ECommerce is the umbrella definition of all transactions made electronically, through the means of the internet. It will account for over $4 trillion of global sales by 2020! That being said, how will Brexit affect both Britons and large Trans-National Corporations (TNCs) like Amazon (which accounts for over 40{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} of the United States’ ecommerce sales, the world’s biggest consumer market) in this industry?

To understand how Brexit could negatively affect ECommerce both nationally and internationally, one must first understand what the European Union (EU) does to aid the industry. The EU pushes a ‘Digital Single Market’ policy across its sphere of influence. This is the body emanating the ‘European Single Market’ in electronic form. As such, it is a policy with aims to create a “borderless” internet – and thus far it has been successful! The EU’s ECommerce economy is projected to reach $685 billion in value by the end of 2017, according to a report by KashmirWatch. This sum contributes to the body’s members and the United Kingdom (UK) now being the second greatest global economy. This growth is largely attributed to the increase of spending in this sector by Central European and Eastern European countries – some have increased ECommerce sales of over 25{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} in the past year! It also can be ascribed to younger generations changing their spending habits in tune with ECommerce.

The above notwithstanding, there are plain issues the EU is facing in its implementation of this policy. The archetypical complaints revolve around delivery speed (17{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} of all complaints), technical issues (13{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} of all complaints) and damaged goods (9{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} of all complaints), according to Business Insider. Some may argue that these matters are manageable or even solvable; Brexit may not be so straightforward.

The UK accounted for 33{a990e605127f06bac58d8f530ec8d3ddc1721ced564bd12be3752b381e1e9f7f} of EU ECommerce sales in 2016. However, this statistic may be under threat. A “soft – Brexit” would lead to the UK’s joining of the European Free Trade Agreement (EFTA), allowing the Single Market to continue operating in this area. This would place it alongside Iceland, Switzerland, Lichtenstein and Norway. However, the EU has stated the UK will only be permitted to join this if it also complies with the ‘Free Movement of Persons’, a term the majority of British politicians are not willing to accept (see tenet five in the hyperlink). This would indicate that the divorce between the two unions would occur as a “hard – Brexit”, meaning new agreements negotiated with each European nation, most likely leading to tariffs and surcharges on shipments: a hostile environment for ECommerce.

The tariffs and surcharges, compiled with the additional bureaucracy, would make ECommerce more costly to the business, costs that would undoubtedly be passed on to the consumer. This may lead to a downturn in sales in the industry from within the EU and the rest of the UK, dampening ECommerce sales in the region, bleakly impacting its value while also hurting companies like Argos. Therefore, a good future for European ECommerce is dependent on both unions negotiating fairly and amicably.

By Ruairi Coyne, Year 10 Work Experience

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