Retailers with e-commerce channels have a lot to gain during Cyber Monday or Cyber Week. According to BlackFriday.com, Cyber Monday spending is anticipated to grow 20% this year, with consumers spending nearly $9.5 billion online. Cyber Monday also falls on December 2 this year, one week later than last, giving consumers fewer weeks before Christmas to stuff their stockings, and putting more stress on financial systems during that time.
The Supreme Court ruling of South Dakota v. Wayfair caused quite a stir among online retailers and with 38 states imposing online sales tax (up from 25 last Cyber Monday!), retailers may have fallen out of compliance leading up to Cyber Monday. Retailers may require many more state tax IDs as they meet the requirements of the latest economic nexus threshold changes and incur process challenges to register in these new states, each with different tax filing requirements. Tax and IT teams should be focused on more important business matters, not scrambling to meet these new requirements, or dealing with subsequent fallout from negative auditing results.
So what are some steps retailers should take in preparation for Cyber Monday holiday season to ensure their digital commerce, financial and tax automation systems and corresponding teams are ready this year?
1. Be sure you are properly registered and prepared to collect and remit sales tax into all the jurisdictions you plan to sell to. While the impacts from Wayfair have now reached most states, your business’s tax and IT teams might not be prepared for any new state tax filing obligations that you may now be required to fulfill if sales from Cyber Monday reach a certain threshold. Compare the impact of your Cyber Monday sales projections with state economic nexus sales tax thresholds.
2. Check if you meet the criteria for Certified Service Provider services through the Streamlined Sales Tax Agreement (SST). Many states have also taken steps through SST to simplify state and local tax rates, and tax remittances and returns. Learn if you meet the criteria for, and how to take advantage of, SST. It may also be advantageous to look into outsourcing the bulk of sales and use tax administration to a Certified Service Provider (CSP), such as Sovos.
3. Make sure relevant marketing offers are properly configured in your sales and use tax engine. Successful businesses are constantly bringing new and improved products to market and devising imaginative product bundles to make existing offerings more attractive. Before Cyber Monday hits:
- Ensure these bundles are taxed appropriately across all the jurisdictions where you sell.
- Check that your product codes (SKUs) are mapped to the correct product taxability codes.
- Also think about whether your automation process considers the tax implications of discounts, coupons, shipping and handling, and gift wrapping.
Getting these things right when your transactional volumes are at their highest is important when you can least accommodate an angry call from a customer complaining about incorrect tax.
You may also need to ensure exemption certificates are up to date and valid, which can be a huge lift for a small team. Consider outsourcing certificate management to a managed services provider. Also, any new distribution centers or shipping locations should be properly represented in your tax engine to ensure proper tax calculation for those items your consumer chooses to pick up or have delivered faster from a more convenient location.
4. Review your technology architecture and scalability contingency plans. Plan for increased volumes over last year. Besides your own volume forecasting and patterns based on previous years, review what the industry pundits are saying and compare to ensure your systems will scale. Determine the right time for code freeze of your entire commerce environment. Only make changes to the environment with extreme caution and with change management controls in place. A SIPOC diagram or high-level process map is a valuable tool to identify problem areas and conduct process analysis for continuous improvement.
5. Make sure you have the proper vendor support contracts in place. Make sure your support contracts are in order with your vendors and suppliers to make sure you’re properly covered. As an e-commerce retailer, you’re in business 24/7. Your support contract should follow suit. Do you receive annual account reviews to review past successes or issues and share future goals? Are you covered for cloud-based as well as on-premises systems? Are your current SLAs for incident resolution adequate for your business?
Cyber Monday, known as Cyber Week (if not Month) to many, is a time for celebration and injecting a year-end business boost. With proper planning and preparation, you can improve your customers’ experience and your own during one of the busiest and most important times of the year for sales.
Contact us to learn about Sovos Premium Support options.
