International retailers expanding into the UK market – what you need to know

Before launching in the UK, international online retailers looking to expand their offering into the UK marketplace might want to consider some key points, to ensure both a smooth launch and predicted growth forecasts.

1. Local Market Knowledge:

The UK has a highly developed, diverse, and competitive online market which offers international retailers a great opportunity to obtain a market share. 

It is extremely important to fully understand the local UK market including competitors and consumer preferences. Knowing the how, when, and why UK customers search for, and purchase retail products online will form the basis of the sales and marketing strategy and define the most appropriate range of products. 

As consumer behaviour can differ from other international and European markets, it’s important to understand this fully from the outset, to ensure the right strategy is in place to achieve UK internet market penetration and to meet expected growth predictions.

Learning and experience gained over time are part of this development of knowledge and looking at a UK growth strategy in the longer term tends to result in stronger and more sustained success.   

1. Taxation and regulatory compliance:

Non-UK retailers need to be aware that if they intend to hold stock in the UK, they must hold a valid UK VAT registration before they can enter into a relationship with a fulfilment house to store stock on their behalf, and also a UK EORI registration in order to export goods from the UK. Without these, they will not be able to commence trading in the UK.  

If an international retailer wishes to outsource its fulfilment to a third-party provider, they will also need to ensure that their partner is registered and approved by UK HMRC under the Fulfilment House Due Diligence Scheme (‘FHDDS’). It is illegal for a fulfilment house to take on non-UK clients unless they are registered, and an organisation’s registration details can be checked on the Gov.uk website. 

Fulfilment houses registered under the FHDDS are required to comply with certain data collection and retention requirements for their international clients – so non-UK retailers will be expected to be able to provide data on the origins of goods imported into the UK – such as MRN numbers – to meet legal requirements. 

It is worth noting that retailers who are importing plastic packaging in high volumes into the UK will also be required to register and comply with the Plastic Packaging tax reporting regime – and therefore consideration of these requirements is advised before launching a consumables/ packaging strategy. 

1. Customs duties and Import Regulations:

It is crucial to understand the customs and import regulations and packaging requirements/ labelling/ certification governing the entry of different goods into the UK and their onward distribution to customers – before commencing trade in the UK. 

Compliance with these regulations is crucial to avoid delays and having goods held up by Customs or by UK Trading standards, both of which can be costly to a business. Examples of a few types of goods that have labelling or certification requirements specific to the UK, are food supplements, electrical goods, and cosmetics.

1. Legal differences

There may be differences in legal requirements or contractual norms between jurisdictions and international retailers will normally expect a partner in the UK to require agreements under UK law. 

Legal requirements elsewhere for working capital finances (e.g. bailee waivers) often conflict with UK contract or regulatory requirements for control over stock held, with such differences needing consideration from the outset. 

Insurance cover may also require attention for cross-border storage arrangements, as a result of differing circumstances between regulatory regimes.  

1. How to find the right fulfilment partner

The right fulfilment partner is crucial to any outsourcing arrangement, even more so where these are cross jurisdictions and potentially operating within different time zones. 

Retailers need to be able to trust their fulfilment partner to provide a professional, reliable and resilient service – to do what they do best – to provide a seamless fulfilment operation for the dynamic UK market. The right experience, knowledge and a strong relationship are key to ensuring a successful partnership. Through timely and accurate fulfilment, goods arrive on time and in good condition, ensuring customer satisfaction with the retailer free to focus on growing their business. If fulfilment operations do not meeting these exacting standards, the retailer risks a poor reputation which will impact on future sales with costs and growth potential severely impacted. 

So – what do you look for in a UK 3PL?

• The right partnership 

It’s important to connect with the people you are looking to appoint as your 3PL and feel you can trust and rely on them to deliver outstanding service. 

Choose a fulfilment partner whose values align with your own, visit their premises and meet the team ensuring you are comfortable with what they are offering, both in terms of order fulfilment and support as your business grows. 

Obtain references from their other clients, this can be beneficial in understanding service delivery from the customer’s point of view. 

• Experience

There are numerous companies offering order fulfilment services in the UK – some of whom have many years of experience and some who have come to the market more recently given the unprecedented rise in e-commerce. Experience and skill levels vary significantly, and it is important to find the fulfilment partner with the appropriate experience to handle your specific business requirements and volumes.

• Clear and timely communication

Connecting with a 3PL provider who provides clear and timely communication is crucial for resolving issues and maintaining a strong partnership, especially at a distance. Make sure you can get hold of the appropriate people within the organization who can action any changes to the service. Ultimately, choose a partner you feel you can trust with a ‘can do’ attitude. 

• The right shipping options

Options and costs associated with delivering products within and from the UK can vary widely and the supplier options tend to be more complex and diverse than in many other countries.

Different fulfillment providers may choose to provide limited or restrictive carrier options, whereas others offer more flexibility and choice; costs and commitment required may also vary significantly depending on the carrier and order volumes. 

• Strong technology integration offering  

Your fulfilment provider’s technology needs to integrate seamlessly with your e-commerce platform or order management system to streamline order processing and minimise the likelihood of errors. Ensure your chosen partner has strong IT integration experience and has worked with your platform/OMS previously. 

• Ability to scale and flex

Assess the scalability of the proposed fulfillment services. Consider whether the provider can accommodate your forecast growth over time and are willing and able to handle fluctuations in order volume without compromising on efficiency and service quality. Changing from a trusted partner is a costly and disruptive process – especially from a distance – so it is vital to mitigate this risk as far as possible at the outset of the relationship by carefully selecting the right partner and developing a trusted long-term relationship. 

• Transparency and detailed cost structure 

Full explanation and understanding of the detailed pricing structure is key to being able to understand the costs of your business. Transparency in pricing helps prevent unexpected costs and ensures a clear understanding of the financial aspects of the partnership. An experienced fulfilment partner will be able to talk you through the costs upfront and be able to provide your invoices with full supporting details and explanations at transactional level. This is important when looking at different markets as costs and cost structuring may vary.

• Service level agreements (SLAs)

Reputable partners will offer SLAs as part of their contract, setting out obligations and responsibilities for both the fulfilment partner and the retailer. These will include order processing times, shipping timelines, and any guarantees regarding accuracy and order fulfilment rates – which will all be based on compliance with standard operating procedures with clients meeting their side of the agreement. 

These are just some of the key factors for international retailers to consider when looking to launch into the UK market, aiming to benefit from its robust e-commerce ecosystem which has a high percentage of the population engaging in online shopping. Additionally, the UK offers well-established infrastructure to support digital transactions, including a regulated fulfilment sector. 

Strategic planning and decades of experience combined with robust IT infrastructure and state-of-the-art automated order fulfilment has led Pro FS to be the fulfilment partner of choice for many international retailers. To secure a long-term future in the dynamic UK e-commerce market, trust Pro FS to deliver fulfilment services for you that are on time, every time.