The challenges of trading into Europe from the UK

Infinity Nation Podcast transcript – Bobbie

At Infinity Nation and beyond we look at the status of your digital landscape.

And how it effects the growth and profitability of your business. On the show we will be talking to business partners in the e-commerce world of our own specialist team to give you actionable insights 

and find solutions to help you on your growth journey today. We will consider new ideas stretch our mindsets beyond the status quo and in the process discover how to get an edge on the competition and drive some great results.

AL:

Hi welcome to the latest Infinity Nation podcast

With me we have Bobbie group marketing director from GFS and we are going to discuss the complexity of selling into Europe and how that’s affected UK e-commerce and we will give you ways to overcome these challenges and reboot your sales into Europe. Hi Bobbie, how are you?

Bobbie: 

Hi Al, I’m great, that was a really good introduction. I noticed you didn’t use my surname right because you’re scared about pronouncing it. I knew it, I knew it! Hi everyone, lets hopefully, everyone will get something out of the session.

AL:

I’m sure they will, So I think one of the main things we’ve

we’ve been discussing in our recent interactions is the impact of Brexit and the change in the VAT rules in terms of UK businesses selling into Europe, so love to hear from from your side as you’re a bit more of a coalface than we are and what impacts you’ve been seeing.

Bobbie:

Shockwaves through businesses as when suddenly on the 1st of January the boarders went, lets say. Which meant we suddenly went from having 

the luxury of borderless trade with Europe, we could import, export send parcels to Europe without customs, then suddenly on the 1^st of 

January the boarders went up. So, businesses needed to be ready for being able to trade under completely new circumstances with Europe which meant that you know when you get to the border ,are your parcels are missed context. So, for example if you are sending a parcel to France, the custom officials need to have the proper paperwork there, that shows them what the goods are, what the harmonisation codes offer each of those products that you’ve sold what the value is all this mandatory information that’s required with every parcel in order to get it through the boarder.

It’s no surprise in you know I think it was reported that 4 7 % of UK businesses but stopped trading or drastically reduced their trading with the EU.

Because of this and we saw some, obviously it’s got better, GFS we we are the largest provider of multicarrier parcel services in the UK and

International so we saw lots at that time. It was reported in the news, we saw backlogs of parcels at shipping ports and boarders, 

where the documentation wasn’t correct so parcels were being sent

back to where they came from and of course you know that meant a lot of disappointed and unhappy customers are waiting for their

Goods to arrive so, to say was major, will be to be playing it down a bit but it did cause mayhem.

AL: 

I don’t think it really helped with the decision being taken while almost as late as Christmas Eve the government on ratified it just left yeah no time at all for anyone to really talk about leaving it to the 11th 11th and a half hour ever it really was.

SO you’re suddenly breaking up for Christmas then coming back to a new a new world in the new year of complete change with 10 days to try and plan for it.

A Lot Of encouragement to try and plan way in advance but what the actual is where we never really firmed up.

Bobbie:

Yeah a lot of weeks we saw a lot of businesses because there was this ,so much confusion over what steps needed to be taken, not just the delay in getting the information but the information that was coming through  wasn’t really clear at all. Because were we going to get a deal or not. so there was a lot confusion, what we were trying to do for our customers was plan for of plan for the worst case scenario which is we don’t have a deal and we will have to trade with EU with boarders, which meant set up,

get yourself set up for trading under is the new world.

Yeah yeah so it was and that meant making sure that you know we had all their stock and infantry all had harmonisation codes so that that information was available to go onto the customs documentation, so 

comply with that but yeah a lot of business.

Weren’t quite ready and even those that were from day one there was still a lot of teething problems, so if you were shipping into gGermany it was a nightmare because the Germans would do everything by the book, if you were shipping somewhere else it wouldn’t be so difficult.

AL:

Interesting you mention Germany, we had some customers shipping there and

if you went via the road it was definitely tricky but there were one or two careers that flew stuff so you missed all the queues in the port that definitely was our preferred route in. More costly yes.

Bobbie: 

Yes there were carriers that would take your goods in and be the importer of record or whatever. For those businesses that weren’t ready there’s always a solution. But when you’re operating on tight margins it’s costly, so it’s not a long-term solution.

AL:

And cultural from the data we’ve seen the Germans are happier to return order extra in return so then the reverse of that stuff coming back was equally a nightmare.

Yeah.

I think going back to your point though, that made alot Of people reticent and selling into EU, priced itself out of affordability.

That’s the reason why we are here today discussing how a lot of people have pulled out of that market, pulled out just because of a hassle factor.

Bobbie:

That’s it, I think it wasn’t just the cost, the pain of doing it and then you have boarders and custom documentation to get your returns but the worst thing was, no sooner were businesses trying to get their head around what they need to do differently to reboot selling into the EU

and then on the 1st of July was hit with the VAT reforms, that was not part of Brexit but rolled over with something that is happening globally on the 1st of July went live across Europe which meant that on top of everything we have to deal with it now meant there anything that was sold in the UK was subject to VAT where is before there was a minimum threshold of 22 euros that that was abolished on the 1st of July which meant that literally everything over VAT was abolished. So if you are selling to France you have to declare VAT in Germany you have to collect VAT at the German level and then also do your Vat return in Germany as well. Add that on top of everything else and if your Ecom business selling through multiple countries of Europe huge, that didn’t apply to businesses that are selling on marketplace, they get a slightly different  situation in that the market places. That most retailers  are responsible for the VAT side. But even so, most places are selling multichannel,

website direct from there and websites market places so which ever way you look at it selling to the EU has become extremely complicated and potentially costly.

AL:

Being at the coalface how do you think UK businesses of coped with this plethora of change the date, which has been thrown at them?

Bobbie:

I think it came to Brexit dealing with boarders, a lot of businesses paused because they couldn’t ship for whatever reason, they weren’t ready, some were more advanced than others. 

But now we have seen a lot of businesses trying to reboot those EU sales.

Some of the larger businesses seen them move into their larger fulfilment into Europe so for example we have number of customers where we are doing fulfilment, were we take their products and the warehouse and BP Castlefield within our facilities in Netherlands and then shift your car. They can avoid the complexities of documentation and stuff.

But for the small businesses that’s not really an option.

It’s very costly to be able to do that to be able to find a partner that will do fulfilment within the EU, because you can imagine demand has soared there. But you also have to have a certain volume of orders of trade to be able to make that feasible and profitable.

So you know that hasn’t solve the problems for many businesses.

When it came to VAT complexities and potentially having to charge VAT and declare VAT in every single country that was selling to, one thing that has been 

great has been when they launched all the one stop shop service number of businesses overcoming a lot of the VAT hassle by registering for one-stop shop and using the import one stop shop scheme to make VAT a lot simpler.

And make it easier to get your parcels.

But there’s a lot of confusion around that as well I don’t think businesses have really scene the benefits of that yet because there is still quite a lot of confusion around it.

AL:

Yeah I think one stop shop or I are S esses.

It doesn’t seem clear cut and just go back to your point on the Netherlands they were very switched on in his early days to encourage will make it very easy for you to go and set up a warehouse will be part of warehouses to have a an address there to overcome your shipping into Europe as you say if you have the of the right size whether you shipped from China turn left to the UK or turn right to Netherlands didn’t really make any difference.

A number of people can set up entities over there to enable that you to ship some stock straight to that solution but go back to one stop shop.

What do businesses need to do to take advantage of this I think you’re right in terms of theirs it’s been talked about or mentioned a lot on but I still feel there is ambiguity about it there is no clarity on it in a number of visitors or sitting on the fence again, saying do you wanna go back into Europe or not is it worth awhile is it not to Germany is one of the leading e-commerce economies in the world so it seems mad not to be trying to hard is it. They need to do it in a margin sympathetic way so yeah any tips or advice?

Bobbie: 

The first point, I think you are absolutely right, businesses 

need to grow and keep selling and it’s not going to be selling into Europe which I think is on the largest trading partners

4 3 % of UK exports go to EU, as a business you have to keep selling have to keep growing, if you’re going to ignore Europe, you’ve got to go somewhere else and if you’re selling outside Europe you still going to deal with boarders and the complexities, need to deal with documentation that’s not going to go away so you know the obvious thing is try and simplify and the one stop shop scheme allows businesses was introduced to simplify VAT. Which meant that if I’m selling across Europe with one stop shop I can register decide which country in the EU I want to register with because every EU country has an iOS portal where you can login and register your business you can decide pick anyone you want and that you will get your iOS number and identification number which means that benefit that is that you can sell across all of Europe.

One monthly VAT return that’s one thing, the second thing is that when your goods arrive at the board or parcels arrive at the border in wherever it’s going France Germany whatever those parcels you have to show your iOS number on the customs documentation and what that tells the custom officials is the date.

As well is that if they know the parcels arrive and they are VAT exempt then your customer.

From someone say I’ve got your ora.

Are you until you paid X.

Experience so it’s much smoother operational experience operationally it reduces the amount of.

You have to do it does mean is that not only do you have to register get your iOS number show that.

Number is on the customs documentation that you also need to be delivering it or shipping it on an iOS service so we offer a whole range ios express to start. But you have to be the carrier service you’re using is got to be a service so that they can number. When your customers buy something at checkout you have to go on your website you have to be you have to calculate and display the VAT that they’re going to be charged has to be calculated and displayed to the customer at the point of checkout. So you’re going to have to look at how you will build that functionality into your into your website what technology do you need.

Updated website and check out process and then there is adjustments.

Include iOS number on your documentation. Know the benefits are that

It’s smooth a much smoother process now the downside is some people.

Sound about the additional VAT that goes on top European customers.

But it is what it is we have to do that.

Customer experience perspective we always say to customers to our E.

Be transparent consumers want transparency they need to know up from what it’s going to cost them because what’s worth it today.

And duty-free. Country and they can’t they get a surprise phone call.

You know there was the reports of the number of France saying the orders that were being basically refused excepted and they were refused.

Read you’ve got a deal if your shop.

Customs compliance to deal with so that’s why you need your harmonisation codes need to make sure that the correct documentation with the correct information parcel and then could be a doctor put a lot of businesses off.

Do I do this what do I need to do this.

But technology calculation allows all the information on there is overwhelming.

AL:

Is there anywhere they could go to find a checklist or listen to for them to check out see if it is worth there if it’s all yes and any sources that you can recommend?

Bobbie:

Golf .co .uk website got a lot of information on there about trading and I can’t remember the other website and there is another another website which is all around trading definitely .uk website is a great place to start because there’s other sources and links from there that you can go to but it’s got everything on there.

Yeah definitely.

AL:

Tell us a bit more about GFS and were listeners can find out about more info about you and information about you how are you to maybe help people get in touch.

Bobbie:

Gfs. Was set up 2 1 years ago we we were first multicarrier provided by that meaning that rather than going.

Carrier the largest multi carrier service Uk and international.

I’m looking for delivery partner and we’re not pride and the problems that our customers have and be through our expertise so you know Europe is so common ground for us we are able to all the aisles need to be able to all services, problem to solve together with the customer if you like.

They get their countries oh GFS deliver that is our website.

AL:

Thank you so much for your time today thank you for all your insights and tips much appreciated.

Bobbie:

Fantastic thank you very much Al.