So far, June’s U.S. Supreme Court ruling on sales tax collection has had little effect on merchants. But amidst ongoing debate in Congress and statehouses nationwide, sellers should brace for change in the coming year, and prepare to mobilize omnichannel efforts to smooth the transition.
The Supreme Court’s South Dakota v. Wayfair Inc. decision opened the door to sales tax collection for online purchases, but states are still formulating their responses. A Congressional hearing last month gathered input from supporters and opponents of the ruling, while past attempts at creating federal policy to simplify the existing patchwork of sales-tax rates and rules have continued to stall.
Amidst the confusion, merchants wonder what they can do to prepare for whatever the eventual result may be. The good news is that they can position themselves for success now – and many of the tools they need may already be available to them. Among the moves to consider:
Secure a nimble solution now for eCommerce sales tax compliance. Keeping up to date on changing legislation state by state and municipality by municipality can be onerous for small- to mid-sized merchants. They should verify whether their eCommerce software integrates with specialized solutions that help with up-to-the-minute sales tax compliance. Kibo clients can activate Avalara with a one-click integration, while the service TaxCloud is free to merchants.
Offset online sales tax with alternative discounts. One analyst conjectured that 1 in 10 online shoppers will revert to purchasing in physical stores due to implementation of online sales taxes. Merchants should anticipate that the bump in total order cost may dissuade price-conscious shoppers or buyers of big-ticket items, and find other ways to motivate the sale. Item price discounts, double loyalty rewards, or value-added services such as white-glove delivery and installation are among the options.
Strengthen online/offline connections to win sales. Merchants with physical outlets have an advantage if online sales taxes are levied more widely, in that store and eCommerce site pricing can be completely consistent. Shoppers can opt for stores to receive items instantly – or avail themselves of free store pickup for online orders as a means of skipping delivery costs and keeping the online order total as low as possible. Merchants should work to fully integrate back-end operations in real time and streamline store pickup processes to encourage fluid omnichannel experiences.
How are you planning for potential sales tax adjustments in the coming year?