Brexit and the Burgeoning Ecommerce Marketplace: Will Consumers Open Up Their Wallet in a Closed Economy?
As markets and businesses worldwide recover from the aftershocks of Brexit, the implications to commerce and consumers still remains to be seen. The uncertainty, however, has made both retailers and consumers take anticipatory action to protect their own interests.
Retailers, on one hand, foresee higher sourcing costs due to a slumping pound and are considering raising prices to combat lower sales and shrinking margins. Consumers, on the other hand, are paranoid of the pending gloom and what it means to their wallets. Some consumers are convinced that price increases for popular electronics are inevitable, and are out for early Christmas shopping.¹ This paranoia is not without reason. In 2011, when cotton prices spiked and increased by a factor of 25, U.K. retailer Next passed on this entire increase to customers.
The impact of falling British pound is not restricted to just U.K. businesses but has global repercussions. This is particularly true for online retailers in US and Canada given that U.K. is the leading international destination for shipments outside of North America. Online retailers in North America will likely face reduced demand as products priced in U.S. dollars automatically become more expensive for British consumers, in addition to potential other restrictions to cross border commerce. “Today our clients can land anything in any Amazon fulfillment center in the EU and be eligible for Prime shipping anywhere in the EU,” says Eric Heller, founder of MarketPlace Ignition, “It’s a shame that eventually goods will have to be sent separately to the U.K.”
While we don’t yet know what the ultimate implications of Brexit will be for the economy and businesses, the one thing we do know is consumers will continue to engage with brands that deliver superior experiences. Apple, for instance, has consistently proved that it is recession-proof by showing double-digit growth during times when rivals suffer from slowdowns.
For online retailers, the change presents an opportunity to take proactive steps to grow their top line. This starts with delivering a differentiated experience to consumers, whether it is online or offline. This means enabling customers to complete their shopping seamlessly without being stuck at checkout and streamlining the fulfillment process in a way that transcends barriers between channels.
However, as the world of payment evolves and adapts to the new age of commerce, fear from fraud loss in digital channels is preventing online merchants from delivering a seamless shopping experience that customers have come to expect. The result is longer checkout times, delay in fulfillment due to offline checks and/or customer insults due to rejected orders. Big brands and big merchants, in particular, face challenges balancing top line growth with loss prevention as they lack an effective, scalable way to use their big data to differentiate good customers from fraudsters.
The good news is with recent advances in technology, machine learning, because of its ability to draw insights from big data, has shown greater promise to boost human insight, intuition and decisioning-making. By studying the pattern of good transactions and comparing it to bad ones, machine based algorithms can process data with greater speed and efficiency than humans can. The result is better detection and identification of customers – good and bad.