Amazon begins requiring sales tax in select states, learns lessons

For the past year or so, Amazon has fought numerous battles with state governments over whether they should force customers to pay their relative state taxes at the digital retail point-of-sale system.

However, earlier this year, the company ceded to Texas Comptroller Susan Combs and agreed to begin requiring customers from the state to pay sales tax on their Amazon purchases. This was only the beginning, though, and since then, the company has settled with a number of other states.

Amazon may not be so bad off from the deal. Bloomberg Businessweek reports that the retailer is planning to open another 13 warehouses across the nation, in what many believe is an attempt to speed up deliveries. Furthermore, states that look welcoming to Amazon could benefit from new revenue sources and jobs.

"Amazon is smart like a fox," John Otto, a state representative from Texas, told the news source. "The minute you put a physical presence in the state, you’re obligated to collect the tax."

The obligation cited by Otto is supported by a 1992 Supreme Court decision, Quill Corp. v. North Dakota. The ruling has come under increased attention as a result of tougher economic times and the increasing competitiveness of online retailers.

Tablet conversion rates similar to desktop ecommerce

Merchants have questioned the viability of mobile platforms compared to traditional point-of-sale payment platforms, such as brick-and-mortar and ecommerce. However, a new study from Shopatron suggests tablets are achieving similar conversion rates of traditional desktop computers, further highlighting the importance of incorporating these devices into a merchant's overall retail strategy.

According to the report, the overall conversion rates of tablets are only between 5 and 8 percent lower, with Shopatron clients noting approximately 6 percent of their total sales coming from tablets. As more consumers purchase these devices, the number of people shopping from them is sure to increase as well.

"It’s no surprise that conversion rates on tablets are nearing or outpacing the conversion rates of desktops," says Mark Grondin, Shopatron’s senior vice president of marketing, as quoted by Internet Retailer. "Browsing on a tablet is intuitive and user friendly, providing portability without sacrificing interface quality or functionality."

The face of ecommerce is constantly changing, and retailers will need to adapt if they want to capitalize on new opportunities. Merchants can learn more about the tools they need to streamline their ecommerce operations at the upcoming 2012 Retail Pro Global Conference.

Consumers spending more on mobile devices, retailers developing new strategies

The number of consumers adopting mobile devices continues to grow. There are now 60 million Americans using tablets and 120 million carrying smartphones, according to data that was recently published by Statista. As a result, transactions conducted on these devices account for a greater portion of overall web-based sales, up from 2 percent in 2010 to 8 percent as of the first quarter in 2012.

Moreover, consumers have a tendency to spend more when browsing and buying on tablets. The average ticket total for an online purchase made via tablet is $123, according to Adobe Digital Marketing Insights. This is 20 percent more than shoppers spend on computers and 50 percent more than orders placed on mobile phones.

This could be good news for multichannel retailers, given that consumers are expected to continue investing in tablets. By 2014, it's predicted that 90 million U.S. consumers will be using tablets, according to eMarketer.

To capitalize on these sales opportunities, retailers must develop strategies for optimization, urges GigaOm. The site recommends retailers first investigate the experiences customers are having on the web-based storefront by collecting analytics. This can give merchants insight that can help them discern the type of visits their customers expect to have when they visit.

Learning about consumers' habits can help businesses understand what will turn traffic into conversion. Once they understand this key information, they can use solutions such as Retail Pro's software to provide shoppers with the best buying experiences. 

Mobile commerce to drive retail sales in UK

A recent report by Forrester Research revealed mobile commerce in the United Kingdom is expected to grow from $3.3 billion in 2012 to $23.49 billion (19.25 billion euro) by 2017. By that time, 6.8 percent of online transactions are expected to be generated via mobile commerce.

The report points out, however, that mobile commerce is not to be confused with other mobile payment trends. It limits the definition to consumers using cell- or smartphones to make transactions for physical products or services without placing a phone call or speaking to anyone, as reported to Internet Retailer. In its limited form, this definition excludes digital wallet applications, tablets and near field communication (NFC) technology.

"Mobile buyers will mature from the early adopter profile today to become an increasingly mainstream audience – although this change will take time," writes report author and Forrester analyst Martin Gill, as reported by the source. "Shoppers will use their mobile phones to make an increasing amount of 'traditional' online purchases as they become more familiar and comfortable with the m-commerce paradigm."

Gill adds that these purchases will no longer be limited to primarily digital content such as ringtones, MP3 downloads or mobile applications, and will instead be replaced with small physical items that may be purchased on impulse.

To prepare for these trends, retailers can invest in ecommerce software to optimize their websites for smartphone screens. Retail Pro is one supplier of these programs, which can help merchants stay at the head of the retail technology curve.

Smaller retail merchants prosper online

While big-name retail brands may have been among the first to get heavily involved in ecommerce, it's the smaller merchants that are seeing better sales as they take the plunge. According to the new edition of the Internet Retailer's Second 500 guide, the average up-and-coming merchant has experienced a significant sales growth over the past year.

The guide suggests that smaller merchants have seen sales growth of 17.7 percent compared with 2011, compared to the average 14 percent increase observed among larger companies. Of course, this doesn't include the very tip of the top – Amazon's sales surged 40 percent and actually raised the growth rate of the top 500 by 6 percent.

Being small has several key advantages, such as being able to quickly respond to changing demand.

"We have the liberty to think through challenges and strategies quickly and without the hindrance of history," says Richard Mumby, vice president of marketing for web-only retailer Bonobos. "We are a new brand so we can speak to customers the way we want to."

Information is critical to responding to customer demands, and Retail Pro's software can help small retailers become even more flexible and responsive.

Chinese retailers make big investments in ecommerce

Chinese retailers are hoping to capitalize on the improving internet infrastructure in the country and are offering more ecommerce options, China's Ministry of Commerce reported.

Web sales in the country topped 782.56 billion Yuan ($124.22 billion), a 53.7 percent increase compared with the same time last year. Overall, ecommerce accounted for approximately 4.3 percent in total retail sales. Comparatively, ecommerce grew by 16.1 percent in the U.S. and accounted for 4.6 percent of all sales.

"In 2013, China is expected to surpass U.S. as the world largest online retail market," said Yaoping Jiang, vice minister of commerce, as quoted by Internet Retailer.

However, this growth is coming at the expense of overeager ecommerce giants. Many Chinese retailers are taking heavy losses now in the hopes of becoming a leader in the ecommerce sector as it continues to grow.

As Chinese retailers continue to diversify their offerings, technology solutions can help them engage customers and improve the overall shopping experience. Everything from retail POS terminals to security technology could be used to expedite the shopping process while ensuring merchants maximize return on investment.

Texas begins collecting taxes on online sales

Online retailers have a number advantages over their brick-and-mortar counterparts – fewer operational costs because they don't need physical locations, a broader reach as they can engage anyone with an internet connection, etc. However, if there is one critical perk to operating an ecommerce shop, it's the fact that online retailers don't have to charge sales tax in some states.

This has obviously been a point of contention among many state governments and local retailers. Governments don't collect any tax money on these purchases, while brick-and-mortar retailers view it as an unfair advantage because it reduces the amount consumers have to pay. It's a lose-lose situation for both parties, with retailers losing sales to ecommerce merchants and governments losing money from taxes physical retailers would be paying.

As a result, many states are adjusting their laws to begin charging ecommerce shops taxes. Texas is the latest to take action that requires online-only retailers to collect taxes. Beginning July 1, merchants such as Amazon.com will need to charge shoppers sales tax on each purchase.

"A true free market is devoid of government preferences and special treatment," said Sandy Kennedy, president the Retail Industry Leaders Association (RILA), as quoted by RetailingToday. "Texas has made a powerful statement that it's time to end special treatment for online retailers and close the sales tax loophole that gives companies like Amazon an artificial leg up on Main Street retailers."

As many as eight states throughout the country have passed legislation requiring online retailers to collect sales tax and more continue to do so each month. California and Pennsylvania are slated to do so in September, while New Jersey and Virginia recently did this as well.

RILA was quick to suggest that Congress should take action and enforce this nationwide. Physical retail stores bring a lot to the economy, including new jobs, and giving ecommerce storefronts an advantage threatens their existence.

That said, it's paramount that physical retailers also improve store operations to create a better shopping experience. Now that the playing field is evening out, retailers can win over customers by providing an experience they can't get online. Many merchants are integrating new technology in a way that will help them better serve their customers, improving the ease of shopping and convenience dramatically.

Small ecommerce retailers spring back in May

Small and mid-size ecommerce retailers experienced a lag in sales this past April, but prospects brightened considerably in May, according to a new report from Dydacomp.

In April, web sales declined by 4.3 percent, but they shot back up by 8.6 percent in May. Dydacomp CEO Fred Lizza was quick to note that this marked the single largest year-over-year growth rate, both for gross sales and number of orders. The size of the average order was up 1.8 percent, while total growth in the volume of orders increased by 6.7 percent in May.

"Books continue to be a high-growth category despite the dominance of Amazon.com and the popularity of e-readers, recording a 22 percent year-over-year increase in total sales in May," Lizza says. "We believe this growth is influenced by many religiously affiliated organizations that publish unique content not available through mainstream distribution channels."

Separate data from comScore has noted the growing popularity of online shopping. During the first quarter of 2012 alone, ecommerce sales were up year-over-year by double-digits.

Australian retailer taxes shoppers for using outdated web browsers

Maximizing user experience can be a pain. When retailers are operating an ecommerce website, they need to account for shoppers browsing through a number of platforms and technology, ranging from smartphones to different internet browsers. This also creates more work for design teams, which adds additional expenses to operating an ecommerce platform.

Kogan, an Australian technology retailer, has come up with an interesting solution to that problem. The retail brand recently decided to begin leveraging an additional tax for users still browsing with antiquated software, such as Internet Explorer 7.

"Internet Explorer 7 has long since passed its use-by date," Ruslan Kogan, CEO and founder of the ecommerce site, told News.com.au. "It’s a constant source of frustration for our web guys and we're sick of burning cash on a browser that hit the market nearly six years ago. It goes against everything Kogan stands for."

Kogan believes he is doing customers a favor by encouraging them to upgrade to browsers that provide a better shopping experience.

While Kogan's move may be extreme, it highlights how much time and energy retailers should be investing into making the best user experience. Often times, business owners create a single site – given the sheer number of web-browsing platforms, that isn't enough anymore.

European Ecommerce chairman looks to ease online shopping fears

Ecommerce is slowly picking up steam in Europe, with research firms noting consistent double-digit growth each year. Francois Momboisse, a veteran of the retail industry and the newly elected chairman of Ecommerce Europe, hopes to stimulate interest in the shopping medium even further by eliminating some of the common concerns consumers in the region have with ecommerce.

While growth has generally been consistent, Momboisse has noted there is a tremendous disparity within European member states. For example, in Scandanavia, the United Kingdom and the Netherlands, high-speed broadband is common and consumers are more apt to shop online. However, in Bulgaria and Romania, internet penetration is very low, which makes ecommerce a foreign concept to many consumers.

As the recently elected chairman of Ecommerce Europe, Momboisse aims to promote ecommerce and help the growing sector prosper. The key to doing this addressing key issues that prevent online shopping from taking hold in the region, such as underdeveloped internet infrastructure, the use of cookies to track customer behavior and the general promotion of ecommerce as a means of purchasing products and services.

"My objective will be to provide members of Parliament and the Commission with a better understanding of our job, and of consumers' expectations and needs," Momboisse explained to Internet Retailer. "We believe all areas have a strong potential for growth, based on what happens everywhere in the world. The regions that are still underdeveloped need broadband penetration growth, and we want to see that this is an objective that the Commission has clearly identified."

Always room to grow

Even regions where ecommerce has been established – such as the U.K. – can be benefited by the exploration of new markets. For example, several grocery stores in the country have begun selling groceries online. Tesco, one of these chains, is expected to bring in upward of $5.26 billion from its ecommerce offerings.

According to a separate report from Ecommerce Europe, only approximately half of Europeans shop online. In some areas, as few 6 percent of residents actively buy goods online, which suggests ecommerce has a long way to go before it's universal.

"There are enormous opportunities, but there are many barriers that still inhibit the growth of ecommerce," Wijnand Jongen, chairman of the executive committee of Ecommerce Europe, told Internet Retailer. "This is because of the differences in legislation, payments and logistic systems in Europe. What we strive for is more uniformity, so we are not restrained by European digital boundaries."