The cost of rapid growth in UK e-commerce

2020 is drawing to a close, and the UK’s 11-month Brexit transition period is about to end on the first day of 2021. After four years of struggling and the replacement of three prime ministers, after the two general elections, how will the Brexit negotiations finally end?

Britain may leave the EU, and the trillion-euro trade will disintegrate soon

On December 10, local time, the British Prime Minister stated that it is “very likely” that the UK will leave the European Union without a deal and said that “now is the time” for businesses and individuals to prepare a no-deal Brexit.

The United Kingdom should be prepared to “based on the pure principles of global free trade” and reach an agreement with the European Union similar to its agreement with Australia. In other words, the UK and Europe will trade in accordance with the terms of the World Trade Organization (WTO), and tariffs must be set by WTO regulations, which may cause a substantial increase in commodity prices.

The EU is like a besieged city. People outside want to come in, and people inside want to go out. Benefits dictated that Britain, which had been in the city for 47 years, insisted on leaving after four years of entanglement in love and hatred. The disintegration of the trillion-euro trade is imminent.

Tax rebates were cancelled under the epidemic; the economy suffered a cold winter

Under the influence of the epidemic, offline physical retail in the UK has been affected. The cold winter has not yet passed, and the VAT Retail Export┬áScheme that will be cancelled on January 1, non-EU tourists can’t refund tax on goods purchased in the UK make the industry even worse.

Once the opportunity to purchase tax-free luxury goods is lost, the UK will become the only country in Europe that does not provide tax-free shopping to international tourists, and this may cause UK business losses of 3.5 billion pounds. At the same time, this move will further damage the UK’s tourism, retail and leisure industries after the epidemic. A large number of retailers will close down, and unemployment will follow.

According to the National Bureau of Statistics, the number of layoffs in the third quarter increased by a record 180,000 to 310,000. The unemployment rate rose to 4.8%, a record high. Data from the British Retail Research Center predicts that the country’s retail industry will lose more than 230,000 jobs this year.

According to LDC and PricewaterhouseCoopers, the number of closed stores reached a record 11,120 in the first half of 2020. As more and more retail giants announce that they have entered the stage of bankruptcy and liquidation, the number of closed stores will increase further.

The proportion of e-commerce in total retail sales is rising, but the peak may not be sustainable

The physical retail situation over there is not very satisfactory, and online retail is rapidly increasing.

According to E-market, British consumers will spend 141.33 billion pounds ($180.39 billion) online in 2020, a sharp increase of 34.7% from 2019, making e-commerce accounted for more than 30% of total UK retail sales for the first time.

However, despite the apparent growth rate of retail e-commerce in 2020, its explosive power is relatively limited. Affected by the epidemic, the British real retail economy has declined this year, unemployment has increased, and income source is lacking. Shopping consumption has become more rational, and it will take a long time for consumption to recover.

The substantial increase in e-commerce sales has increased the supply chain’s volatility, resulting in a surge in orders at the supply chain end. However, soaring air freight rates, ship warehousing, and railway outages have left a large amount of inventory on the road. The lockdown has further restricted the final logistics and distribution.

Such as these, the future should not be blindly optimistic.

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