Cyber Monday: A Tax-Free Sales Boon for E-Tailers?

Arlington, VA—Even with an estimated one in four adults shopping Black Friday sales today, a larger percent of shoppers say they will stay home and shop on Cyber Monday, Nov. 28.

A recent consumer survey commissioned by the Retail Industry Leaders Association (RILA) found that 21% of consumers plan to research and shop for deals on Cyber Monday. In fact, the survey found that 19% say they intend to do most of their shopping over the Internet adults, while 60% plan to do at least some holiday shopping online. For those online holiday shoppers, 22% expect to rely on the Internet more this year compared to last year.

If those numbers hold up, Cyber Monday sales could beat the $1 billion in sales set on the online shopping day last year. In general, online sales will hit $60 billion this year, a 15% increase over 2010, Forrester Research estimated.

Many retailers got a jump on Cyber Monday with some offering promotions on the eve of Black Friday creating, in effect, a “cyber week.”

“Earlier cyber deals are also being prompted this year by the lingering economic variables facing consumers,” said Casey Chroust, executive vice president at RILA. “Retailers recognize that consumers have fewer dollars to work with this year and firm budgets that they are sticking to.”

RILA: Most Shoppers Have No Idea They Still Owe Sales Tax for Online Sales

Therefore, Cyber Monday doorbuster deals and coupons are being promoted in nearly all mediums—“playing up the digital crowd and offering deals, contests and information via their website and social media platforms such as Twitter and Facebook as well as through mobile and tablet technology,” Chroust added.

The RILA survey found that many of the Cyber Monday shoppers, about 40%, will do most of their buying on the websites of online-only retailers like Amazon or Overstock dot com.

“Brick and mortar retailers will pay particular attention this year to how e-tailers fair with many on-line only retailers able to avoid collecting sales tax at the point of sale, an advantage over the brick and mortar retailer who must collect this tax,” Chroust said.

RILA supports recent legislation introduced in the U.S. Senate that would allow states to collect sales tax from pure Internet retailers.

When respondents to the RILA survey were asked, most agreed that legislation is needed. “Sixty one percent (61%) of consumers surveyed support Congress passing legislation that would allow states to require online-only retailers to collect state sales tax just like storefronts in the community. Not surprisingly, three quarters of those surveyed had no idea that when a sales tax is not collected at the point of purchase on sites like Amazon.com, it’s still owed by the consumer,” Chroust added.

According to RILA estimates, approximately 227 million adults live in states with a sales tax. “According to this data, 135 million of these people plan to do at least some holiday shopping online this season; 98 million of them have no idea that they will likely have an unmet sales tax liability. And on Cyber-Monday about 47 million plan to do some online holiday shopping; 35 million of these shoppers have no idea that they still owe sales tax on their online purchases.” RILA said.

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