The British market 2 years after Brexit - how to sell on Amazon.co.uk?

Internet Access and the E-commerce Market in the United Kingdom
Almost everyone in the United Kingdom has access to the Internet. Over 90% of residents use the web and shop online. This market has been one of the largest in both Europe and the world for many years. According to estimates from the Chamber of Electronic Commerce, further growth is expected over the next 2 years, with online sales reaching approximately 25% of total sales in the country by 2024.

Since the United Kingdom left the European Union, many entrepreneurs from the continent have given up on supplying to the UK due to complicated legal regulations and new obligations. Does the e-commerce market in the United Kingdom still hold potential for European entrepreneurs? How has Brexit affected brick-and-mortar as well as online sales in this country? In a new article, we explore whether it is worth investing in expansion into British marketplaces.

What does the British e-commerce market look like in 2022?
In terms of online sales, the United Kingdom is a wealthy and developed market where only a small percentage of society does not shop online. Since 2015, the turnover of e-commerce sector businesses has risen from £42.6 billion to £129 billion.

Fig. 1 Growth in e-commerce turnover from 2015 to 2021

Source: E-commerce revenue in the United Kingdom (UK) from 2015 to 2021, https://www.statista.com/statistics/282162/e-commerce-annual-sales-in-the-united-kingdom-uk/

The fashion category is the most developed there. Consequently, there is immense competition in the fashion industry. The market leader is Amazon. In 2021, sales on amazon.co.uk reached $17.078 billion. The second major player, Tesco, recorded a turnover of $7.654 billion.

Amazon's competitors, particularly supermarkets, have long offered fast home food deliveries. In response, the American giant decided to provide Prime customers with food delivery at no extra cost. Over a year ago, it partnered with Deliveroo, allowing customers to order groceries and meals with free delivery.

What product categories do the British prefer to buy?
The e-commerce market in the United Kingdom has great potential. British customers are affluent and have high expectations regarding quality. A whopping 93% of them shop online regardless of age, gender, education, or place of residence.

The most preferred product categories among the British are:

• Fashion – 30%

• Toys, Hobbies and DIY – 19%

• Electronics and Media – 19%

• Food and Cosmetics – 17%

• Furniture and Accessories – 15%

Fig. 2 The most popular product categories in 2022

Source: https://payrow.com/blog/e-commerce-trends-to-keep-an-eye-out-for-in-2022-in-the-uk

These are very broad industries with strong competition, yet there are significant growth opportunities. Entrepreneurs offering high-quality products with unique features or attractive prices that stand out from competitors may consider expanding into the British market.

The specifics of the British consumer
In the UK, Amazon (407 million monthly visits) and eBay (297.9 million) dominate online retail. The former platform attracts 2/3 of the total traffic from the 12 most popular e-commerce portals in the country. Given that the UK has a population of 67 million, this number is truly impressive!

What is most important in the purchasing decision process? There are several elements worth considering when preparing your offer for the British market.

Fig. 3 What should you pay attention to when selling in the United Kingdom?

Source: own study.

More than half of the residents of the United Kingdom say they prefer domestic products. In October 2022, inflation in the country reached 9.6%, leading an increasing number of customers to seek promotions and price deals to mitigate the impact of rising prices on their household budget. Almost half of the population pays attention to price increases for regularly purchased items. A staggering 44% chooses cheaper or discounted products.

What does high inflation mean for sellers? The necessity to keep prices steady to avoid losing loyal customers.

What regulations apply to online sales to the United Kingdom?
Sellers from EU member states, after the United Kingdom left the Union, must adhere to several additional regulations:

• Customs – customs duty on orders above £135

• Export – tax obligations related to export and import to a third country

• Additional regulations for certain sectors – if you sell, for example, herbal or health products, find out if you need certifications

These specific rules do not apply to Northern Ireland, as it is treated as part of the EU customs area.

Do you want to know how to start selling in the United Kingdom and what steps you need to take to get started? Apply for an EORI (Economic Operators Registration and Identification number). Remember to declare every sale – export.

For VAT purposes, exports to the United Kingdom do not constitute intra-community supplies, thus requiring payment of import tax in the UK. This obligation lies with the buyers, but it is worth thoroughly informing about this in the offer to prevent disputes with consumers.

Deliveries worth up to £135 are exempt from customs fees and import tax, so prices can be structured to fit within the limit.

Opportunities and risks of entering the UK market
The British have long been accustomed to fast deliveries, so concerns related to Brexit were significant. Carriers and suppliers efficiently adapted their logistics processes to the new reality.

Some companies utilize air freight to deliver orders to their customers in the UK within 2-3 days. However, this only applies to larger players, as small firms cannot afford this.

Therefore, they either abandoned B2C sales or raised their product prices. The return policy is much more complicated, as returns often incur high costs. As a result, some entrepreneurs condition the possibility of return on the consumer covering shipping costs.

For buyers, Brexit thus means not only higher purchase prices but also longer delivery times.

How to take advantage of these changes? Focus on:

• Fast delivery

• High quality

• Friendly return policies

• Untapped market niches

This way, you will fill the market gaps that have arisen due to the withdrawal of many businesses from the British market, and gain a chance for the development of foreign sales.

Is selling online to the United Kingdom still worthwhile?
To answer this question, it is necessary to gather all the pros and cons of entering the British market. Let’s start with the barriers that might deter expansion. Starting sales in the UK currently involves numerous formalities and obligations that must be fulfilled to launch and remembered in the following months and years.

One attractive option is to utilize Amazon's platform program, which allows sellers without a VAT number in the UK to list offers on amazon.co.uk.

If you sell from your own online store, hire a professional accounting office to handle customs and tax settlements.

As mentioned before, the British market has tremendous potential and many gaps that can be filled. There are niches where you can find your place and successfully develop foreign sales.

Due to the high competition investing in modern solutions, focus on flexibility and personalization to make your offer more attractive.

Keep a few payment options in mind and ensure the website design is mobile-friendly.

Happy selling
Amata Borys-Chudek
Go2Market Crew