Amazon Commerce

Is The Brexit Bad News For Amazon’s International Ambitions?

The butcher’s bill has been rolling in all weekend when it comes to the Brexit and, of course, the early numbers are ugly. Ugly on the stock market, ugly for banks and truly ugly for tech innovators in the U.K.

And, as it turns out, the problem spread far beyond the U.K.’s border, and well beyond tech startups. Big players are now facing some big headaches.

Players like Amazon, who are now seeing a big potential disruption in the U.K. and E.U. growth plans.

Amazon has already announced plans to expand its U.K. operations this year by opening two new fulfillment centers in the U.K. — and hiring to fill 2,500 jobs there — bringing it to 12 overall nationwide. That expansion is expensive — Amazon has spent $6.3 billion in the last six years — and Amazon now faces a much worse climate to expand into, reports CNBC.

The concern is that Amazon doesn’t have nearly as good a reason to invest a lot of money and hire a lot of people within the U.K. in the coming months and years. Uncertainly is a driver — it is not clear when and if the Brexit will ever come to pass — but Amazon now faces potentially higher labor costs, a surplus of certain skills (and a deficit of others) and a host of other brand new, highly unpredictable issues that take massive bites out of the bottom line.

The good news, some speculate, is that Amazon’s cold focus on pricing and logistics means that some of the more terrifying Brexit effects on commerce may be muted simply because global giant Amazon has a greater ability than most forms to absorb and regularize post-Brexit pricing anomalies. If U.K. demand keeps up, they may bite the bullet and keep on expanding in England.

The problem for Amazon is what it is for everyone: uncertainty.  The economics of the U.K. might continue to make sense, but then again, England the economic island may suddenly be far less attractive as an expansion hub when Amazon is no longer looking at it as the front door to the E.U.

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