If you want a concise case against the Senate legislation to force online retailers to collect sales tax, it’s worth checking out this Wall Street Journal editorial. But I just thought it would be worth adding a few thoughts.
One of the most compelling arguments offered by brick and mortar retailers is that the current system allows Americans to visit their local stores to shop and then order goods online without having to pay the sales tax.
There’s no doubt that online commerce presents a threat to brick and mortar stores for a number of reasons beyond the sales tax issue. But in the end, the brick and mortar stores that will survive will be ones that are offering some sort of unique service or experience for the customer.
We see a good example of this with the evolution of the book business. In the 1990s, there were a flood of stories about how big box chains like Borders and Barnes and Noble were putting mom and pop book shops out of business. But bookstores that were somehow unique — places like Politics & Prose and Kramerbooks in DC or the Strand in New York — not only survived, but actually outlived Borders and many Barnes and Noble locations.
There are some advantages to brick and mortar retailers. People like the activity of shopping, trying products out or trying clothes on, enjoying service and being able to purchase goods immediately. My guess is that the retailers that will be able to compete in the current environment will be the ones that find a way to create an experience for shoppers that makes it worthwhile to buy products there, even if it means they have to pay sales tax.