Cross-Border Buyers Drive Growth in UK Ecommerce

Double-digit rise in May, but domestic deliveries dipped

Author: Cliff Annicelli

June 28, 2017

In the latest reflection of the effect a weakened pound is having on the UK’s economy, the share of UK retail ecommerce deliveries bound for customers elsewhere in the EU hit a new high in May, according to tracking by the Interactive Media in Retail Group (IMRG).

Figures from the latest IMRG MetaPack UK Delivery Index show that overall UK retail ecommerce delivery volume increased 13.9% in May compared to a year earlier. Spending per order was also up, according to IMRG, with the average order value (AOV) hitting its highest level for May since it began tracking that figure in 2011.

Digging deeper, IMRG found that EU-based buyers from outside the UK played an increased role in boosting those figures. For one, the proportion of May's orders going to EU destinations, at 61.8%, was the highest since IMRG began monitoring that metric in August 2013.

Moreover, the month's higher-than-usual AOV was driven by buyers elsewhere in the EU. IMRG found the AOV for orders going to domestic destinations had "decreased slightly" over the past few months.

IMRG attributed the greater influence of EU-originating cross-border ecommerce on its figures for UK retail ecommerce to the euro's stronger value against the pound since UK voters approved the country's exit from the EU.

“One of the main clichés about Brexit is that it brings uncertainty," said Andrew Starkey, IMRG's head of e-Logistics. "While that may be true from a technical and legal perspective, the impact of Brexit so far on retail has been very clear as the pound tumbled following the vote and has remained at that lower level since.”

He added: “A record high for May AOVs may sound like good news for retailers on the surface, but it could be masking a wider issue around profit margins—shoppers from EU markets are likely being attracted to UK retailers because their currency is strong, relatively speaking, which means they are actually getting the equivalent of a discount on products purchased from UK sites.”

UK cross-border retail ecommerce sales are forecast to rise by nearly 9% this year, according to a separate February 2017 report by RetailMeNot and the Centre for Retail Research. At that rate, 12.5% of the country's retail commerce sales would come from beyond the UK's borders.