Let’s face it, our states and government need money and the only way to get it is to increase taxes. Looking for ways to basically increase taxes without seemingly to raise taxes has been a challenge in our political environment especially since we are still recovering from the recession. However, there lies a large arena that has been shielded from sales tax collection until now, and that is online shopping.
The State of California has been collecting sales tax for online purchases since September 15, 2012, after many bitter battles with online giant retailer Amazon. Other states are sure to follow, so the question begs, will the collection or additional charges paid for sales tax have an effect on online shopping? I say in the long run, no! It is my opinion, that the collection of sales tax won’t even make a ripple on online shopping.
Although many people shop online as a way to save money because prices are lower because many retailers are able to pass the saving of not having a brick and mortar establishment on to the customers. Even with the collection of sales tax, prices still might be better online. But if prices were the only reason people shop online, then maybe it would make a dent in sales. But I don’t think so because price is not the only reason people shop online. People shop on online for many reasons besides price:
- Time: quicker than going to brick and mortar store
- Convenience: online store open 24/7 even holidays
- Ease of comparison of prices
- Increased selection and variety of items
- Less work: no traveling, parking, no waiting in lines etc
- Availability even if live in obscure out of the way places
- Global accessibility, can shop in any country
- Private, safe and secure
- Can have shipped anywhere with click of button
For myself, I shop online because of time or lack thereof. My work (9-6) and school schedule ( 6:30-9pm) does not allow for much shopping especially during the times stores are open. And if they are open late, like Target and Wal-Mart, I am just too tired to think about going in a store to shop. And on weekends, I have much better things to do, like homework and studying and if not tied down with that. I want to do something enjoyable, like a concert, outdoor festival or even a movie, not go shopping. Therefore, it is a necessity for me to do my shopping online. I am sure there are many others who do so as well.
Now that I have said that much, it is not to say that online retailers won’t have to market themselves to stay where they are. Times are constantly changing and people change the most, their tastes and preferences. So just like any other retailer, online retailers need to stay abreast of what their customer preferences are and adapt, by making changes to how they market themselves and how they relate to their customers to continue to satisfy their needs and desires.
Relating to customers is something that Amazon does very well. Amazon tracks what each customer buys and using their Business Intelligence Software, makes predictions on what other items the customer might like and offers suggestions. I believe Amazon does this better than any other online retailer. Sometimes I think they know me better than I know myself.
So the question remains, will the additional tax be too much for online shoppers? No, in my lifetime, the tax rates have gone up along with everything else and I still buy and consume what I need, want and desire, maybe even more than I should by looking at my latest credit card bill. And I believe people who shop online will continue to do so as well.
Happy shopping,
Eva Prada
http://www.sensibleemarketing.com/
http://www.businessweek.com/ap/2012-09-13/tax-on-amazon-purchases-in-calif-dot-begins-saturday
http://www.guardian.co.uk/lifeandstyle/2011/nov/27/online-shopping-guide
http://anamikas.hubpages.com/hub/Online-shopping-sites-benefits
http://ezinearticles.com/?Why-Shop-Online?-Top-Ten-Reasons&id=4073689
eveofmarketing 
I agree with what you’ve mentioned. I buy most things online because of a lack of time and interest to go shopping in person. That aside, I know plenty of people shop online to try and save a few dollars here and there. I don’t believe that the addition of a sales tax will deter most online shoppers. I think they’ll realize that there is still an aspect of convenience through buying it online as soon as you realize you need something as opposed to hoping your memory will come in handy the next time you’re in the store. Even with taxes, you buy it online in a moment and that’s one more thing off your to-do list! The value of our time is much more important to us than what we’ll be spending on taxes.
-Paula Novoa
The point that you brought about Amazon knowing you more than you know yourself got me thinking. It’s true; Amazon is very good at what it does. With that said, I believe that the new tax regulations might bite a bit into their bottom line due to individuals not buying high priced items as often as they use to, BUT they should still be a strong online competitor. I have asked a few individuals about this issue and some were not even aware that online purchases were tax free. This could be due to the fact that, as you stated, many consumers make purchases through online retailers due to time constraints and not necessarily money savings. Very interesting! I also wrote a similar blog post relating to this same topic. Check it out at: http://roqueyani.wordpress.com/2013/02/24/online-retailer-how-will-the-new-tax-laws-slam-your-business-and-e-marketing/
I agree with you. I think make purchases online is easier and faster. Today more people prefer buy online than go to the regular department store. You can make a research and compare prices at the same moment if you want. The problem is if we are paying more taxes now. Anyway, I prefer continue buying online. Even if taxes are high too many people like me prefer buy online.
http://globalemarketingopportunities.wordpress.com
Maite Jimenez
Amazon and its fellow online retailers will have to find ways to stay competitive once the taxes are implemented because their prices will be close to the same as an in-store purchase. Will the online tax be too much for online shoppers? Truthfully I don’t think so because in the end, everyone is busy and not everyone has the extra time to go shopping. I think that some people will be willing to pay the additional tax and then some to keep the convenience of shopping from home.
Yes, we are paying more taxes, but I do not think that will deter us one bit. Amazon do make it very easy for me too shop. Everytime I go on the website, there is a list of recommendations of things that I like. I also get free shipping with my prime membership. I am an avid reader, and I can sincerly say that Amazon makes it very hard for me to save money. Even though I prefer a physical book, it is so much faster and cheaper to get the kindle version that I end up spending most of my saving.
Eva, I totally agree with you, just like you, I also have a crazy schedule; I work full time, and full time student. I shop online a lot, and even though the law is in states like California, New York, Texas, North Dakota, I am glad it has not affected us in FL just yet. I mean I buy online because there’s no sales tax, sometimes shipping is free, and (as we all know), online prices are very competitive compared to the prices at a physical store. So, when sales taxes are applied here in Florida, I will be having second thoughts about online shopping, probably negative ones. I ask mysefl. “Why would I pay regular taxes when -still have to wait 7-10 dasy for my item to arrive?” This will mean that probably this online companies will have to increase their prices, and it will be a lot more expensive for us who shop online. Not only that small businesses will be the ones who will suffer the most because online shoppers will definitely think twice before buying knowing they will have to pay taxes.
Any comments are appreciated at: http://criticalthinkinginmarketing.wordpress.com/
I agree that charging consumers sales taxes online won’t stop the e-commerce from growing, especially in sales of lower ticket items. There is still a price advantage online, since there is lower overhead for online businesses. One thing to consider is that consumers might start shopping differently if they are required to pay taxes. I believe consumer electronics, computer hardware, and appliances sold by online business might see a decline in sales. Those big ticket items, without the tax break advantage might not seem as advantageous to be purchased online. Consumers usually browse for those products in local store, then purchase online for the tax-free advantage. Consumers are most likely to make those purchases in local store if taxes where collected online or at the brick and mortar store.
Claudia Inoue
claudiainoue.blogspot.com
I completely agree with you; prices are not the only reason that people shop online. In my personal opinion it is because all the benefits it offers and one of the most important is because it simply saves time! Either way, if you go shopping at a physical store, you will still have to pay the taxes, so just as you said: taxes wont have a huge negative impact on online shopping.