January 2021:
As with all businesses importing or exporting with the EU, Diamonds Factory was also affected by Brexit, especially in terms of costs.
“Carriers have put tariffs on anything coming from the EU,” Ben said of the situation. “You can’t come into the EU with a carrier and just pay your charge in the UK – they will charge you another fee when you get to France.”
“For instance, it might cost us an extra £25 per parcel to go into France. If you’re selling something at £500, now you’re only ever making £100 – instantly, you’re 25 per cent down on what you were making before.”
He mentioned that there had been discussions of using a third-party group, but that the idea had been put aside:
“I think a lot of people are looking at third-party logistics hubs that kind of negates these costs, but you’re having to pay a third-party company to then manage all your distribution throughout,” he went on.
Ben added that, while people are still learning the intricacies of the new Brexit legislation, costly mistakes would continue to happen. He cited one incident in particular:
“We pay all the duties and taxes for our customers, so they don’t have to,” he explained. “But we had an issue where we missed out one piece of wording on a document for a parcel that meant they just rejected our customs and taxes payment and sent it straight to the customer.”
“The customer was unhappy [at being wrongly charged] and reviewed us poorly.”
For a brand that prides itself on outstanding service and excellent reviews, this had a big effect.
“Having a one-star review sets an alarm going off in our company – we take it really, really seriously,” Ben explained.
“It’s quite a big deal, so we are on it straight away: how can we resolve it? How can we ensure that the customer is happy? How can we reassure them? We bend over backwards to make sure that the customer has a positive experience with us.”
Ben said that the impact of a poor review is far-reaching and can have long-term consequences, which is why the company responded swiftly.
“It’s not only a review,” he pointed out, “It’s a review for hundreds of other people who will see it.”
“Are they then going to recommend us to their friends? It plays such a big part in the growth for our business. We might send a bunch of flowers or a box of chocolates to apologise.”
“We go to all ends of the earth to ensure that the customer is happy in the end.”
March 2021:
Three months into post-Brexit trading, and Diamonds Factory were still reporting issues, especially regarding items being held up in customs.
“It’s been a huge project for us,” Ben said of the topic.
“It feels like everyone is going through the same thing – no one’s really got any direction as to what is right and what is wrong. It just seems to be, try and find out as much information as possible and see how it goes.”
In order to counteract the difficulties surrounding Brexit, the team at Diamonds Factory have been proactively seeking out solutions.
“We’ve stopped using FedEx because we lose sight of parcels at certain times,” Ben continued. “We’re trying to set up European hubs as well. Now, we get charged for returns, but with a hub, you don’t have to pay.”
Ben also spoke of the company’s research surrounding hiring a third-party logistics company. One potential issue with this solution is that a UK-based company would still need to have some kind of business set-up within Europe. Ben referenced other companies who have managed this by establishing limbs of the businesses within the Netherlands.
Additionally, Ben mentioned a customs carrier alternative that removes certain touch points from within the exporting process.
“Even then,” Ben explained, “you know some parcels will get caught up in customs because of due diligence checks.”
Another challenge the business is facing is that of differing VAT rates. Ben said that the business was trying to combat this by paying charges on or ahead of time, but that different carriers were able to charge different VAT rates.
“We’ve got some instances where we should have been charged £10,000 but we were charged £20,000 instead,” he added.
“Some countries are adapting their pricing,” Ben went on. “Where we would pay one fee from the UK to France or Germany, we’re now getting charged differently by an internal carrier.”
“Once the parcel is in France, for example, they can say they’re going to increase the charge by £5 per parcel and we’re at the mercy of that.”
Despite the challenges, Ben remains optimistic, if a little tired, about the situation. He said that the company was developing procedures to balance out the issues, and that communication with other businesses was helping too.
“I’m included on an ecommerce thread where people from different industries are working through different issues,” he added.
He also emphasised the importance of having an established operations team, and a division within the accounts team that solely focus on the paperwork surrounding Brexit.
Throughout, Ben said that the aim had been to ensure that customers were kept well-informed.
Although the majority of customers experience no issues with the exporting process, Ben said that the business had still invested in developing a focus group, who had now developed a piece of technology that tracked the different touch points of the parcel to allow the business to anticipate whether something might be delayed. If the new system flagged a potential issue, the customers affected would be contacted directly.
“We built that tool into our systems so that someone is checking every day,” Ben added.
Although contacts with the customer service teams had increased as a result of Brexit, Ben believes that the business has done well at keeping customers informed in a timely fashion.
“We managed expectations very well,” he explained, “and we offered compensation, discounts and free care packages [for customers who experienced issues].”
“Unfortunately, these delays happened, but it’s up to us [to make it right]. We’re just upfront and transparent about the reasons – we’ve never lied to a customer. We would just say that we don’t know at this stage, but we’ll give you an update as soon as we can, and a lot of the customers have been very patient.”
In terms of costs, Ben said that the business had seen some increases due to a counterbalancing strategy to satisfy customers. In one instance, one high-cost item had to be remade and shipped again following an issue at customs.
“We’ve had to cut almost any margin that we made to keep the customer happy,” Ben said of that particular situation, adding that the overall outcome should be positive for both sides.
“We gave them what they wanted in the first place, but we also gave them a decent view of us as a company, and then maybe they might come back, knowing that we’ve done the most we can.”
Despite the additional costs, the business has no plans to increase the prices of products. The hope is that, by giving customers a positive buying experience despite the challenges, that customer will return and make another purchase, making the outcome profitable.
“A bad review can lose us a significant amount of money,” Ben explained.
“We’d much rather have a positive experience with it, even though it’s not reflected in the cash flow sometimes.”
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