Cross-Border E-Commerce UK: Everything you need to know at a glance

The UK is no longer part of the EU's domestic market and customs union since 2021 . This means that online retailers who ship goods to the UK are faced with new regulations and challenges. These include, above all, a higher bureaucratic burden, additional regulations, additional financial burdens and increased stress in processing.

Many European online retailers have decided to withdraw from the UK market in order to avoid these supposed additional costs. However, according to the Federal Statistical Office, the UK still ranks 8th as an export country for Germany. Conversely, according to Landmark Global, Germany is also one of the top three countries (together with the USA and China) for cross-border purchases among British.

Interest in cross-border shopping has even increased among British as a result of the Brexit. The reason for this is the higher prices for domestic products: A survey by Global-e found that around 48% of all British people shop online for products outside the British market because prices are significantly cheaper there. 

This means that even if Brexit initially created additional hurdles, the purchasing power of the British remains high. Overall, more than 80 percent of Britons online, and the trend is rising. At the same time 74 percent of Britons clothing, shoes or accessories online - a real advantage for German online retailers, as the fashion industry is one of the highest-selling product groups in German e-commerce.

Brexit even creates new opportunities for innovative strategies and enables retailers to take advantage of British buying habits and successfully operate cross-border sales.

What needs to be considered for cross-border e-commerce to the UK?

Cross-border e-commerce to the UK offers many opportunities, but needs good preparation to meet the requirements. As an online retailer based in the EU, there are currently some important points to keep in mind.

The trade agreement

On December 24, 2020, the UK and the European Union reached an agreement on trade and cooperation. The Trade and Cooperation Agreement(TCA) was applied provisionally from 1st of January 2021 and has been officially in force since 1st of May 2021. The agreement regulates how preferential goods are traded between the EU and the UK. It enables duty-free trade for goods, regulates trade in services, promotes cooperation in various areas and ensures comparable standards in labor rights, environmental protection and consumer protection. In summary, the agreement creates a legal framework for trade relations in the post-Brexit era.

Almost three years after Brexit, the trade agreement is still valid. However, some adjustments have been made and individual provisions have been extended or will only come into force this year. From October 31, 2024 for example, the obligation to submit safety and security declarations will be introduced.

For online retailers selling food to the UK, the import conditions will also change in 2024. Animal products and plant products will then be divided into three risk classes: low, medium and high. The import requirements will vary depending on the class, for example, the requirements will increase for medium-risk animal products and decrease for low-risk plant products.

The UK now has trade agreements with over 60 countries. Key points are still being adjusted and deadlines have been postponed until the end of 2024.

Online retailers can find out about the latest changes on the UK government's official website to stay up to date.

Shipping to Great Britain: Customs

Since 1st of January 2021, online retailers have to comply with a number of customs steps when shipping goods to the UK. Firstly, registration with the customs authorities is required. Goods that cross the UK's borders must be cleared through customs. This means

• Apply for an EORI number for electronic exchange.
• Use certified software and register in the ATLAS system
• Submit a customs declaration containing details such as the commodity code, goods description, customs value and the consignee's EORI number.

According to the Trade and Cooperation Agreement (TCA) between the UK and the EU, no customs duties or quotas apply for products originating from the EU.

You can read all the other details you need to consider when selling to the UK in terms of customs in our blog post on Brexit and customs.

Value added tax

There are also new rules for online retailers in terms of VAT. The key factor here is the sales channel, in particular whether you sell via your own online store or a marketplace such as Amazon or eBay, as well as the total value of the delivery of goods to the UK.

As a general rule, deliveries with a goods value of up to 135 pounds are not subject to import VAT in the UK, but are subject to VAT. In the B2C sector, there are two main cases in the e-commerce world that you should bear in mind:

1. value of goods up to 135 pounds via own online stores

Direct deliveries from the EU to the UK via your own web store are exempt from customs duties and import VAT. VAT is incurred in the UK at the point of sale. It is necessary to register for tax in the UK and declare VAT on a quarterly basis.

2. value of goods over 135 pounds via own online stores

In this case, in addition to import VAT in the UK, VAT is also incurred at the point of sale. In this case, the retailer must also be registered for VAT in the UK.

Note on the VAT rates in Great Britain since 01.01.2021:

• Standard VAT rate: 20 %
• Reduced VAT rate: 5%
• Zero rate: 0 %

Delivery costs and delivery times

Delivery times for cross-border e-commerce to the UK are a key factor in customer experience and an important factor to consider as an online retailer. A Global e-survey shows that 49% of British people would shop with online retailers again if expectations regarding delivery times were fulfilled. Deliveries outside Germany tend to take between seven and ten working days. Outside the EU, delivery windows can be even longer, as they are influenced not only by distance, but also by customs clearance and other logistical processes. 

Longer waiting times and high delivery costs lead to customers canceling their orders: Around 59 percent of UK cross-border shoppers listed expensive delivery costs as a reason for shopping cart abandonment according to Global-e. 43 % named long delivery times as a reason.

It is therefore important for successful cross-border e-commerce that retailers offer transparent delivery costs and short delivery times. With exporto, international shipping takes just two to three working days from pick-up, so your customers won't realize they're shopping online outside their own country. Through efficient logistics and working with reliable partners like exporto, you can ensure that your products arrive in the UK on time and in the best condition.

Clear communication

In addition to all the rules and regulations, transparent communication between customers and retailers is the one and all. Clear information about delivery times and costs helps to set realistic expectations and avoid negative surprises.

Studies show that non-transparent fees during the checkout process can lead to almost half of customers abandoning their purchase. By disclosing this information early on, you as an online retailer can build trust, promote customer loyalty and strengthen your reputation.

Returns policy

Don't forget that returns should be just as easy as the on-time delivery of purchased products - regardless of whether consumers shop online within or outside Europe. For example, 16% of UK consumers make a purchase decision based on the simplicity of the returns process (source: Global-e).

The collaboration with local carriers is crucial here. exporto, for example, simplifies the returns process for online retailers shipping to the UK by working closely with the last mile carriers EVRI and Royal Mail. These carriers were already being used for deliveries before Brexit. This means that British customers can simply continue to conveniently hand in their returns to these carriers.

Further information on trading with the UK

If you would like to get an even more detailed overview of the current regulations on trading with the UK, you can find an overview of the most important official sites here:

• Information on the TCA on the website of the Directorate General of Customs
• The Trade and Cooperation Agreement at the Federal Foreign Office
• Information on trading with the United Kingdom as an EU-based company on GOV.UK.
• List of customs tariff numbers for products on tariffnumber.com

Copyright: Olivier Rouge, Unsplash.

Conclusion: easily exploit the full potential of cross-border e-commerce to the UK with exporto

Overall, even if Brexit brings with it more difficult conditions, the purchasing potential of the British should by no means be underestimated. On the contrary: cross-border e-commerce to the UK opens up new sales potential and growth for companies. With exporto as a strong partner, you are ideally equipped to handle cross-border business to the UK quickly and easily.

Efficient logistics, optimized shipping routes and cooperation with trusted last mile carriers make international shipping and return processes considerably easier. The experts at exporto handle the communication with customs authorities, the handling of tax matters and the fast transport of your goods on optimized shipping routes. This allows you to successfully operate e-commerce on the UK market despite the new post-Brexit conditions.

Working with a partner like exporto not only enables online retailers to continue selling their products to the UK smoothly, but also gives them a huge advantage over the competition thanks to the optimally coordinated processes. 

Take advantage of the opportunity today to develop your potential in the UK e-commerce market and establish your online business across borders. Get to know us and our solution with no obligation!

‍FAQ: Cross-Border E-Commerce

What is cross-border e-commerce?

Cross-border e-commerce refers to online trade in which goods and products are sold and purchased across national borders. This includes the sale of products from one country to consumers in another country. "Cross-border" literally means "across the border" and in e-commerce refers to transactions taking place between different countries, for example between Germany and the UK, Switzerland or Norway.

What is cross-border selling?

Cross-border selling refers to the sale of products or services by companies to customers in countries other than the company's home market.