Brexit Vote: Potential eCommerce Market Ramifications

Thursday, June 23, the world watched, buzzing while more than 33 million U.K. citizens submitted their Brexit votes. The result, a 51.9% winning decision to cut ties with the European Union. The result, extreme market uncertainty and instability, and countless geopolitical and fiscal repercussions.

The broader implications thus far have included considerable instability for all of Europe and the Continental bloc, as it's losing a key member with a global military, economic, and diplomatic presence. Those with financial and economic investments in the U.K. grit their teeth, watching as the market fluctuates by the minute.

Roughly 45% of U.K. exports go to countries in the European Union, and 53% of U.K. imports come from the bloc. In terms of eCommerce, the U.K. will be removed from the Digital Single Market, an EU initiative that sets trade standards across member states, simplifying and standardizing cross-border commerce. The ramifications of this will likely include complex reorganization and a reinstated hassle of cross-border trading intricacies, such as taxes, data roaming, geo-blocking, digital borders, and more.

Retailers with fulfillment centers in Europe now face an unprecedented inventory dilemma. To minimize trade obstacles, some may consider splitting inventories, basing fulfillment in both the U.K. and the mainland to streamline service to all European shoppers. On the flip side of the coin, the U.K. will now have the power to negotiate their own trade agreements instead of fitting in with the Digital Single Market.

Will the Brexit decision slow the expansion of eCommerce throughout Europe due to the (now ambiguous) trade barriers? Whether these newly delineated agreements will be beneficial for the country and for shoppers is yet to be seen, and the cross-border eCommerce conversation will continue to reverberate through markets tied with the U.K. around the globe.