By Carol K. Dumas
Remember when you couldn’t buy anything with the click of a computer mouse? The question today is more what can’t you buy online?
ECommerce, the buying of goods and services online, has been around less than 50 years but it didn’t really catch on with many businesses and consumers till the 1990s. Today, some 51 percent of Americans shop online, spending more than $2 billion annually. Big and small companies reap the economic benefits of increased sales and the ease of reaching new customers. Improved software makes fulfillment easy, safe for retailers, and convenient for customers. Consumers enjoy the convenience of shopping via their computers or smartphone without leaving their home and thanks to Live Chat options, can even interact with an online merchant.
Instead of relying on Consumer Reports magazine for guidance, shoppers can also find the lowest prices for many goods via Internet search engines, goods that used to require a visit to appliance or computer stores, for example.
“E-commerce has been paramount to my business as I don’t believe I would able to accomplish as much as fast in the fashion retail space without it,” says Sean Fitzpatrick of Cape Cloth, which has a retail space in Dennis. “It allows me to provide great customer service and establish direct relationships with consumers quickly and efficiently.”
Fitzpatrick built his own website over the internet. “No software required. There are a few different platforms out there that make it relatively easy to build a website. Pricing varies depending on how robust you want the site to be,” he says.
A whole new industry has spawned from eCommerce – entrepreneurs offering digital commerce tools for online merchants.
Coastal Mountain Creative, a digital marketing company founded in 1996, offers a myriad of digital marketing services, including branding, logo design, web design, web maintenance and support, social media management and marketing, search engine optimization (SEO), mobile ad campaign creation and management, web content management systems (CMS), copy writing and content management, email campaigns, Google Analytics tracking and domain registration and hosting. The Mashpee company focuses on small and medium clients representing a wide variety of industries.
Co-founder Chris Boyd says the major change in eCommerce since it began is that it has become much more accessible to any size business and more affordable, due to the many tools now available to sell online.
“You no longer have to spend tens of thousands of dollars to have an online store or to sell services online,” he says. “In the mid to late 1990s we were building stores off Yahoo’s platform.. some retailers today sell through eBay. For many businesses it helps to be established and then move into an eCommerce space.”
Coastal Mountain is seeing trends to create booking engines for events and lodging – all with inventory management. For example, one of its clients, Cape Cod Inflatable Park, hired them to create an online booking system so customers could reserve a cabana for a day.
Whatever size business, for eCommerce Boyd says it’s wise to have a budget in mind and identify the target audience. Essentials are SEO, email campaign and a social following. “Social media is today’s word of mouth,” he says.
For new clients, “We ask what are you trying to do? What are you selling? Do you plan on managing your own inventory? Based on our experience we look at what is the best tool to suit their needs. For the most part, we don’t build eCommerce from the ground up as there are so many great tools out there.”
Not just stuff
Ecommerce is also about selling services, not just goods. A nonprofit eCommerce site would be a vehicle for accepting donations, for example. It’s easy to support your local radio station or contribute to Habitat for Humanity or some another organization’s fund-raising campaign online. Fill out your credit card info, click and you’re done. Book trips, rooms, airlines. Order groceries.
“The big trend we’re seeing is booking engines for events, lodging… all with inventory management,” says Boyd. The vast majority of hotels and inns use booking engines, he adds.
One of their clients, Ryan Family Amusements, hired them to build a booking tool with inventory management for private functions.
Statistics show that only one percent of shoppers visiting an online store actually make a purchase. Privy, a Boston-based digital services company founded in 2011, offers “list building” to online merchants, aimed at reducing cart abandonment and driving sales. One business writer dubbed Privy the “marketing Swiss army knife for online merchants.”
Privy offers a suite of email capture and conversion tools, including exit-intent driven website pop ups and banners to help merchants grow their email list, reduce abandonment and drive sales from the website or online store. No coding or development skills are necessary.
In addition, Privy Email gives small and mid-size businesses the basics they need to do effective email marketing for eCommerce such as newsletters, abandon cart emails and order follow up emails.
Ben Jabbawy, founder of Privy, explains that many incumbent marketing software vendors didn’t focus on list building and capturing visitors to an online merchant. A successful online merchant must build direct relationships with their customers in order to increase repeat business. “You’ve just driven this new, anonymous person to your website. You don’t know who they are, they might complete an order. But like most people, they leave without purchasing. What technology can we use to build a relationship with that person? It’s not just about price.”
One way Privy captures those customers with a program that detects if a shopper is leaving without buying. A pop-up window might appear asking if they forgot something in their cart, or offer a discount for a first-time purchase before the shopper leaves the website.
Having helped small eCommerce stores drive over $2 billion in eCommerce sales worldwide, Jabbawy has empathy for the small business owners vying to market their products in world of giant e-Retailers like Amazon. “Our stake is focused on the small entrepreneur so we do things differently here,” he attests.
To that end, Privy’s pricing model starts free (for sites with less than 5,000 visitors) and the company offers free, live chat support and training for all ecommerce businesses, even those on the free version of Privy’s software. Privy is hosting live trainings at its customer conference in September (go to privy.com/live for more information).
Privy has seen 100 percent growth year over year and has more than 8,000 paying customers. The business has grown from 30 employees to 60 in the first half of 2019.
Changes in tax laws
Until last year, a state could only require a seller to collect sales tax if the seller had a physical presence in that state. A 2018 Supreme Court decision involving the state of South Dakota and the huge e-retailer Wayfair, based in Boston, completely changed a business’s obligation to collect and remit sales tax.
The physical presence test was addressed by the Supreme Court in 1992 (Quill Corporation v. North Dakota). In June of 2018 the current court overturned the prior court’s decision by declaring an in-state physical presence in not required. The current Court deemed an “economic nexus” was all that was required before a state can require a business to collect and remit sales tax.
“The world is a lot different today than in 1992,” notes tax expert David Seiden, a CPA and partner at Citrin Cooperman in Boston. “A lot of people bought online to avoid paying sales tax. The Court’s decision in Wayfair has totally changed the landscape of sales tax and has created a typhoon of issues, especially for smaller companies who are now being forced into compliance by the 30 states that have so far enacted legislation similar to South Dakota. It’s another cost to business owners, especially when they are already selling on a tight margin.”
Most states have adopted “economic nexus” thresholds to determine which businesses are required to collect and remit sale tax. The thresholds are typically based on the number of in-state transactions and/or in-state revenue.
In addition, approximately 20 states have adopted “marketplace facilitator” rules, where the tax burden in put on a marketplace facilitator like Amazon or eBay to collect the sales tax on sales made on the marketplace.
Seiden notes that the Wayfair case spawned a new industry that offers technology and servies to help online merchants navigate the complexities of the multi-state tax laws.
“It can be overwhelming at first,” he says, “but getting a company’s sales tax compliance right from the start can avoid the complications and costs with trying to catch up.”
Demise of Main Street?
While there’s been a positive effect of online commerce on business, eCommerce has negatively impacted many brick and mortar retailers, some of which have been unable to compete with eCommerce giants and have gone out of business or have seen reduced sales.
Small businesses especially find it tough.
“Unless it’s extremely unique and not found on Amazon, eCommerce isn’t going to work for a small business,” notes Boyd.
Ceci Hadawar, owner of If The Shoe Fits, would agree.
In 2002, she opened her Main Street, Orleans shop, selling unique shoes and clothing. “There was no place on the Cape to get the shoes we had. There were lines out the door and I had six full-time employees.”
But as eCommerce grew, her sales dropped. She estimates she lost 70 percent of her shoe business to online merchants. “First I lost all the 20-somethings. Then the 30- to 40-year-olds. Then even the Gertrudes, Mabels and Ediths stopped coming in.”
If The Shoe Fits has an online presence on Facebook, a more active one on Instagram, with weekly posts and a minimal website that basically is information about the two stores. Having an online component would be costly to her business, in terms of staffing, maintaining inventory and shipping. Instead, Hadawar has focused on traditional retail strategies, such relationship-building.
“We do have a certain customer who totally relies on us to put them together and we so appreciate their loyalty over the years,” Hadawar says. “And we have seasonal customers that come in every year as soon as they open their homes and bring all their house guests. But to support staff and keep inventory fresh year round you need the volume.”
The impact of the internet didn’t stop Hadawar from opening her Chatham store in 2018. The store has done well, she says, as there remains a clientele who still want to try something on. Chatham’s walkable Main Street is attractive to strollers and is full of small shops that appeal to the town’s affluent summer tourists. “
Then there’s the shopper who looks around, takes a photo of a shoe and then “goes right outside on that bench and orders it online.”
“It’s so disrespectful,” she says. “When all these shops are gone and replaced with hearing aid offices or more real estate offices they might wake up.”