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Brexit Impact on Ecommerce

On Thursday, June 23, the UK will vote on a referendum to decide whether it should remain in the EU. If the UK pulls out of the European Union, that could complicate things for online buyers and sellers, domestically and globally.

The EU is a group of 28 countries that work together “to promote economic security, peace and stability.” (The word “Brexit” is an abbreviation of the words “British” and “exit,” used to describe the United Kingdom’s possible exit from the EU.)

One of the advantages to being an EU member is the right to export and import goods freely with other member states. On the other hand, companies from all member countries must conform to certain EU rules such as those around consumer protection, which can be quite strict.

The UK government says the EU is the its biggest trading partner with over 3 million jobs in the UK linked to exports to other European Union countries, who buy 44% of all UK exports.

The single market of the EU is made up of over 500 million customers and represents an economy over five times bigger than the UK’s, and it makes it easier and cheaper for UK companies to sell their products to the other 27 EU countries, according to the government.

Andrew Pearl, Director of Strategy and Insights for EMEA for ecommerce firm Profitero, said it’s difficult to give a point of view with so much still up in the air. The expected trading uncertainty could have some significant short-term price impacts.

Pearl said specifically for the ecommerce industry, Brexit could mean the departure of the largest contributor to the Digital Single Market, set up by the European Commission to standardize online trading terms within the EU.

“British ecommerce may therefore be affected in exactly the same way as wider Industry with British firms having to negotiate new trading terms with EU partners,” he said. “In addition, British ecommerce trade outside of the EU could equally be affected with the risk of UK firms being substituted for EU companies covered under the Digital Single Market.”

Some sellers discussing the issue on the eBay boards did not appear concerned about an immediate impact. For example, one said the UK would likely reach a trade agreement before officially leaving the EU if the Brexit measure is passed.

The seller, using the ID bridget-jones-diary, said, “It’s unlikely to make ANY Difference whatsoever …at least in the short term. A lot will depend on whether a free trade deal can be done….which will almost certainly be done as no one in the EU wants to lose a market comparable to France (3rd largest only 1 million less than France at over 65 million).”

There’s a lot more to the controversial Brexit issue, of course – and the issue of immigration is a major factor for some people. Brexit involves not only politics and principles, but also has personal and practical impacts on people’s lives.

The BBC has a comprehensive guide to Brexit on its site. Here’s what the BBC says about the reasons for wanting the UK to leave the EU:

“They believe Britain is being held back by the EU, which they say imposes too many rules on business and charges billions of pounds a year in membership fees for little in return. They also want Britain to take back full control of its borders and reduce the number of people coming here to live and/or work. One of the main principles of EU membership is “free movement”, which means you don’t need to get a visa to go and live in another EU country. They also object to the idea of “ever closer union” and what they see as moves towards the creation of a “United States of Europe”.”

The BBC said wrote, “the British public are fairly evenly split, according to the latest opinion polls.” And it explained that the minimum period after a vote to leave would be two years.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.