US online retailers under pressure with looming tax bill

WASHINGTON — The US Senate moved Monday toward expected approval of a bill that would subject online retailers to state sales taxes, cutting a advantage that helped them steal business from brick and mortar stores.

The bill, the Marketplace Fairness Act, represents a long fought battle by local governments and businesses to collect taxes on Internet sales to local people by outside retailers like Amazon, eBay, and other online giants.

But it also raises operating challenges for Internet businesses, especially medium-sized ones, to begin collecting tax payments for state and local jurisdictions, wherever orders originate.

Senators voted a generous 74-20 to move to debate on the bill, which suggests an easy passage, despite a stiff lobbying fight to block or alter it from online retailing power eBay.

The bill would force online retailers to collect sales taxes on purchases made in states and localities even if the retailer is not physically present there.

A 1992 Supreme Court ruling has prevented states from compelling tax collection as long as the retailer lacks a physical presence in the state.

With combined state and local sales taxes adding as much as 10 percent to the price of a good, that has given online sellers a significant advantage to local shops.

Local shops then want the bill, as do states and local governments trying to rebuild finances after the deep 2008 recession by seeking out new sources of income.

The National Retail Federation, which represents physical retailers, estimates that $24 billion worth of taxes goes uncollected due to online sales.

“It’s costing states and localities billions in lost revenue,” said Republican bill sponsor, Wyoming Senator Mike Enzi. “Now is the time for Congress to act.”

The bill would cover only retailers with more than $1 million in revenues from outside their physical base, an effort to alleviate the collection and filing burden collecting taxes from multiple jurisdictions would have on small businesses.

But the online giants Amazon and eBay have split over it. Amazon, which long fought local taxes, now has or will have a warehouses in so many areas that it backs the bill, if mainly to ensure its competitors do not have an advantage.

But eBay, the auction marketplace that is increasingly competing with amazon for direct sales of new consumer goods, over the weekend launched a broadside against the bill.

EBay chief executive John Donahoe told eBay members in an email that the bill threatened their business.

“Some lawmakers and large retailers want to impose more costs on you by mandating nationwide sales tax collection for your online business, whether you sell through eBay, other marketplaces or your own site,” Donahoe said.

The White House strongly endorsed the bill, saying it “will level the playing field for local small business retailers that are in competition every day with large out-of-state online companies.”

The influential anti-tax lobby Americans for Tax Reform issued a statement urging backers to fight the bill, saying it would extend the power of “money-hungry state legislators” to apply taxes outside their borders.

“The regulatory implications will span more than just internet based businesses.”

source: interaksyon.com

Google tests same-day delivery service in challenge to Amazon

SAN FRANCISCO — Google on Thursday began testing a service for same-day delivery of toys, clothing, groceries or other items ordered online in what could be a challenge to online retail titan Amazon.

People living in San Francisco or a swath of Silicon Valley from the cities of San Jose to San Mateo were invited to take part in “a new experiment” that the Internet colossus dubbed Google Shopping Express.

“It’s a local delivery service that we hope will make it possible for you to get the items you order online the same day, and at a low cost,” product management director Tom Fallows said in a blog post.

“The pilot will expand as we work out the kinks.”

The service is part of an effort by the Mountain View, California-based firm to “bring the speed of the Web to the real world,” according to Fallows.

People enrolled in the test program will be able to shop at a single online venue for products from retailers such as Target, Walgreens, American Eagle, Toys R Us, and San Francisco’s coveted Blue Bottle Coffee.

“So hopefully, no more trips across town for simple errands,” Fallows said.

Pricing for Google Shopping Express had yet to be determined so people testing the service were being offered six months of free, unlimited orders for same-day deliveries.

Amazon entices shoppers with a Prime service that offers free two-day shipping on orders along with online streaming of films and television shows for an annual subscription fee of $79.A

source: interaksyon.com

Online sellers tailor prices to geography

U.S. online retailers use their computing power to tailor prices to where their customers are located, The Wall Street Journal reported.

The newspaper said it found Staples.com charged $15.79 for a stapler that another customer just few miles away got for $14.29. The Journal said it found Staples appeared to factor in a customer's distance from a rival brick-and-mortar store, such as OfficeMax or Office Depot, when quoting a price.

"How can they get away with that?" asked Trude Frizzell, the Bergheim, Texas, customer who got the lower price.

"I think it's very discriminatory," said Kim Wamble, the customer in nearby Boerne, Texas, who was made to pay the higher amount.

The Journal said its investigation found areas that tended to have discounted prices had a higher average income than places that tended to get higher prices.

Staples told the newspaper its online and in-store prices vary by geography based on "a variety of factors," including "costs of doing business."

The Journal said companies such as Discover Financial Services, Rosetta Stone Inc. and Home Depot gather information about visitors to their websites and use it to develop different pitches to different people -- with prices, products and advertising shaped for specific geographic areas.

Companies that do it say online price differences are no different than those for bricks-and-mortar stores.

source: upi.com

Facebook offering e-retailers sales tracking tool

SAN FRANCISCO — Facebook Inc wants more credit for making online cash registers ring.

Facebook will begin rolling out on Friday a new tool which will allow online retailers to track purchases by members of the social network who have viewed their ads.

The tool is the latest of the new advertising features Facebook is offering to convince marketers that steering advertising dollars to the company will deliver a payoff.

Facebook, with roughly 1 billion users, has faced a tough reception on Wall Street amid concerns about its slowing revenue growth.

“Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers,” said David Baser, a product manager for Facebook’s ads business who said the “conversion measurement” tool has been a top customer request for a long time.

The sales information that advertisers receive is anonymous, said Baser. “You would see the number of people who bought shoes,” he said, using the example of an online shoe retailer. But marketers would not be able to get information that could identify the people, he added.

The conversion tool is specifically designed for so-called direct response marketers, such as online retailers and travel websites that advertise with the goal of drumming up immediate sales rather than for longer-term brand-building.

Such advertisers have long flocked to Google Inc’s Web search engine, which can deliver ads to consumers at the exact moment they’re looking for information on a particular product.

But some analysts say there is room for Facebook to make inroads if it can demonstrate results.

“The path to purchase” is not as direct on Facebook as it is on Google’s search engine, said Debra Aho Williamson, an analyst with research firm eMarketer. But she said that providing information about customer sales conversion should help Facebook make a stronger case to online retailers.

“It lets marketers track the impact of a Facebook ad hours or days or even a week beyond when someone might have viewed the ad,” said Williamson. “That allows marketers to understand the impact of the Facebook ad on the ultimate purchase.”

Marketers will also have the option to aim their ads at segments of Facebook’s audience with similar attributes to consumers that have responded well to a particular ad in the past, Baser said.

Online retailer Fab.com, which has tested Facebook’s new service, was able to reduce its cost per new customer acquisition by 39 percent when it served ads to consumers deemed most likely to convert, Facebook said. Facebook defines a conversion as anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter.

New opportunities

Shares of Facebook, which were priced at $38 a share in its May initial public offering, closed Thursday’s regular session at $22.17.

In recent months, Facebook has introduced a variety of new advertising capabilities and moved to broaden its appeal to various groups of advertisers.

Chief Operating Officer Sheryl Sandberg said in October that Facebook saw multi-billion revenue opportunities in each of four groups of advertisers: brand marketers, local businesses, app developers and direct response marketers.

Facebook does not disclose how much of its ad revenue, which totaled $1.09 billion in the third quarter, comes from each type of advertiser. Pivotal Research Group analyst Brian Wieser estimates that brand marketers and local businesses account for the bulk of Facebook’s current advertising revenue.

Earlier this year, Facebook introduced a similar conversion measurement service for big brand advertisers, such as auto manufacturers, partnering with data mining firm Datalogix to help connect the dots between consumer spending at brick-and-mortar and Facebook ads.

And Facebook has rolled out new marketing tools for local businesses such as restaurants and coffee shops, including a revamped online coupon service and simplified advertising capabilities known as promoted posts.

The new conversion measurement tool is launching in testing mode, but will be fully available by the end of the month, Facebook said.

source: interaksyon.com