Just in time for the holiday shopping season, yesterday, October 29, Massachusetts revealed that Amazon.com will begin collecting sales tax as of November 1, 2013 – or Friday, in other words. According to the article, a group of Massachusetts retailers is pushing for a federal law requiring that sales tax be collected from all online retailers. The question is, will a tax on online retailers help or hurt small businesses, retailers in particular, as they head into what typically are the biggest shopping months of the year?
In this article on Masslive by Jim Kinney, consumers expressed dismay that Amazon.com will begin collecting sales tax for the state. One consumer (disclaimer: it was this writer) expressed frustration that she was being asked to pay more money to the Commonwealth, while another, a professor of marketing, noted that local bookstores rarely, if ever, have the specialty marketing and branding books he needs in stock. Both consumers noted that they are unlikely to shop at brick-and-mortar stores and will likely look for better deals elsewhere.
Meanwhile, brick-and-mortar retailers are thrilled, including the proprietor of The Odyssey Bookstore in South Hadley, Mass. “It’s only fair,” Joan Grenier, the owner, was quoted as saying. George Rodriguez, the manager of Manny’s TV & Appliance in Wilbraham, Mass. noted that consumers are “shopping” for TVs on their smartphones while in the store. “It’s just completely unfair,” he said.
Retailers are calling for fairness; consumers are crying foul. So who will benefit?
Amazon.com is going to emerge as a winner, said Phil Rooke, CEO of Spreadshirt, in an email interview. “Amazon’s focus on customer value and service will still retain their customers and attract more. It is always value, choice and service that win in business. Amazon is THE pace setter and this is why they lead e-commerce,” he said.
As for small businesses that may try to compete, those that are only in it for pricing and neglect customer service and value will suffer, Rooke said. Companies will fail not necessarily because of the sales tax but because they were not better at customer service, according to Rooke. He offered the following advice for small businesses and small retailers:
In all business: Everything is about the customer. Keep it simple for the customer. Concentrate on the value, services and choices that you deliver. This is what makes winning companies in booms, recessions or taxation changes. It has always been this way and always will be, [and] this will help you survive and thrive despite the [sales tax].
In ecommerce specifically: look at Amazon and work out what you can provide the customer that is better or different from services Amazon already provides. If you cannot do this, you are not providing anything new to the market and this is a much bigger problem than [sales tax].