Preparing for Brexit: How Merchant of Record Services Can Help

Many brands and retailers are implementing multi-node fulfillment operations in preparation of Brexit, creating opportunities to expand ecommerce operations across Europe. However, the extensive VAT reporting requirements involved with processing international orders are causing some to hesitate. We’re taking a closer look at how third-party MoR services can help streamline international expansion.

The UK is set to exit the single market in just four short months. As you seek out ways to mitigate potential issues at the border post-Brexit, what alternative solutions have you considered?

In our last post on the topic, we talked about cross-border supply chain continuity through multi-node fulfillment operations, something that will be critical to ensuring post-Brexit success. However, many online retailers and brands fear the complicated VAT processing this option requires. Luckily, there’s a simple solution.

Implementing a third-party Merchant of Record (MoR) relieves your business of VAT challenges. Whether you’re a UK or Europe-based brand, or even a U.S. brand looking to expand services across the pond, setting up MoR services enables you to expand to new markets quickly and easily.

Expand Your Reach with MoR Services

So, how does it work? In reality, it’s a simple solution that makes a big impact. When you enlist a third-party MoR, your products are sold in the MoR’s name on your behalf, transparently to customers. The MoR essentially buys the product from your business when the customer clicks the “purchase” button, and immediately sells the product to the customer. It all happens within seconds, hence why we call it the “flash sell” model.

By taking on product ownership in this way, all tax responsibilities fall on the MoR, eliminating the need for online retailers and brands to get VAT registered and take care of VAT administration in the different countries where you will sell. As the seller of record, the MoR is responsible for completing and submitting the VAT paperwork required for all countries you ship to. With minimal upfront investment and simple implementation, you can quickly expand operations to support customers in new regions.

The right MoR offers:

  • Management of all VAT reporting
  • Monitoring of VAT compliance laws and rates across geographies
  • Quick entrance into new markets
  • Support for a seamless “flash sell” model
  • The ability to fulfill product from any location

Focus on Long-Term Benefits

Many brands and retailers are feeling financial constraints brought on by the COVID-19 outbreak. However, though brands received some relief with the announcement that full border controls on goods entering the UK would be delayed until July 2021, the UK has made it clear that they plan to follow through with Brexit at the end of 2020.

The surest way retailers and brands can minimize further disruption and negative customer experiences due to Brexit is by setting up a multi-node fulfillment operation and enlisting a MoR to manage the operation. In anticipation of increased volume of consumer inquiries, due to consumer uncertainty and otherwise, consideration should also be given to customer service scalability. As a precautionary measure, being able to flex your customer service model on demand can help alleviate any expected and unexpected pain points to help resolve customer queries within your SLA.

While you may feel that your resources should be directed to more immediate needs in the midst of the pandemic, it’s important to keep looking to the future as well and prepare your business for the major challenges just ahead with Brexit.

Joe Farrell is VP of International Operations at PFSweb

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