Internet Sales Growth Explosive, Compared to In-Store Sales

The following article was sent to me by the Streamlined Sales and Use Tax Governing Board, an organization representing more than half the states that charge sales tax. In it you see the shift to Internet retailing and the consequent loss of sales tax revenue for the state. We are attempting to convince Congress that they should require Internet merchants to collect sales tax for states in which they do not have a physical presence, something the Supreme Court said was too difficult for them to do 15 years ago.

There are several bills in Congress right now do do this – a Democratic bill, a Republican bill, and a bi-partisan effort that seems to have legs. Yesterday the legislature in our Washington passed a “joint memorial” (SSJM 8009) to Congress urging them to take action on one of the bills. I personally prefer the bipartisan act.

This act by Congress could collect up to $170 million in sales tax that is legally owed but not being collected today, putting a substantial dent in our budget problem. This would not raise taxes, just do a better job of collecting them.

Our membership in the streamlined sales tax group and this bill is supported by the business community in Washington State, including the Association of Washington Business, Amazon.com, the Retail Federation, etc.

Article from SSUTA:

Early retail sales estimates released today by the U.S. Department of Commerce for November show total retail sales increased 6.7% in November, but that sales at non-store retailers increased at more than twice that rate, 13.9%. E-commerce and mail-order sales make up more than 75% of the non-store retailer subsector, the Commerce Department says.

On a month-to-month basis, total retail sales increased 0.2% from October to November, whereas non-store retail sales grew 1.5%, the Commerce Department says. The November estimates show that stores continue to lose ground to e-retailers during the critical holiday period. Non-store retailer sales accounted for 8.7% of total adjusted retail sales in November, versus 8.2% in November 2010 and 7.8% in November 2009.

 

Early data for December show the trend continuing. Store sales grew 2.9% year over year for the week ended Dec. 10, according to the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index. For the week ending Dec. 9, meanwhile, onlinesales increased 15.7% compared to the same period last year, per comScore Inc., which tracks web sales. Sales data released today by ChannelAdvisor Corp. show that the company’s e-retailer clients yesterday—a day marketers have dubbed Green Monday—experienced an overall sales increase of 19% compared with the same day in 2010. Yesterday was the second Monday in December, which is typically one of the top sales days for e-commerce.

 

Consumer electronics is a prime example of a category of product that consumers increasingly are buying online. ComScore estimates that approximately 30% of all consumer electronics sales in the United States are now bought online, and online sales of consumer electronics grew more than 15% during the third quarter versus the same time a year ago.

Best Buy Inc. today reported that its same-store sales of consumer electronics declined 4.8% during the third quarter ended Nov. 26, compared with the same quarter last year. The electronics retailer also reported that same-store sales (including BestBuy.com sales) increased almost 1% during the quarter. On its own, BestBuy.com revenue increased 20% year over year during the quarter, Best Buy says. Best Buy is No. 11 in Internet Retailer’s Top 500 Guide.

Store retailers this week also announced that they’ll be extending their hours to capture sales ahead of Christmas. Sears Holding Corp. (No. 7 in the Guide) says most Sears stores will stay open until midnight starting Wednesday and lasting through Friday, Dec. 23. Department store chain Macy’s Inc.. (No. 17) says it’ll have 14 stores open 24 hours a day in the last days before Christmas and another 27 stores will be open until 2 a.m. Meanwhile, web-only retailer Amazon.com Inc.. (No. 1) announced today that it is extending its deadline to qualify for free super saver and standard shipping until Dec. 19.

(source: Internet Retailer December 13, 2011)

About the Author

Ross
I am the Director of the Department of Early Learning for Washington State. I formerly represented the 48th Legislative District in the State House of Representatives, chairing the Appropriations committee and spent many a year at Microsoft.