Occam’s Razor Meets The Internet Sales Tax

I was reading a post on internet sales when one of commenters compared internet sales to the problem with liquor sales across state borders. Here was my reply as I make the argument internet sales tax will fail because it is too complex. Simplicity is typically the best solution and the internet sales tax is not simple. The internet sales tax plan is a recipe for failure.

Since I grew up in Northern VA the reason the residents went to DC to purchase liquor was because the prices were cheaper. Virginia sold liquor via state run alcohol beverage control stores(ABC). DC had private businesses selling liquor who drummed up business by aggressively promoting their products. Over a period of years Virginia decided it was wiser and simpler to allow VA grocery stores to competitively price beer and wine and to allow the ABC stores to competitively price their liquor than to ask police officers to monitor liquor sales at the border. The simple solution won but it took many years and a lot of complaining by local residents and grocery stores.

If we try to look for a simple solution to internet sales tax we do not have one for either the small businesses or the smaller states. If I had a choice of creating a small business that was tax exempt or expand one that would pay internet sales taxes, I would choose to create a tax exempt business. Internet retailing is brutal so any advantage I get on Amazon is good! What can California do? Sue me in civil court!? Good luck with that!

Does anyone think it will be cost effective for Alaska and the other smaller states to collect internet sales tax? I am sure there are state employees who are dreading the thought of thousands of sales tax applications that will result in little to no tax revenue. All that work for so little money. Isn’t this the same situation as posting police officers at the border to catch out of state liquor sales? Customers are amazingly adaptive. I would not be surprised if we create a new market for package forwarding from states that do not collect sales tax. If the internet sales tax is not as simple to implement as the payroll tax, it will fail. Simplicity wins in the end.

RE:All Your Tax-Free Internet Shopping Is About To End

From the Business Insider we have this article about the demise of tax-free Internet Shopping.

"Supporters of this online sales tax bill are trying to muscle it through before senators find out how disastrous it would be for businesses in their states," Ayotte said. "I will fight this power grab every step of the way to protect small online businesses in New Hampshire and across the nation."

Baucus said the bill would require relatively small Internet retailers to comply with sales tax laws in thousands of jurisdictions.
"This legislation doesn’t help businesses expand and grow and hire more employees," Baucus said. "Instead, it forces small businesses to hire expensive lawyers and accountants to deal with the burdensome paperwork and added complexity of tax rules and filings across multiple states."

But Sen. Dick Durbin, D-Ill., said the bill requires participating states to make it relatively easy for Internet retailers to comply. States must provide free computer software to help retailers calculate sales taxes, based on where shoppers live. States must also establish a single entity to receive Internet sales tax revenue, so retailers don’t have to send them to individual counties or cities.

"We’re way beyond the quill pen and leger days," Durbin said. "Thanks to computers and thanks to software it is not that complex."

As a computer professional and a person who has tried to figure out which sales tax numbers to use in Ohio, I am skeptical that we can implement this system without a lot of small business pain. Here are some of my questions:

  1. If participating states are providing software to help retailers calculate sales, does that mean I will have to integrate fifty different sales tax calculators into our online order entry system so that I can show the customer the correct sales tax when they are checking out? Yes, Senator Durbin, fifty different sales tax calculators destroys productivity as much as going back to a quill pen and ledger. In a perfect IT world I would use a single number for the entire state and I would not have to worry with county and city taxes or exempt products. Getting the states to agree to a generic sales tax like this is probably like herding cats.
  2. I assume the states will want the sales tax to be paid monthly with annual reconciliations. This may not be that hard for Amazon but for our small business with a part time accountant this could be a lot of extra work that contributes nothing to the bottom line. If a part time accountant makes a mistake on one form, that is a problem. If more than one form has a problem, that is an accounting disaster and it may take a full time  accountant to fix the problem. Now just imagine if a state wants to audit your books. Multiplying the opportunity to fail by 50 does not sound like a plan to encourage and grow small businesses.
  3. If we had a test environment it might be interesting to see if small businesses opt to not sell merchandise in certain states or set up sales tax exempt subsidiaries.
  4. If you opt to pay sales tax electronically, you will have fifty or more userids you will need to keep up with. This problem could be reduced with a national clearing house organization to consolidate payments and record keeping but I don’t see that in the law.
  5. If you are a small business exempt for sales tax collection and you market  some of your products through Amazon, are you required to collect and report sales tax because Amazon is required to collect and report sales tax?
  6. If the legislators were serious about this internet tax, the legislators should convince Amazon and Google to take the lead with an open source project to standardize the code used for sales tax calculations and reporting. Amazon and Google have a lot of small businesses as customers and it would be nice if we came up with the same sales tax for an order. Small businesses view the changes required to support an internet sales tax as all risk and no reward. For those who believe in the law of unintended consequences, there is an incentive for a business to stay small so they can stay tax exempt.

Getting Updated Google Shopping Results

After I fixed my problem with Google Shopping I decided to see how long it would take for my browser to show correct shopping results. It has been almost a week and no change in the results. Today I decided to move on. I fixed the problem on Internet Explorer by deleting browsing history(cookies). Fixing the problem on Google Chrome was a bit more challenging. Here was the setting that worked.

Settings - Clear browsing data_2012-11-05_11-56-33

Fixing the Google Shopping problem where no products show up even though the product ads are searchable

I have been battling this problem with Product Ads for some time. Our Products Ads were supposedly search-able but we could not find them using Google Shopping. We could find our products via a standard Google search and via Google Shopper on my android phone. In the last email of this continuing saga of questionable product support I saw a telephone number. Previous phone calls by our marketing guy had Google support recommending that he increase the bid amount and open the server up for Google bot searches. None of those recommendations worked but I really did not have a choice. So I called Google and they recommended that I add a default product ad extension for all products. Hmm… Here’s the steps:

  1. Bring up your product listing ads campaign, My Product Listing Ads.
  2. Click on the Ad Extensions tab.
  3. In my case the Ad Extensions area of the screen was blank, so I clicked on the New Extension button.
  4. There was only one choice for me, All products, so I selected it. Now I have one Ad Extension on my screen for all products.
  5. The person from Google said it would take about 12 hours for it to process.

This morning our products are searchable in Google Shopping from most desktops and we are back into the comparisons. I guess that a default product extension is a necessary step. See the picture below for an example.

We still have the problem where we get different search results from different browsers and laptops. My desktop using Chrome seems to be using an old version of shopping results where as my Firefox browser on the same computer retrieves current shopping results. I guess Chrome uses a cached version and will eventually catch up. Another new change for Google Shopping is that  "site:" does not work any more. It is fascinating that Bing and Google have had so many problems with shopping search engines.

Campaign Management_2012-10-30_10-59-37a

Comparison Shopping Engines: Want to Compete with Amazon? Start Offering Remarkable Content

Here is a great post by Trinity Hartman, Managing Editor of Content Ping that argues that the best way to compete with Amazon is with great content and offers a few pointers on how to improve the content.

If CSEs want to compete with Amazon as places where online shoppers go to discover products and compare prices, they’ll need to improve their content.


Making Great Content Work

Here’s my advice to CSEs on how they can become go-to sites for product discovery and research:

  1. Obtain outstanding product descriptions
  2. Make room at the product page level for enhanced content (lifestyle images, video, 3D images, magnification, buying guides, etc.)
  3. Pay attention to product page design
  4. Include more consumer-generated content (product reviews) 

Comparison Shopping Engines: Want to Compete with Amazon? Start Offering Remarkable Content
Fri, 28 Sep 2012 15:13:06 GMT

Amazon to Not Pay For Google Shopping Listings

Tien Nguyen wrote a nice article, Amazon to Not Pay For Google Shopping Listings, in which he said:

In all it’s good news for retailers, large or small to not have to compete with Amazon for eyeballs on their products, similar to an MLB team learning that the high budgeted Yankees are bowing out of the season. Since Google Shopping Ads’ costs will be determined by the market, similar to Adwords (which interestingly enough Amazon is still on), one less high spender should in theory lower costs and increase visiblity for the rest.

On one hand I agree with him that it is good to not be competing with Amazon in Google Shopping. Lower ad costs will be good, too. At one time it seemed that every time I looked at a Google Shopping price comparison Amazon was at the top of the list. In recent months I found more and more instances in which Amazon was not the low cost price leader. The bad news is that even when we were the price leader, we were not getting either the clicks or the conversions.

Our marketing guy is pretty skeptical about Google Shopping Ads. Our trial run with Google Shopping ended with terrible conversion rates compared to Google Adwords. We are getting a better bang for our advertising buck with Google Adwords.  Part of the problem is that Google Shopping and Adwords are competing against each other for the same sale rather than being complimentary or additive. When I look at the potential for this channel, I am pretty dismayed. Google Shopping has the most comprehensive comparison shopping list out there and we are getting about the same sales from Google Shopping as we are getting from Shopzilla.  Our Nextag sales are even better. I don’t get it.

Google Shopping Problems

We finally gave up on Google Product Ads this week. We get a lot more traffic from Google Shopping than from the Product Ads so it made sense to turn Product Ads off until Google can get their act together. Our problems with Google Shopping seems to have started on June 28th when our search clicks fell off to almost nothing.  Despite all of our products showing available for Product Search only 934 products could be found using Google Shopping. We tried briefly to try and make our feed work for both Product Ads and Product Search but the progress was too little and too slow. So we unchecked the Product Ads box on the advanced feed settings and submitted the feed again. The disapproved Product Ads is zero and the products we can find using a generic Google Shopping search has climbed from 4390 to 5510 and our search clicks are back to where they were before this mess. This whole mess could have been avoided with some good diagnostic messages in Merchant Center and some decent customer support.


Google Shopping is not listing products if the product-ads or product search is disapproved

In the Merchant Center Troubleshooting group Celebird said this in response to the question Google Product Ads Disapproved but Product Search Approved:

for a u.s. feed the two policies have now been combined —
if product-ads is disapproved the items will not be listed;
if product-search is disapproved the items will not be listed.

Although I have not seen this confirmed in any Google communication, it sure looks like this is what is happening. The big problem is that we do not know why our Product Ads are being disapproved. It is hard to fix a problem without an error report. Here is my previous post on this problem, Google Shopping Fail? Webmasters Report – CPC Strategy .

Google Shopping Fail? Webmasters Report – CPC Strategy

Andrew posted this article on random occasions Google has denied the Google Shopping ads for retailers that abide by all rules. Since I do not have a Facebook ID I will make my comments here.

We noticed a problem last week and it was more severe than Product Ads being disapproved. Only the products with "approved" Product Ads were actually searchable in Google Shopping. Only 934 of our 6652 products could be found using a generic search in Google Shopping despite the Merchant Center saying that all of the products were searchable. Removing the products from Product Ads seems to have fixed the problem.

Here is part of Andrew’s article.

A few hours ago we received word that on random occasions Google has denied the Google Shopping ads for retailers that abide by all rules. These retailers were given no notice on why their Google Shopping ads were disapproved, just a nasty looking graph in the Google Merchant Center:

Google Shopping Fail? Webmasters Report – CPC Strategy