Brick-and-Mortars And Their Bogeymen: Showrooming, Online Sales Tax And Amazon

For the last year or two, brick-and-mortar execs have shared three bogeymen—showrooming, E-Commerce sales tax avoidance and Amazon, itself—blaming each for plummeting sales. And just like the bogeymen of generations of children's nightmares, neither of the first two is real, other than being real excuses for their own problems.

The sales tax bogeyman has been mostly exposed to the light, with the initial states where Amazon has started charging sales tax showing what should surprise no one: The sales taxes being charged have had no statistically meaningful impact on Amazon sales. (A Wells Fargo survey in Texas found a minute drop, one well within the survey's margin of error.)

For the Amazon sales tax haven to be an issue, you first have to believe that the only—or even a main—reason why people shop at Amazon is to save the sales tax. There are quite a few reasons why that assumption is absurd. But the fact that shipping charges are typically many times the sales tax amount is a pretty good place to start.

Amazon's sales are strong because the site is convenient and impressively fast. Its product assortment is massive—so it truly can be a one-stop destination. And its CRM-based recommendations are actually helpful to—and appreciated by—shoppers.

Not only has charging sales tax not changed anyone's mind about shopping with Amazon, there's an excellent chance that many shoppers didn't even notice. (Note: If Amazon ever stops charging for shipping for all customers, that they would notice.)

But for years, retail execs—Sears owner Edward Lampert has been the loudest—have argued that Amazon's sales tax avoidance was crippling brick-and-mortar stores.

It's quite similar to the anti-showrooming refrain, where Amazon is again at the heart of brick-and-mortar problems. Back in January, Target complained to suppliers that they must fight showrooming with product differentiation to foil shopper efforts to price-compare. (Publicly asking suppliers to help make life more difficult for your customers? Yeah, that's going to make them want to visit you more often. Help block efforts to check our prices with rivals? What signal does that send to your shoppers?)

This followed a one-day Amazon trial last December where shoppers were encouraged to scan select products. What we're talking about here is a customer who is interested in a specific product and who has already driven to your store, found the right aisle and located the product. That shopper can walk to checkout and own that product in a few minutes. Or he could enter a lot of keystrokes to try and buy it online, wait days and perhaps weeks to receive it, and pay a healthy shipping charge for the privilege. If you can't close that sale, you have some serious problems, and Amazon really isn't the cause of almost any of them.

Many—but certainly not all—physical stores have not even tried to customize and boost customer service. Beyond the immediacy, you have people in the aisle who can smile and be helpful and knowledgeable. The problem is that for many stores, the associates aren't doing any of those things.

When a retailer truly invests in a superior in-store experience—more pleasant, more helpful, more intuitive—there isn't a Web site that can touch it. (You hear Trader Joe's or Nordstrom complaining about showrooming?)

Plenty of real bogeymen exist for physical stores—gas prices, the economy, shoplifting, limited inventory, etc. There's no need to invent bogus ones.

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