Market analysis
Understand your competition and lock in your positioning to succeed in your new market
Right now, nothing has changed since before the invention of the phrase ‘Brexit’. So currently everything is still business as usual.
However, The EU has set a (new) final deadline for an agreement for October 31st of this year. This leaves us with the following scenarios:
a. The UK will leave the EU without a deal = Hard Brexit
b. The UK will leave WITH a deal, content still unknown
c. The UK will stay as member state in the EU
Scenario A - Hard Brexit
If the UK leaves without a deal, the situation for a business selling online, will likely be quite similar to the one we see in Norway today. The UK will not be part of the EU. Imported goods will have to go through customs and there will be added taxes. This will either leave an administrative burden on the shoulders of the selling business or on the buying customers.
To leave it to the customers will probably be a bad idea and take a toll on conversion and sales.
To be competitive in the UK you will probably need a local entity or a branch of your EU company. This entity or branch will be the selling part inside the UK in order to keep your UK customers out of the custom handling. You will have to do the custom handling between your EU company and your UK entity or branch.
Handling this scenario puts a lot of work on the UK authorities, setting up legislation and processes for all the import into the UK and also establishing the infrastructure in harbours and airports.
Scenario B - Leave with a deal
This is probably the scenario we are most likely to see, but it is hard to see what the consequence will be. From a financial perspective it makes a lot of sense to protect the crossborder business, both for the EU and for the UK. It is therefore likely that The Government come to an agreement close to the deal already negotiated with Therese May and in addition, adding some extra time to make sure legislation, processes and infrastructure are in place. This will also give businesses time to prepare and will probably result in a smoother transition. But since the UK becomes a trade partner to the EU like US, China and others, it can easily move the competitive advantage against one of the other trade partners. It is not a happy divorce after all.
Scenario C - Stay in the EU
If Boris Johnson becomes the new prime minister of the UK, then this is probably not a scenario we are likely see. If this happens it is, of course, “business as usual” and you are prepared.
How should you prepare?
If you plan to sell in the UK, we will recommend that you "hold your horses" until it is clear what the outcome of the Brexit negotiations will be. The scenarios are pretty far from each other and the preparation necessary is quite different.
We keep an eye on the development and as soon as we have a direction, we will be ready to guide you. Until then, check out the reports on e-export which we have already prepared in English, Danish and Swedish here.