Internet Sales Tax Won’t Stop Me From Online Shopping

Brick-and-mortar stores shouldn’t bank on the pending Marketplace Fairness Act.

The Marketplace Fairness Act is a bill that aims to “level the playing field” between online retailers and brick and mortar stores. Most online retailers don’t have to collect state sales tax from buyers in states where they have no physical presence (like a retail store, warehouse or distribution facility). Changing that could be a windfall for state tax revenues and could change the retail landscape. Or will it?

I keep reading about how troubled the physical retailing community is due to an inability to compete with the lower prices offered by cyber retailers who don’t have the same overhead, and that this pending legislation will go a long way to minimizing the price gap between the two types of retailers. But level the field? Not exactly.

Well, not for shoppers like me, anyway. I can’t imagine I’m in a minority when I say that the ease of online shopping—even if tax-free purchases were no longer a factor—will continue to attract me to the computer when I need to buy hard goods or products that I have previously previewed.

As for those things that I need to try on or feel or judge for color or quality, I will head to the hard retailer every time with, in fact, complete disregard to price. Not only do I want to see the item, but returning an Internet purchase can be a hassle. Many e-tailers will refund only the purchase price, not the shipping, and will often deduct a “re-shelving” charge. That, added with the return shipping, can often result in a refund that is far from the purchase outlay. Every now and then there’s an astonishing exception to the Internet-return nightmare. I recently bought a pair of shoes from LorisShoes.com. They arrived, and the tag on the box showed a price lower than what I had paid. When I notified the company, they couldn’t send me a check fast enough, hassle-free and friendly. I was shocked.

So you see, ease of shopping and customer service are worth something too. For me, those factors may outweigh any price difference or, more importantly, be the deciding factor for how I shop even if the price is the same. So will this legislation really change the retailing world that much?

I don’t know, but it might change the shipping world. Because e-retailers don’t have to collect taxes in states where they have no physical structure, they rely on UPS, FedEx and the USPS. Take a giant retailer like Amazon who sells to every state in the country. They would no longer have any reason to not build logistical infrastructure throughout the country. Wouldn’t it make sense to build warehouses in large metropolitan areas and central locations to improve their shipping capabilities? It would be cost effective to Amazon and, and FedEx and UPS would take a hit.

As for me, I’m pretty sure it will affect my investing behavior rather than my shopping; I’ll be dumping some UPS stock.

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  • CJ

    Thanks for the article but once again the customers who purchase through the mail are not mentioned. Millions of people shop through catalogs and mail in checks. We process millions of checks each year. This act also impacts them. A standard order form specifies a tax rate for the states required. That is typically 2 or three states. If I need to notify my customer what they should be paying in each jurisdiction, it would require a 40 page booklet. My typical order is for $50-70. I can’t afford to mail a 40 page order form to the customer. These customers can’t or won’t order online. What are they supposed to do now?