How are UK ecommerce businesses adapting to new EU duties on low-value parcels?

As of the 1st of July, the EU has replaced its €150 duty-free customs exemption with a temporary €3 customs duty per item charge, creating complex ripple effects for UK-based online retailers selling to European customers. 

To understand how these shipping changes are impacting the e-commerce industry, we spoke to UK ecommerce founders and warehousing and fulfilment specialists directly, unearthing insights into the fresh challenges affecting cross-border trade. 

From the rising cost pressures on smaller sellers and administrative headaches, to growing needs for third-party logistics providers, we explore the main hurdles ecommerce businesses are facing today – and offer guidance on how to respond to the new rules.

New EU shipping rules: what you need to know

On the 1st of July, the EU removed its long-standing €150 customs duty exceptions for low-value parcels entering Europe from non-EU countries. In lieu of the exemption, the union introduced a temporary €3 customs duty charge per item for parcels worth €150 in value.

Introduced as part of a wider effort to address the growth of low-value imports, this current system is expected to remain in place until 2028, when a broader sweep of EU customs reforms will be introduced.

 Smaller, low-margin sellers will feel more of a burden

Due to the nature of the shipping law changes, it’s clear that the brunt will fall on businesses operating on tight margins, specifically if they sell low-value products. 

According to James Demtriades, the founder of ecommerce business Undeniable Jewellery, while the regulation change may look “trivial on paper”, it will squeeze sellers “running on thin margins and low perceived value” the most. 

Pedro Brianca, Professor of Economics at Nova School of Business and Economics, explains exactly what this could look like in practice. He tells us that a “€3 duty on a €25 basket of jewellery, skincare or prints works out at an effective tariff of roughly 12%” – a significant spike for businesses that already operate on tight budgets. 

Brianca highlights that these costs aren’t happening in isolation, either. They compound the wider financial pressures UK sellers have faced since Brexit, from EU import VAT to customs declarations.

Ultimately, the experts are in agreement that while larger retailers may view the policy as more of an inconvenience than a threat, many smaller sellers will have to choose between absorbing the costs themselves or passing them onto the consumer.

Sellers with diverse product ranges will face greater complexities

Cost pressures aside, the new rules also pose logistical complexities for retailers selling mixed-item orders. 

Andrew Scanlon, Head of Sales and Marketing at 3PL Paxon, explains that many smaller sellers have diversified their product ranges in recent years to attract new customers and spread risk.

Yet, with the new changes in place, sending multiple product types in a single parcel may become more expensive, as different items may fall under separate tariff classifications.

As Scanlon breaks down: “if a UK business ships a small parcel to the EU that contains three different types of product, they might end up paying multiple tariff classifications, meaning they pay €9 duty on a parcel with a total value of €150 or less.”

As a result, businesses with varied product categories may need to reconsider their product mix and order strategies, in order to make sure their offering remains commercially viable to EU customers.

 EU-based fulfilment and logistics partners could lighten the load

While the EU’s new rules undoubtedly present fresh challenges to UK ecommerce businesses, the good news is practical solutions exist to ease the transition. 

Scanlon explains that some smaller sellers are now exploring EU-based warehousing and fulfilment solutions to reduce the friction of cross-border trade. By moving stock in bulk to a central EU location, businesses can clear customs once before fulfilling customer orders locally within the bloc.

Logistics partners are likely to play a bigger role in helping smaller retailers navigate these changes too. As Scanlon notes, specialist third-party logistics providers can offer access to “transportation networks, customs expertise and warehousing” to help businesses manage the additional complexity of international shipping.

Brinca also points out that the changes could create a more level playing field for UK and EU brands competing against ultra-low-cost imports. “The ultra-cheap direct-from-China model just lost part of its price edge”, he explains, which could help UK brands compete on quality, rather than price.

 Practical advice to follow today 

• Review your pricing strategy – Consider how you can increase your perceived value without simply adding a surcharge 
• Audit your product range – Review mixed-item orders to identify where product combinations could create extra costs
• Explore alternate fulfilment options – Check whether EU-based warehousing or a third-party logistics partner could make shipping more efficient 
• Develop stronger supplier relationships – Maintain good relationships with suppliers for greater flexibility