Should UK retailers move stock and returns into the EU to protect margins?

UK exports are approaching £1 trillion, but for retailers selling into the EU, protecting margins is becoming increasingly difficult. One month after the EU introduced its new €3 customs duty, the question is no longer just how to absorb another cross-border cost.

For retailers operating at scale, it is whether their current model for stock, fulfilment and returns still makes economic sense. The latest figures from the UK Department for Business and Trade show that British exports continue to grow despite a challenging economic environment. UK exports reached £946.

6 billion in the 12 months to May 2026, while exports to EU countries totalled £385. 3 billion in the 12 months to March 2026. Europe therefore remains one of the most important markets for UK businesses. At the same time, selling from the UK into the EU is becoming increasingly expensive and operationally complex.

And it’s not just from the UK that it’s becoming more difficult, I was dismayed to see an Irish business (based in the EU) announce on LinkedIn that they’re suspending sales to the rest of the EU!

But perhaps the more pressing issue for many is for low-value e-commerce consignments which are now subject to a customs charge and especially how do you reclaim the customs charge for returns?

The question has to be asked if it is still profitable for UK retailers to ship direct to EU customers or if it’s only viable for those able to hold stock within the EU and fulfil from there?

The €3 duty is only the beginning Since 1 July 2026, low-value e-commerce consignments entering the EU have been subject to a temporary €3 customs duty per item category, based on tariff classification. Five identical T-shirts within the same category attract a €3 charge, while three T-shirts and a watch in another category attract €6.

For retailers, the immediate response is operational. HS codes need to be accurate. DDP can prevent unexpected charges reaching customers at delivery. Mixed-category bundles need to be reviewed. But businesses selling at greater scale should also look beyond individual parcels and examine how their entire EU operation is structured.

That includes two increasingly important questions: should some stock already sit inside the EU, and should products sold to EU customers really cross the UK-EU border again when they are returned?

For e-commerce brands and retailers shipping hundreds or thousands of EU orders a month, relatively small costs at parcel level can quickly become significant annual costs. Why does this need attention now? The new duty forms part of a broader reform of the EU customs system. Further changes are already scheduled.

Product Identifiers (PIDs) are expected to become mandatory on customs declarations from 1 November 2026, while a separate EU handling fee has also been proposed, although its final amount and implementation date are still to be determined. From 1 July 2028, the temporary flat-rate system is expected to end as the EU moves towards its new customs framework.

For retailers, this means the €3 duty should not be treated as an isolated cost to absorb and forget. It is another reason to understand the total cost of serving an EU customer, from checkout and customs clearance through delivery, returns and getting returned stock back into circulation.

Retailers should stop asking what one parcel costs and start asking what one completed EU sale costs. Delivery, duties, failed delivery, returns, inspection and the time a product remains unavailable for resale all belong in the same calculation. Once that number is visible, decisions about stock, fulfilment and returns become much easier.

– Paweł Zakielarz, CEO, Shopreturns Where is the money actually leaking? The most visible new cost is the €3 duty, but it is not necessarily where retailers stand to lose the most. One issue is mixed baskets containing several tariff categories.

Another is a delivery model in which unexpected charges reach the customer at the door, turning a relatively small customs cost into a refused delivery, chargeback or lost customer. Returns add another layer. A product sent from the UK to a customer in Germany, France or Spain may subsequently have to travel back across the border.

During that time, the retailer is paying for transport and handling while the product remains unavailable for resale. This is particularly important for categories such as fashion and footwear, where returns are a routine part of the business model rather than an exception.

Cross-border returns should be treated as a margin issue, not simply a customer-service process. If a returned product can stay within the EU, it can be inspected quickly and the retailer can decide whether it should be restocked, resold or consolidated for onward transport.

The faster that decision is made, the faster saleable stock can get back into circulation. – Paweł Zakielarz, CEO, Shopreturns What does this mean for different retailers? For smaller cross-border sellers, the answer is