Sales Tax Isn't Why Online Retailers Are Killing Your Store
NEW YORK (TheStreet) -- The media is constantly buzzing about real world retailers being unable to compete against online stores that provide the same merchandise. The stories often focus on the advantage online retailers have in avoiding charging sales taxes. But in reality the advantage isn't all about the taxes: It is often about variety of products, availability, the price, and when you can get the product.
Let's talk about a real-world example of competition in the physical/local market versus going online. Last month I went to purchase an item from my local store. The item costs around $7 in a local drug, grocery or big-box retail store. When my corner drug store no longer stocked the item, I began my search locally. I searched nearly every drug store and grocery store chain and independent store to find this product. To find this one product -- that I have used for years -- I spent between one and five hours over the course of a week, to no avail.
It was taking too much time and effort. None of the stores had an alternative product. So I went to the web and typed in the product name. I found pages of listings for the product, in stock and ready to ship. Three things were apparent:
So I placed an order for four of the product, used my credit card and waited to see when the package would arrive. Two days later I had the product at my door! When I did the math -- not including my valuable time -- I saved $8 off the product (with shipping I saved $4) AND this vendor collected sales tax as if I had purchased the product at a local store.
While it is challenging for physical retailers to compete against virtual ones, the bottom line for the customer may not be just the tax savings. It's an even bigger issue of convenience, variety, range of products, and faster at-home delivery.
I am an avid online shopper. I usually don't have time to go to a local store and often I'm on the road where "local" becomes a relative term. For example, I'm heading to Chicago and realize that I'm packing the last legal pad in my briefcase, I'll take a few minutes to log onto my preferred office supply store, hit my favorites list, place an order and know that when I get back from my trip the legal pads will be waiting for me on my return.