'Net Features : ecommercece

POV: Why the Internet Sales Tax is Bad for Small Business

Administrator — Fri, 14 Jun 2013 17:30:00 GMT

By Steven R. Power, Bicommerce

The Senate’s decision on May 6 to back an Internet sales tax will have a profoundly chilling effect on small business owners across the nation.

Under the Marketplace Fairness Act (MFA), states could require online retailers, no matter where they are located, to collect sales tax whenever a purchase is made. Today, online sellers only have to charge sales tax in states where they have a physical office or warehouse.

What’s the backstory here? The MFA, backed by President Obama, is supposed to level the playing field between brick-and-mortar stores and online retailers. But let’s take a look at the big picture, to see who comes out ahead if the bill passes and who stands to lose.

Follow the money

This is a case of compliance costs hurting small online business, while big companies bide their time. Look at the retailers pushing for MFA – Amazon, Wal-Mart, Target. All of them have a huge online presence. They can easily afford the extra expense (and hassle) that comes with keeping track of tax payments in every state in which they sell.

The supposed target of this legislation, of course, is Amazon. The argument goes that by forcing Amazon to charge sales tax, the company loses its purported tax-free edge on brick-and-mortar stores. That’s just not true any longer, and Amazon knows it.

In the past Amazon would have fought tooth and nail to kill this bill. Lately, Amazon has focused efforts on fulfillment speed, building more warehouses in every state to reduce transaction turnaround time. They’re already prepared to charge and collect sales taxes.

Amazon built its business on having lower prices and no tax. Now they’re so big it no longer matters. They can throw whole teams of people at the compliance problem. Small online retailers don’t have that luxury. By supporting Internet taxes, Amazon can simply outlast smaller competitors that can't afford to keep up with compliance.

A small business nightmare

Small online retailers just don’t have the cash or resources for the paperwork necessary to file tax returns in 45 additional states every single month. Many of these companies operate on 10-20 percent margins. The cost of complying with and paying new state taxes will cripple small businesses.

Make no mistake: Small business will suffer. While the bill is targeted at companies with more than $1 million in out-of-state revenue, that’s many more businesses than you might imagine.

These online retailers have to consider Gross Merchandise Value (GMV) to calculate revenue sold through a particular marketplace (like eBay or Amazon). That includes fees paid by the retailer to the marketplace. An online retailer with a GMV of more than $1 million actually turns a far smaller profit. New sales tax and compliance costs will really cut into that margin.

I think the revenue threshold for the MFA should be much higher – at least $20 million in GMV. Anything lower will crush small business growth.

Who this hurts

My company has nearly 35,000 small businesses using our e-commerce platform to sell online. And while our service doesn't charge transaction fees, many of our clients are multi-channel retailers. They sell through multiple platforms like Etsy, eBay and Amazon, as well as their own e-commerce Web stores.

One retailer sells Halloween masks and costumes – commoditized products for which he has a lot of competition from overseas retailers in China and elsewhere. The tax plan would be damaging to his business. An online consumer could easily opt for his Chinese retail competitor based on nothing more than cost. Another sale lost to foreign competition, where sales tax isn’t an issue.

Another client sells unique tools for bakers that can’t be found in regular stores. The husband and wife who own the company aren't just worried about whether a 6-8 percent cost increase will deter buyers. They're working seven days a week to keep the business going right now. Where will they find time for the administrative nightmare of sorting through the various state and local tax rates? What will hiring more people or tax experts do to their already narrow margins?

The changes proposed by the MFA could drive merchants like these out of business - just like big-box retailers did to small brick-and-mortar operations.

It's time our government started listening to how this legislation will really affect the little guys. Millions of hardworking U.S. small business owners – the lifeblood of job creation for our economy – are just getting by, supporting their families and a skeleton staff on razor-thin margins. Listening to big business alone will throw the economy into a tailspin, and shake the very foundation of e-commerce.

Steven R. Power is Chief Revenue Officer for Bigcommerce. He can be reached at steven.power@bigcommerce.com.

Last-Minute Father’s Day Strategies for Google-Minded Merchants

Amberly Dressler — Mon, 10 Jun 2013 19:00:00 GMT

Dads may typically be easy to shop for, but those doing the purchasing might be a bit pickier. This Father's Day, shoppers are looking to get more bang for their buck. They also want to access product and business information seamlessly across channels.

The good news is that the National Retail Federation’s 2013 Father’s Day spending survey conducted by BIGinsight indicates that the average person is increasing their spend on dad’s gift ($119.84 up from $117.14 last year). The bad news, for those merchants not on their mobile game, is that they also expect their shopping experience to be supported on their phones or tablets. Two in five of those who own a tablet plan to use their tablet to make a Father’s Day purchase, while more than half (51.1 percent) of tablet owners will use their device to research products and compare prices, redeem coupons and look up retailers’ information such as store hours and location. Additionally, four in 10 of smartphone owners will use their mobile device to research gift ideas, compare prices and look up store information.

Regardless of mobile presence (or lack of one), here are four last-minute tips that Google-minded merchants can do between now and Sunday to optimize the Father’s Day shopping experience for their customers (across channels) and increase foot and virtual traffic.

1. Be Friends with Google+

Merchants with brick-and-mortar locations really have the upper hand the week before gift-giving holidays, because many shoppers – even those who regularly purchase online – are hesitant to trust that shipments will arrive on time. Local retailers should ensure that their address, hours and contact information are correct on their website, Facebook Page, Yelp profile and, especially, Google+ account. Proline Golf (pictured below), for example, has a complete Google+ profile, including its address, phone number, category, images and the highest reviews of the results, making it findable by consumers in a gift-buying pinch.

2. Use Ad Extensions

Online and offline retailers looking to increase sales for Father’s Day 2013 (and beyond) should high tail it to their AdWords account to leverage the power of Google Ad extensions. This extra info gives potential customers more reasons to click on paid search ads, resulting in increased click-throughs, conversions and brand awareness. Check out Website Magazine’s “Common Google Ad Extensions for E-Commerce Merchants,” which details six extensions to incorporate today. For example, the offer extension can help retailers promote in-store coupons in their online ads, a perfect recipe for Father’s Day success, while the call extension is a seamless way to connect mobile users to a business with gift offerings, like Golfsmith below.

3. Make Shipping Guarantees

Merchants who are positive they can get a product to a consumer by Father’s Day shouldn’t just say it, they should spray it - all over the place (e.g. social media, paid search ads, splash pages, interstitials, etc.). They should also make shipping guarantees, like CherryMoonFarms.com does here:

4. Provide Inbox Actions

Regardless of the popularity and impact of social media (even you Google+), email is still a very important channel when it comes to connecting with consumers. And, just in time for Father's Day, Google announced its quick action buttons in Gmail, which enable marketers to reach customers without them evening opening emails.

"These buttons appear next to certain types of messages in your inbox and let you take action on an email without ever having to open it. For example, you can RSVP to your friend's party invitation or rate that restaurant you went to last night all right from the inbox," wrote Google Product Manager Shalini Agarwal.

Merchants should only use this tools when high-interaction rates are expected (e.g. leave reviews, make reservations or retrieve promo codes). Learn how to add Google's quick action buttons.

A Lack of Social Media Cohesion

Pete Prestipino — Wed, 02 Jan 2013 19:50:00 GMT

New research from eCommerce and digital marketing company Acquity Group reveals that more than 75 percent of brands lacked a cohesive social media presence across the major platforms.

Results from the agency’s 2012 Brand eCommerce Audit, which evaluated Interbrand’s 2012 Best Retail Brands on customer engagement across major digital channels, indicated that while every brand on the list (except one) had a Facebook page, and 45 out of 50 are on Twitter, only 12 of the brands had a cohesive presence across all five of the major social networks that were analyzed ( Facebook, Twitter, Instagram, Pinterest and YouTube.

Twitter had the largest gap between usage and interaction according to the study. Less than 27 percent of brands analyzed actively participated in Twitter conversations with consumers, even though 90 percent of those brands had a presence.

Other highlights from the Acquity study include:

- 80 percent of the brands analyzed leveraged YouTube with an impressive 85 percent engagement rate.
- 56 percent of brands do not yet utilize Instagram, but there is a high level of interaction at 79 percent.
- 60 percent of the brands had adopted Pinterest and interaction rates on the social pin-board were 70 percent.

Acquity Group also profiled 10 brands that scored best overall in social interaction including Target, Home Depot, RadioShack, Bath and Body Works, Nordstrom, Gap, eBay, Coach, American Eagle Outfitters and Banana Republic (in the order of their ranking).

"Although most brands are signed up for the major social networks, many struggle to understand how they fit into their overarching business strategy. As a result, our audit revealed several critical areas of improvement when it comes to actually connecting with consumers across social channels," said Jay Dettling, Executive Vice President at Acquity Group.

"The important take away for brands is to avoid haphazard or sporadic use of social media. When a new social media channel is introduced, brands need to take the time to analyze the potential impact and return, and develop a solid strategy from there."

Should Merchants Shift Their Focus to Marketplaces?

Allison Howen — Tue, 06 Dec 2011 21:00:00 GMT

As the e-commerce world continues to expand through channels like mobile and tablets, one e-commerce software provider predicts that the next big thing for online retailers is marketplaces.

“Consumers are flocking to marketplaces for good reason,” says Brian Horakh, founder and CEO of Zoovy. “These sites provide a superior user experience with a unified purchase history, large selection of products, sense of familiarity and ease of use. Likewise, online merchants are transitioning their business to marketplaces to take advantage of this trend and view marketplaces as strategic to the success of their growing business.”

Some of the biggest names in the marketplace space include Amazon, eBay and Buy.com, and although many consumers rely on search engines like Google to search for products from a vendor-specific retail store, Horakh predicts that soon, consumers’ first choice for shopping searches will be within a trusted marketplace.

“Marketplaces direct shoppers to the most reliable seller and give consumers the confidence to make a purchase by providing critical buyer information like user feedback, rankings and price comparisons – while search engines do little to help consumers make an informed decision about where to purchase their products,” says Horakh. “Regardless of how optimized a website may be for particular keywords, search engine optimization (SEO) does not ensure the customer’s purchase will be accurate or arrive on time.”

If this assessment holds true, and marketplaces are the future of e-commerce, the obvious first step for merchants is to create a marketplace presence. But the next step is where things get complicated – merchants must increase their marketplace visibility in order to increase sales, and this is done by becoming the marketplace’s most reliable seller.

E-commerce services and tools provider Zoovy has coined the term “marketplace optimization,” which describes the method in which retailers convince the marketplace that they are the most reliable seller. Zoovy will announce its marketplace optimization practice in January 2012.

According to Marketplaceoptimization.com, the five essentials of marketplace optimization include minimizing order cancellations, increasing inventory availability, performing dynamic repricing, improving customer experience and optimizing logistics.

“Much the same way that SEO improves the visibility of Web sites while searching for terms on a search engine, marketplace optimization will provide sellers with insight into the ranking algorithms or signals used by marketplaces to select preferred vendors,” says Horakh.

Encore, ControlScan Protect Data

MaureenA — Tue, 31 Mar 2009 21:45:00 GMT

Encore Payment Systems has partnered with ControlScan to ensure merchants are meeting the new PCI Data Security Standards (PCI DSS). The standards, established by the PCI Security Standards Council, must be met by all organizations that deal with cardholder information and was established to protect sensitive data. The partnership will provide training and certification for merchants using the Encore platform.

Jethro Felton, executive vice president of sales and business development, ControlScan, sees the partnership as a huge plus for Encore and its merchants. "By utilizing ControlScan's PCI compliance solutions as part of their overall offering, Encore Payments will help their merchant community become secure, thereby ensuring that they meet all private and public regulatory requirements by protecting all cardholder data," Felton was quoted in the release.

In October, Website Magazine reported that each lead generated to Encore provides a $20 commission, and utilizes credit/debit processing. So, protecting all data is a good idea.

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Data on E-Commerce and Customer Feedback

Pete Prestipino — Mon, 16 Feb 2009 19:26:00 GMT

Survey solution provider iPerceptions crunched customer feedback on sites using its free 4q website survey tool and found some interesting data on e-commerce and customer feedback.

Retailers lag beyond other verticals and the webwide average when it comes to shoppers' ability to accomplish their primary task on a website. Only 68% of shoppers could actually get what they needed from the site, whether it was product information, company data, pricing, etc. This may be due to more shoppers coming to the website to research/learn (34%) than buy (25%) and more shoppers interacting with your brand and your site many more times before purchasing. In Web analytics speak, these shoppers are “lengthening the conversion funnel.”

In this environment, getting people to your site at the point they are ready to buy is a big win. But 44% of retailers are missing out on that opportunity, because of mundane but unnoticed things like broken shopping carts, limited product availability, inadequate pricing information or simply because visitors couldn’t find what they wanted.

WM Morning Wire: 10-14-08

Pete Prestipino — Tue, 14 Oct 2008 13:13:00 GMT

Welcome to October 14th, 2008! Below are a few press release that caught our attention this morning that you might find interesting. We'll be covering some of these releases throughout the day. If you have a news announcement you would like to share with the Website Magazine community, please contact Website Magazine editors now.

E-Commerce Vendor ShopSite Announces Version 10 of Leading Shopping Cart System
ShopSite, Inc., a leading provider of e-commerce shopping cart and catalog software for small to medium-sized businesses, announced the release of its new ShopSite version 10. ShopSite(R) is an industry leading e-commerce software option for web hosting providers, for new or existing Internet merchants, and for Web designers.

Brightcove 3 Transforms the Business of Online Video
Brightcove Inc. today announced the general availability of the Brightcove 3 online video platform, which transforms the way video is published and consumed on the Web. Built from the ground up, the new platform empowers website producers to be successful in the era of pervasive video.

Veridigm's MediaPal Launches First Music Industry Affiliate System
Veridigm, Inc. a UK investment Company today announced subsidiary MediaPal.com has launched the music and media industry's first Affiliate Management and Content Publishing System.

VidEngage.com Announces the World's First Video-Integrated Social Network
VidEngage.com today announced the grand opening of its video enabled social networking platform. Among a comprehensive offering of traditional social networking functions, VidEngage.com has launched a new video enabled community, in which users can create multiple video profiles for different purposes, such as for job hunting, networking, dating or communication.

Three ECMTA Announcements In One

Pete Prestipino — Mon, 29 Sep 2008 14:35:00 GMT

Trade association for small and medium sized ecommerce businesses ECMTA (eCommerce Merchants) announced three partnerships today.

- The association entered into a 2-year partnership with comGateway which enables merchants to sell to Visa and American Express card holders in the Asia Pacific region who shop from US Internet Retailers on www.onenow.com and www.globaleshop.com. ECMTA members will have the set up fee of $2,500 and the yearly fees waved for two years.

- eCommerce Merchants members will also have access to GamaSec's online web vulnerability-assessment service; testing web servers, web-interfaced systems, and web-based applications against known vulnerabilities. No information was provided on the scope of the offering to ECMTA members.

- Finally, WinBuyer has become a Corporate Partner of the ECMTA. WinBuyer's ecommerce application enables retailers to provide competitive pricing information. Since WinBuyer is a free service to merchants, I am unsure of the actual relationship details of this announcement.

Revolution For Online Merchants

Pete Prestipino — Fri, 12 Sep 2008 13:31:00 GMT

Revolution Money Inc. and CardinalCommerce Corporation today announced that, beginning in October, online merchants will be able to accept RevolutionCard payment cards through Cardinal Centinel(R), the Universal Merchant Platform.

CardinalCommerce's Centinel technology allows merchants to enable multiple payment brands through one installation.

RevolutionCard payment cards charge merchants up to 80% less in transaction fees than other card brands. RevolutionCard charges no interchange fees and only a 0.50% processing fee per transaction. And because all RevolutionCard payment cards are PIN-based, many merchants are discovering that the cards also reduce transaction costs related to disputes, chargebacks and unauthorized transactions.