All through the U.S., Americans have steadily done more shopping online every year. There’s not too much to discourage a shopper from doing their purchases from the convenience of their homes. E-commerce websites have a wider selection shoppers can choose from, and let’s not forget, the lower prices that eCommerce websites can offer. One fact that may have gone unnoticed, or perhaps one of the real reasons why eCommerce websites were able to prosper so well was the fact that online sales were tax-free. In comes the new eCommerce sales tax.
As of this past Thursday, the Supreme Court has now closed that loophole, ruling that eCommerce websites will now be required to include a sales tax for online sales. The ruling states that internet retailers of these eCommerce websites can be required to collect sales tax, even in states where they have no physical presence.
South Dakota v. Wayfair Inc.
The eCommerce sales tax can be seen as leveling the playing field between eCommerce sites and brick-and-mortar businesses who have complained they’ve been put in a disadvantage because of the loophole.
To be clear, states that have been missing out on revenue from online sales taxes from these ecommerce sites can now collect their share.
Think about this: Amazon, the largest traditional retailer, had $119 billion in revenue from product sales alone last year. WIth this new ruling, there’s a chance to spread the wealth for states who are in desperate need of funding for their budgets to make a difference in their local cities and communities.
When Will The Ruling Go Into Effect?
As for South Dakota, they can begin collecting the e-Commerce sales tax for online sales in as little as 30 to 90 days. Other states may not be that far behind. Some may have to change their laws if they want to take advantage of the decision. “Expect a flurry of activity in legislatures”, said Hayes Holderness, a law professor at the University of Richmond.
What Does This Mean For Your E-Commerce Website?
As an eCommerce SEO agency, we highly advise to do your own specific research as to what each state is planning to do with the knowledge of this ruling. For example, municipal governments in states such as Pennsylvania and New Mexico, where peculiarities in tax codes prevent local jurisdictions from taxing remote sellers.
As a consumer, this ruling could mean that you may need to pay more for products you have bought in the past.
We know this ruling is an extremely big deal for an eCommerce business because the retail giants like Amazon and Overstock.com are already feeling the hurt. Amazon’s shares feel 1.1 percent and Overstock.com went down more than 7 percent, as of Thursday.
Seek out the best eCommerce SEO company to develop a long-term plan that can help your eCommerce business not only compete with the sales tax for online sales, but also combat against the soon-to-come rising SEO efforts from the retail giants as well.
Now, more than ever, it’s important to increase your eCommerce SEO strategy efforts to increase traffic to your website. By ranking high on many of your keywords, specifically product keywords, the better chance your eCommerce website has a chance to compete. SEO for eCommerce websites will garner you more organic results rather than paid ads, which can combat the hit your business will take with the new sales tax for online sales.
The ruling may seem intimidating because the challenges of compliance it has brought upon can really present problems for internet startups. In this day and age, many companies offer software that help small businesses navigate local laws.
No Slowing Down
Online shopping is not going anywhere and the ruling will not impede consumers from purchasing online. In fact, experts agree that the opposite will happen. Last year, remote sellers accounted for sales exceeding half a trillion dollars. The tax-free nature before Thursday helped online retail giants gain a significant advantage when they needed it the most. It’s time for other eCommerce websites to prosper as well.
If you’d like a complete sales tax guide for online sellers, check out https://www.bigcommerce.com/blog/ecommerce-sales-tax
Our next blog post will dive deeper for those eCommerce businesses that would like to learn more about eCommerce SEO, how to choose the best eCommerce SEO company, and the best way to prep against the eCommerce sales tax. Take a look at our blog for other insights, in not only SEO, but other strategies and tips that can help your business succeed using digital marketing.