The good news: Last year achieved significant growth in online shopping, and there’s no sign that train will slow down anytime soon. The bad news: Changes in sales tax laws had e-sellers scrambling to understand and comply.
Trust in online shopping as a convenient, secure alternative to brick-and-mortar continues to grow by leaps and bounds. In 2019 we saw:
• Record-breaking Black Friday and Cyber Monday online sales — 19.4% and 16.5% growth over 2018 respectively
• $72.1 billion in online sales from Nov. 1 to Dec. 1, 2019 — a 16.3% increase over 2018
• By 2023, U.S. business-to-consumer e-commerce is projected to grow 47.8%
• New technologies such as augmented reality (AR) and artificial intelligence (AI) will play a bigger role
• Automated marketing tactics such as targeting and personalization will drive online shoppers’ choices
Two e-commerce channels in particular emerged as the big winners in 2019.
1. Sales via smartphones
• 54% of visits to retail sites — 19% growth over 2018
• 33% of all Cyber Monday sales — 46% growth over 2018
• Projected 72.9% of e-commerce sales by December 31, 2021
2. BOPIS (buy online, pick up in-store/curbside)
• 43% growth over 2018
The 2018 U.S. Supreme Court ruling (South Dakota v. Wayfair) basically gave each U.S. state the power to set its own economic nexus thresholds. That made 2019 the year of tax law changes throughout the land.
As a result, e-commerce sellers face an astronomically more complex task in filing state sales tax returns. In fact, there are now more than 40 different state nexus laws to determine if and where you must register and collect sales tax.
The amount of time, labor and expertise needed to stay on top of sales tax compliance has reached the point where many e-commerce businesses are choosing to outsource the work as a more cost-effective solution.
E-commerce businesses are flocking to software solutions, for all the reasons we discussed above.
• Rising sales volumes require scalable applications that can handle high traffic, provide reliable security and protect against downtime
• Sales tax calculations must stay current with the new complexities
In addition, e-Commerce customers expect convenience and transparency as they check out at their favorite online store. A 2019 study showed that 95% of consumers want to see the total of all fees and taxes before they click “Buy”. Failure to meet this expectation can cost you in sales as well as brand loyalty.
Sales tax processing is just one of the accounting services Xendoo provides to its small business customers. Our comprehensive, affordable packages can take the whole load of bookkeeping hassles off your shoulders.
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