For a time, brick and mortar stores ruled the landscape of modern cities and were the epitome of the term one-stop-shop. Making their first appearance in the middle of the 19th century, brick and mortars were the definitions of customer service and luxury. Brick and mortars first came under fire at the introduction of discount stores in the 1970's. Discount stores offered customers luxuries similar to brick and mortars but at a much cheaper price. Despite this drawback, the prosperity of the brick and mortar stores continued to soar. Now, brick and mortars are under fire once again from the threat of e-commerce giants like Amazon, big box stores like Walmart and their arch nemesis discount stores. How can brick and mortars survive in this digital age?
After dozens of protests, petitions, and litigations, brick and mortars have finally found a way out. Within the last several months the Supreme Court filed a ruling allowing states to collect taxes on online retailers that don't have a presence within the state. This ruling overturned a previous Supreme Court decision and is intended to boost state revenue, but at the expense of the residents and small businesses.
This decision also levels the playing field because online retailers, who previously didn't have to pay state taxes, must pay now. Now that online retailers have to pay state taxes, customers could choose to return to their beloved brick and mortar stores as an alternative to the new taxes. But what about small businesses? Grandmothers who send their knitted items two customers on places like Etsy would have to pay this new tax. Another huge threat for online retailers is the state audits. Online retailers will be liable for every mistake and every piece of missing paperwork. Just one mistake could prove fatal to their businesses.
But could this really be a win for brick and mortar? Although brick and mortar stores may not know it yet, this decision may open the door for e-commerce giants like Amazon to their own build brick and mortar stores to have a presence within states to avoid the new tax. Having a bigger presence could prove catastrophic because Amazon already has order pickup locations in places like Whole Foods Market, 7-Eleven, and BMO Harris Bank.
The best scenario for capturing your place in the "digiverse" (Digital Universe) is to have a place both online and offline. Customers that prefer to shop online can still purchase your products in the convenience of their homes and shoppers that don't want to give up the brick and mortar experience still have a place to go.
If you are an online business or a small business and you're concerned about how this new tax will impact your business, feel free to contact us today.