · 13-10-2020 9:57am

FYI, for anyone looking up Tariff Codes, I've tried several sites but by far the easiest to use is the UK Gov's own site... https://www.check-future-uk-trade-tariffs.service.gov.uk/

Thankfully most of my products are 0%.

FutureGuy · 02-11-2020 2:45pm

Scotty # wrote: »

FYI, for anyone looking up Tariff Codes, I've tried several sites but by far the easiest to use is the UK Gov's own site... https://www.check-future-uk-trade-tariffs.service.gov.uk/

Thankfully most of my products are 0%.

That is hugely useful!

Darc19 · 02-11-2020 4:18pm

Scotty # wrote: »

From the Central Statistics Office, 2017 (LINK)
There were 6,719 enterprises who exported goods to the UK in 2017, 78% of the total number of exporters. 3,214 enterprises, almost half of the enterprises who exported to the UK, traded with the UK only.

Approximately 50% of the total value of exports to the UK in 2017 was from SMEs, with a value of €8.1 billion. Large enterprises exported €7.6 billion of goods to the UK.

SMEs make up the large majority of the number of enterprises exporting to the UK, at 97% of the total number of UK exporters. Micro enterprises alone make up over half the number of firms exporting to the UK.

Exports to the UK in 2017 were €16 billion in total.

No wild exaggeration. Almost 6,000 small and micro businesses export to the UK.

The poster said it would be disastrous for "thousands of small Irish businesses"

It won't be.

Most of them will be well able to cope and fill in customs forms.

You are jumping between "small online sellers" (very few would depend on the uk) and general sme's (companies with up to 250 employees and turnover of up to €50m)

And for the vast majority of of these, brexit will not be disastrous as the information and support available is substantial.

Scotty # · 02-11-2020 5:28pm

Darc19 wrote: »

...

Have you any useful information to share regarding the implications Brexit is going the to have on small Irish businesses (c.3800 of them) who sell into the UK? Any at all?

antoinolachtnai · 02-11-2020 6:12pm

Scotty # wrote: »

Have you any useful information to share regarding the implications Brexit is going the to have on small Irish businesses (c.3800 of them) who sell into the UK? Any at all?

How are you getting on with it in your own experience?

Scotty # · 03-11-2020 6:07pm

antoinolachtnai wrote: »

How are you getting on with it in your own experience?

I intend to cease trading in the UK in mid December unless a deal is struck between now and then.

We operate on smaller margins in the UK and any increase in the cost of doing business will make it not worth while. I expect parcel deliveries to increase by at least €15-€20 with admin fees for clearance.

You also have the added time and expense with filling out customs declarations (BTW: Even if you're final destination is not the UK, Slovakia for example, if your parcel travels via the UK (as almost all euro parcels from Ireland currently do) you will have to provide customs declarations).

Then there's the fact that UK consumers will be less likely to purchase from outside the UK knowing they're going to get a VAT/customs bill on delivery. If they wish to return an item they will have to chase UK Revenue themselves to get the VAT/excise back.

All in all it's just not worth the trouble for me. The UK only makes up a very small part of our business. If I lose it I won't have to let anyone go. But if I want to keep going I'd likely have to take someone on to look after it.

I may look at setting up a UK company in a few months when we have a better idea of what's going on and things have become more streamlined. As it stands, you can register for VAT in the UK as long as at least one company director lives in the EU. I don't know how this will work after Brexit. Will you still be able to register for VAT in the UK without having any entity there? I don't know?

Scotty # · 05-11-2020 5:10pm

Interesting update from DPD today...

They WILL NOT be delivering orders of less than GB£135 B2C unless you are VAT registered in the UK and have already collected the VAT at POS. They will deliver goods <£135 B2B as long as you have your customers VAT No.

I wonder will this be the same UK → Eire?

You can register for VAT in the UK here > https://www.gov.uk/government/publications/vat-application-for-registration-distance-selling-vat1a

They've also already opened direct lines to the EU so you'll bypass the UK and won't need to complete customs clearance.

JMR · 06-11-2020 5:31pm

I run a sideline ecommerce business, selling 95% to Ireland and the UK.
We currently use both an Irish based fulfillment house and a UK based one, this was primarily put in place to guarantee next day delivery, which is highly important for our product range.
I had been thinking of pulling it all back to Ireland as the Irish fulfillment house can now achieve next day delivery to the UK, this would simplify the business greatly.
I have trialled it and it works, I am only slow to make it permanent due to the uncertainty around Brexit. Thoughts?

The real question I have is around opening up EU markets to counter the loss of UK trade.
How have others done it? We have both a .ie and .co.uk website as I viewed this as important for each target market at time of setup.
Have others found ways of growing sales to other EU countries - language barriers etc?

Scotty # · 07-11-2020 10:27am

JMR wrote: »

Have others found ways of growing sales to other EU countries - language barriers etc?

You seem to have a fairly small range of products and products that are packaged small physically so Amazon might be a good option for you. Fees are 15% per item though plus a monthly sub.

https://services.amazon.co.uk/services/sell-online/how-it-works.html

andrewfaulk · 16-11-2020 4:46pm

JMR wrote: »

I run a sideline ecommerce business, selling 95% to Ireland and the UK.
We currently use both an Irish based fulfillment house and a UK based one, this was primarily put in place to guarantee next day delivery, which is highly important for our product range.
I had been thinking of pulling it all back to Ireland as the Irish fulfillment house can now achieve next day delivery to the UK, this would simplify the business greatly.
I have trialled it and it works, I am only slow to make it permanent due to the uncertainty around Brexit. Thoughts?

The real question I have is around opening up EU markets to counter the loss of UK trade.
How have others done it? We have both a .ie and .co.uk website as I viewed this as important for each target market at time of setup.
Have others found ways of growing sales to other EU countries - language barriers etc?

The real question I would have is if you Irish based fulfillment partner can give the next day service into the UK AFTER Brexit.. It may be possible now, but after will be a whole different ball game

tacofries · 17-11-2020 1:46am

JMR wrote: »

The real question I have is around opening up EU markets to counter the loss of UK trade.
How have others done it? We have both a .ie and .co.uk website as I viewed this as important for each target market at time of setup.
Have others found ways of growing sales to other EU countries - language barriers etc?

Regarding pulling back fulfillment to Ireland, I would keep your UK fulfillment company on board till late January at the earliest. Around then, I would do a trial for a few days where all UK orders are shipped from Ireland. This should be easy to set up on your website. If the Irish company works then continue to use them although I would still hold a small amount of stock in the UK for a while incase things go down hill. If the trial doesn't work then just revert your website to the old shipping settings and continue using your UK fulfilment company.

Language isn't too much of a barrier when selling to other EU countries but I imagine this is dependent on the product that you are selling. We get our marketing material translated on Fiverr.com and our website was translated by Star Translations (marketing material doesnt need to be 100% perfect unless you have the money and time to invest in getting it done professionally however your website should be perfect even to a native speaker). We actually got foreign voiceovers made on Fiverr.com also which we used on our videos which were originally in English.

When a customer email comes in, Gmail will automatically translate it for you and we found that foreign customers do not mind whatsoever when you reply in English. None of my staff speak a language other than English yet without issue we are dealing with foreign customers daily.

The hard part is finding companies that can consistently deliver internationally within a few days at a reasonable cost. We ended up using a fulfilment centre in Germany as it reduced delivery costs by 15% and allows us to offer next day delivery.

If you want to test a new market, I would advise using An Post Express for the delivery. Its not the best but its reasonable value and it gives you a cheap and quick way of understanding if the foreign market has an appetite for your product. If the market shows strong potential then ship stock in bulk to a fulfilment centre in the given country. It will reduce you customer service requirements 10 fold as you won't be dealing with endless customer complaints about where their parcel is.

Also just to note, Amazon can be pretty good in foreign countries. Their FBA fulfillment costs are cheap. If you are selling on your own website you will probably need to use PayPal, or at least try it out for a while, as it seems to be more popular then it is in Ireland.

JMR · 17-12-2020 9:28am

As an update to this, our Irish fulfillment partner has confirmed last week that the carrier currently used for next day to the UK has decided to exit the Irish market altogether.

For us, that leaves An Post, GLS and DHL for tracked to the UK with both An Post and GLS feeding into the Parcelforce (Royal Mail) network, which is less than reliable.

DHL prices quoted are €12.25 standard road (up to 6 working days!) and €22.11 next day, with further levies expected to be added to these prices.

All our products are < 1kg.

We will be retaining our fulfillment partner in the UK. What are others doing to combat the increased delivery charges?

BREXIT... and sending parcels to the UK.

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