2017 may be a year of finding out what the true impact is of Brexit for ecommerce companies.
But I believe for those that take action it may separate the wheat from the chaff, producing some winning businesses.
The posturing continues, but Article 50 is still expected to be invoked before the end of March. This will leave just two years before the UK has to leave the European Union. There are only around 500 working days in two years.
So, while Theresa May and the Three Brexiteers are negotiating the UK’s exit from a market of over 600m internet users, what should ecommerce companies spend their 500 days on, if they want to be thriving in 2019?
Firstly, it’s time for some strategic thinking and action. What will the business look like in two years’ time?
You can’t control the Brexit process, but some things are within your power, like your location, technology, profitability and logistics.
So, should you stay or should you go? There’s been a lot of talk about tech companies moving to Berlin, Lisbon or another tech hotspot inside the EU, but physically moving a company is tough and kills as many companies as it saves.
The financial cost of moving is high, but the human cost can be even higher. What happens if you move the job, but the person doing it doesn’t move? You may well lose the majority of your team and their knowledge along with it.
Knowledge in your business is a valuable asset, don’t treat it lightly. Moving will absorb a half to three-quarters of your management time and make you less agile whilst you’re about it. It’s hard to be agile and move at the same time!
That said, should you be looking at a physical presence in the EU? Successful expansion is all about getting the balance right between shipping somewhere and having a local knowledge and presence.
We found that in the USA it was vital to have people who understood the market, but we do not necessarily need it in most EU countries. Strategic application of satellite teams inside the EU could balance Brexit and growth.
This is especially relevant for ecommerce fulfilment, where being inside the EU makes delivery easier, with an open border from the Atlantic to the Baltic.
Is your technology fit-for-purpose? This is something you can control, so it would be a good idea to spend some of your 500 days reviewing and improving your technology.
One of the mistakes we made some years back was to concentrate on new features rather than solving underlying issues with our technology. Once we addressed these issues, we were able to focus on new buying trends like mobile, local adaptability and supply chain management.
If your ecommerce market is about to get smaller, now is a good time to make sure your technology is fully functional so you can become stronger in your smaller market, or better at cross border business.
For Europeans, buying from a British firm was fine when the UK was part of the EU, now British ecommerce companies will need to be more adaptable to localisation and handling local issues.
If your market is about to get smaller, then maybe this is a moment to focus on profitability, so you’re lean and ready when the exit comes? By cutting costs and improving processes you could still drive profits just in the UK.
The British are very active online shoppers and the market is still busy; the economy grew by 0.5% in the first quarter after the referendum. The British are still buying things and they’re still going to do it online.
So the question is, how to improve your profitability if scale is about to get harder?
In the end, cross-border issues are mostly about delivery. Delivery companies will create services for UK companies so they can deliver into a Brexited EU.
But they will take their time and this will be in the second half of your 500 working days. Of course, the cost of delivery will go up, so starting to optimise your shipping company spread and making sure you have the deals now will help when it comes to a post-Brexit deal.
In the end Brexit may even be a benefit to the winners, because many UK companies take a soft approach to the rest of the EU.
UK ecommerce firms will need to start looking at what they can control now, to be ready when the exit comes. And they may even end up in a better situation than those who don’t.
Further reading on Brexit: