Channel Dollars » Marketplaces and More

Amazon Taxes and the Rumor Mill

Kevin Packler — Fri, 13 Jan 2012 03:30:18 +0000

At the end of 2011, Amazon made a hard push to ensure all of their third-party merchants had provided IRS Form 1099 information. The push was hard enough that Amazon would be deprecate anyone who didn’t complete this (no word if that actually happened). Why now, and what makes it so essential to have this information provided by the end of 2011, or at least before 2012 rolled around?

All of Amazon’s work with individual states suggest that by 2014, Amazon expects to have the internet sales tax issue worked out. As Internet Retailer reported, Amazon has cut a deal with another state, this time being Indiana to solve the tax issue. Their provision pledges that Amazon will voluntarily collect sales by January 1, 2014 for all Indiana consumers on Amazon. Some people believe Amazon is anti-tax, but that’s not the case. As Jeff Bezos has stated, Amazon is just pressing for a sensible tax system, and it’s looking more and more likely a system will be in place within 1-2 years, with a bill being passed either this year or next.

What makes the 2012 push for 1099 forms interesting is a rumor written about by Jason Calacanis that Amazon may open retail stores. That would be a huge change, and if it were to happen, it would make Amazon instantly tax liable in any state which a store is opened in. Adding more credibility to the rumor, the physical store roll out would also make sense because it’s inline with Amazon’s always aggressive strategy, fits with their push to grab offline sales such as Amazon’s Q4 offer to credit consumers to buy on Amazon, would stick it to Walmart (I wouldn’t underestimate this one), and fits with their same day delivery experiments where a consumer could have an item delivered to them same day and thus create a store with very little overhead expenses due to the light inventory.

I don’t usually devote space to speculation, but this rumor has a certain ring to it which may be worth listening to.

Reverting Back from Holiday Rate Cards

Kevin Packler — Wed, 28 Dec 2011 20:06:18 +0000

That was a busy holiday season. I imagine everyone will agree we saw about a 15-20% lift year over year for the quarter industry wide, but sometimes the work involved feels like it’s gone up exponentially to achieve those goals. Regardless, when thinking ahead to life outside of Q4, it’s good to keep in mind the end date for holiday rate cards.

Shopzilla has already gone back to standard rates, so this should be a prime location for pushing budget to. On the other side of the coin, some engines are not rolling back rates until January 15th, so throttles should be available if needed.

End of Holiday CPC Rate Card

Shopzilla December 25
Gifts.com December 31
NexTag December 31
Shopping.com December 31
PriceGrabber January 15
Pronto.com January 15

National Online Sales Tax Moving Forward

Kevin Packler — Sun, 30 Oct 2011 09:57:58 +0000

Bit by bit, the national sales tax momentum is gaining steam. Dual bills have been introduced in the federal government which is being spurned on by the shoot out between states to establish a revenue stream from booking online sales industry.In the Senate, Lamar Alexander, R-Tenn., Michael Enzi, R-Wyo., and Dick Durbin, D-Ill., are pushing a measure very similar to a House bill being pushed by Steve Womack, R-Ark., and Jackie Speier, D-Calif. The structure to both is similar to what many industry experts are looking for:

Designating a single rate tax structure for all states
Creating a single point of collection for the sales tax
Clearly establishing what items are taxable

There are some differences as well in the bills, specifically measures leaning more toward small businesses.

In terms of history, all current legislation for tax collection are based on a 1992 Supreme Court Case, Quill Corp v. North Dakota. In this case North Dakota attempted to collect sales taxes from Quill based on mail order catalog sales. The court ruled that there needed to be strict standards on having a physical presence in the state to collect taxes, such as an inventory center or retail store. In this case, the Supreme Court stepped in because of a prior case in 1967 which confirmed the governments ability to regulate interstate commerce and taxes. Overall, it’s fascinating to note that present day Internet tax laws are based on mail order catalog sales.

The good news is that legislation is crawling out of the 20th century to catch up with technology. In terms of state sales tax, my best guess says that a law is passed by the end of 2012 and implemented in times for 2013. Hopefully, and likely, this will begin a long line of updated (and possibly streamlined) legislation.

Federal Intervention For Online Sales Tax Gains Momentum, California Affiliates Lose Their Heads

Kevin Packler — Thu, 07 Jul 2011 04:02:58 +0000

The gears of tax reform continue to turn, not only in the nation’s capital, but also along the Pacific. In Washington a series of bills are being considered, including the Digital Goods and Services Tax Fairness Act. This bill, supported by Amazon among others, would not only clarify taxes across state borders, it would also bring clarity to digital goods. Currently digital goods are taxed at telecom rates of 18-20% instead of rates which a typical 6-10% which a consumer would pay if they bought the same item in physcial form. It’s becoming more obvious that reform is needed, and fortunately a concensus is growing in equal proportion.

Moving to California, the passing of state sales tax laws there is causing Amazon to give the axe to 10,000 affiliates to avoid paying the sales tax. As more of these bills are passed, aside from the tax issues, some questions emerge around the affiliates. If this saga stretches out, the competitive landscape is thinning out so that states with strong affiliates are now gaining a big advantage. Additionally, questions have to emerge at some point if Amazon will feel the effects of this as their marketing network is changing. It’s not likely this will affect Amazon’s top line revenue based on their extensive and aggressive marketing operations, but at some point it should encourage shifts in strategy where gaps are opening up in driving sales.

SHOP.COM Going Back To It’s Roots

Kevin Packler — Sat, 02 Jul 2011 21:11:05 +0000

SHOP started as a marketplace only option, and by golly, it’s going to end as a marketplace only option. Since being acquired by MarketAmerica, SHOP has officially moved it’s operations away from NY, and now the focus is officially moving too. The CPC program which was first offered a few years ago as an easy integration option, will be shuttered effective August 1st. No word on details of how the OneCart program will be managed or if more changes are coming, but any merchant on the CPA platform will continue along as usual.

Google Product Search Unique Identifier Requirements

Kevin Packler — Tue, 17 May 2011 04:57:32 +0000

Google is making a strong push to better identify the product offers being used. Google has already given a cut off date of May 3rd to have required identifiers in place, but are in the process of phasing this in currently.

Google’s looking mainly for UPCs on items, however there are some ways to get around this. First, UPCs are being phased in for Media and Books as a requirement. Apparel and custom made goods are exempt from the requirement. For all other categories, Google will take 2 out of 3 requirements. For example, a merchant can provide Brand and MPN, and this will serve as substitute for not having a UPC. Of course MPNs can also be difficult to find at times, but UPC is much more difficult so it’s a good substitution situation.

Overall, this makes sense as Google is looking to create more competitively matched offers, in the same way that Amazon does. So, merchants can expect to potentially loose a portion of traffic if their listing is now buried in other merchants. However, a merchant may also see a large boost in sales if their offer is the best positioned (from complete offer information, price, reviews, history).

The full rules can be found here:

The full requirements can be found on Google’s page here: http://www.google.com/support/merchants/bin/answer.py?answer=160161

Marketplaces Gaining Traction

Kevin Packler — Fri, 29 Apr 2011 01:49:24 +0000

There’s been a lot movement lately in the marketplace niche. Presumably, Amazon’s run away success is enough to keep companies working to keep looking for options. However, most of the recent changes point more to opportunities in 2012.

eBay’s recent acquisition of GSI Commerce looks like it has the most obvious potential. First, GSI Commerce has the infrastructure needed to set up a fulfillment by eBay type of system to compete with Amazon’s FBA program. When you mix in the infrastructure put together around ShopRunner, you have a good mix to take eBay to a higher level, continuing the move from garage based sellers to legitimate large scale retailers. In keeping with the timing prediction however, this will take a while to pull together. Look for some serious push next year.

SHOP.COM has also undergone a transition. One of my favorites in 2005, SHOP suffered a long and painful slide as it originally looked like the best marketplace option to Amazon. However, perhaps the partial ownership by Amazon put the brakes on that competition. SHOP is now owned by Greensborough NC based Market America. Initial signs show that the CPC model which was brought in to compliment the One Cart system is now being pushed out, to move back to a more focused marketplace model. I’ve always thought SHOP had a huge amount of potential if put together properly. Giving Market America some time, maybe they can bring out the potential.

The next option worth pointing out is Sears Marketplace. Sears is interesting, because you have a large brick and mortar retailer looking to essentially backfill with other merchant’s inventory. It’s an interesting idea, and it has gained attention. I haven’t seen any hard metrics to show what kind of potential exists here, and currently I don’t see how Sears can turn a huge amount of sales for other sellers. However, given some time, perhaps they can find the right mix of competitive partnership in selling their own goods, and also selling other sellers’ goods.

The last marketplace option is Buy.com. Buy has been pushing their integrated site offering for a few years now. There is also a good amount of potential here, with an established core business, good name brand, and room to grow. Integration hurdles remain, as well as working to build a large stable of merchants, but given more time and coordination, Buy could also emerge as something greater than a single-inventory driven site.

So, the conclusion is that if being Amazon were easy, everyone would do it. However, as long as Amazon continues to mount record sales numbers, someone will try to join the party.

Google Algorithm Change and the Impact to Comparison Engines and Marketplaces

Kevin Packler — Fri, 04 Mar 2011 02:06:31 +0000

I recently came across some great information from SEOClarity which helps understand how the recent Google algorithm changes are impacting third party product sites like comparison engines and marketplaces. Based on SEOClarity’s research, the winners appear to be Amazon (as usual) and NexTag among others. The losers are even more interesting, where TheFind, Bizrate, and Shopping.com all appear to be have lost ground, and merchants may be feeling this impact.

I won’t spend time echoing the study when instead I suggest reviewing SEOClarity’s .PDF yourself:

SEOClarity: Clarity Insights Google Algorithm Change 2/24/2011