E-Taxes Take Another Holiday

Last week on Capitol Hill, when the U.S. Senate approved a two-year extension of the moratorium on Internet taxation, the entire e-commerce industry drew closer to the biggest reprieve it has ever received.

With the White House indicating that George W. Bush will sign the pending bill, it appears that Congress and the president have joined forces in recognizing the importance of allowing e-commerce additional time for unfettered growth.

Online merchants have grown more efficient as time has gone by. But now, they must respond with even more determination to use the next two years to build up the image of online shopping and advance the development of e-commerce systems and standards.

Local Heat

First of all, the big bad wolf has not gone away. There is still a lot of heat on the house of e-commerce.

Even as the industry hails the passage of the bill, individual state governments are likely to turn up their effort to impose sales taxation on Internet purchases.

After all, in the year 2000 alone, states arguably lost US$26 billion in uncollected sales taxes on Internet purchases. That loss is apt to fuel the resolve of states to find a way to tax online shopping.

E-tailers should respond in advance to the states' efforts by finding more winning marketing strategies, and further streamlining fulfillment and delivery processes. Proactive steps now by online merchants could ensure a captive, loyal audience that will stay online even if taxes become a reality.

Going Mainstream

Web retailers must also convince each new member of the exponentially growing Internet audience that there are good reasons to shop online.

Selling the American public on Internet shopping is all about timing and circumstance. Right now, many forces seem to be aligned in e-commerce's favor: new shoppers, greater demand, and Americans staying home instead of going to malls.

Additionally, many sites are in much better technical shape than they have ever been. E-tailing has had enough time now to learn from its mistakes, and concentrate on value, fulfillment and service.

The question is, will the holiday shopping season fuel the fire, or put it out? Forecasters differ on their predictions of holiday e-sales volume, but one thing everyone agrees on is that there will be some new faces at the e-commerce table this year. E-tailers have an important opportunity to increase the number of those faces.

Ready or Not

E-tailers are not simply order-takers; they're marketers as well. If they were order-takers, e-tailers could just sit back and let it happen. Since they're marketers, they have to make it happen.

Although e-tailers are probably in better shape in terms of their infrastructure and their mission, whether they will successfully execute strong holiday marketing remains to be seen.

Online retail is past its infancy. The industry can and should learn from previous mistakes. The extension of the tax moratorium is a gift for e-tailers, and to some extent an unexpected one. Will e-tailers' rise to the occasion and take full advantage?

What do you think? Let's talk about it.