Swiss Post eyes opportunity from Channel Island ecommerce

Swiss Post International is seeing a considerable business opportunity ahead with a “significant” number of UK internet retail distributors now considering relocating to Switzerland. Last week the British Treasury said that from April next year, it will abolish the Low Value Consignment Relief system that had allowed goods under £18 in value to be shipped into mainland Britain from the Channel Islands avoiding VAT.

The system had meant online retailers selling items like CDs, DVDs and accessories were shipping items into the UK from Jersey or Guernsey in order to avoid the 20% sales tax.

As an interim measure, ministers lowered the £18 threshold for the loophole to £15 from the start of this month, but the system as a whole will now end, in order to provide a more level playing field for internet retailers based on the mainland.

It will also seek to bring back the estimated £140m in tax lost each year to the LVCR loophole.

“These reforms will ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with those larger companies with the resources to set up operations in the Channel Islands, said Exchequer Secretary to the Treasury David Gauke last week.

However, the retail sector has said many fulfillment companies based in the Channel Islands will simply move outside the European Union to cut costs.

Kim Bayley, director of the Entertainment Retailers Association said: “In a globalised world, it does not make sense to address an anomaly in the Channel Islands alone. Much of this business will simply be displaced elsewhere.”

Switzerland

Swiss Post International told Post&Parcel yesterday that it has been approached by a “significant number of companies” in the past few days, who see Switzerland as a viable alternative location.

Anonymous staff from Channel Island-based companies have told the British press they are looking at the possibility of Switzerland or Eastern European locations.

Chris Stevens, Swiss Post International’s head of distance selling, said that while abolishing the LVCR would try to prevent companies from relocating outside the UK, Switzerland had competitive advantages to compensate, while Swiss Post International had a positioning, operational strength and competitiveness that it would also provide a competitive advantage to those relocating.

“Delivery times back to the UK are likely to be no more than one day longer than from the Channel Islands,” said Stevens.

“Businesses will also be able to penetrate the European market from a central Swiss location, including all the major European markets. Therefore, locating to Switzerland will positively benefit the online businesses as a greater customer base will open up to them.”

The international arm of the Swiss postal service said it already has the capabilities and resources in place – including warehouses, customs and cross-border facilities, returns management and customer service capabilities – in place to serve relocating fulfillment businesses.

UK businesses have been considering a move for some time, said Stevens, with Swiss Post International holding a Swiss Day for Distance Sellers event as far back as mid-2010.

Stevens said relocating to Switzerland would also have environmental benefits. “Inbound logistics into Switzerland is easier than having goods moved into the UK and then trucked or ferried over to the Channel Islands. This has a positive environmental impact as it helps to reduce the carbon footprint of operators.”