Sales taxes - or the absence of them - are one of the big reasons why some online retailers can often beat out their brick-and-mortar counterparts that also sell online.
Simply put, many e-tailers do not collect taxes from their customers if they don’t have a presence in a state. This gives them an edge over operations that range from Wal-Mart to Target to Sak's Fifth Avenue.
This discrepancy is also one reason sites such as eBay and Amazon have thrived in the downturn, according to the Economist. A PriceGrabber.com study from earlier this year supports this notion. It found that 53% of online Americans said the recession caused them to spend more time on the internet researching purchases so they could suppress impulse buying, and also searching for deals that do not include shipping fees or sales tax.
Holiday Over?
However, the tax holiday enjoyed by e-tailers and their consumers may be coming to an end as the appeals process over a New York state law winds its way to a close. Last year New York’s legislature passed a law requiring Amazon.com and other internet retailers to collect taxes on sales to New York customers (via the New York Times). Amazon challenged the law in a lower court, a motion it subsequently lost. Now, a New York appeals court is expected to rule soon.
If the law is upheld, cash-strapped states are likely to follow suit shortly after.
New Tactics
Unwilling to wait for legislative relief, retailers with both online websites and brick and mortar outlets are deploying multiple strategies to get consumers to spend both online and in-store this holiday shopping season. At Macy's, for example, every dollar a consumer spends online at the site leads to $5.70 in spending at a store within 10 days - because consumers learn about other products online.
With such goals in mind, retailers are beefing up "multichannel" shopping opportunities, in which people can buy the same items from the same retailer in several different ways - online, in stores and, now, via their mobile phones.
Mobile as a Tool
In fact, retailers are placing significant hopes on incorporating shoppers' cellular phones into the retail experience. A technology called near-field communication (NFC) enables shoppers to scan products with their phones to learn more about them, and then to pay by swiping their phones at the cash register. Unfortunately, the Economist reported, NFC will not be widely available for some time.
