This blog was last updated on June 26, 2021
In mid-January the National Retail Federation held their 105th convention & expo at the Jacob K. Javits Convention Center in the heart of Manhattan. The event boasted over 33,000 attendees, 500 exhibitors, and at least one child-sized robot. Omnichannel, the New Philosophy The definitive unifying idea of the show was centered on the move to Omnichannel experiences for consumers in all areas of retail. Nearly every vendor in attendance either offered a solution to present a unified brand to the consumer or a product that could help get you there. The change in the retail space has accompanied a shift of focus from the products sold to the customer experience when purchasing those products. One of the key drivers behind this has been the rise of Ecommerce which has vastly increased the number of places that an individual can acquire any specific product. The mom and pop bike shop in Massachusetts now faces competition from all over the country or, in some cases, the world. In order to differentiate in an increasingly crowded market, retailers have moved towards fostering relationships with their customers in a way that engenders brand loyalty. This can be seen from the rise of social media presences among companies to shifts in how people do business with the retailer. Technology has allowed for unparalleled flexibility when a consumer initiates and completes a transaction. There is no longer a distinction in the mind of the consumer between Bike Store Online and Bike Store the brick and mortar location. For this to happen, retailers need to ensure that they present a consistent face to the consumer so that these interactions go smoothly. Changes are also happening after the transaction on the fulfillment front. Retailers are continuing to pursue creative methods of getting their products from the producer to the customer in ways that are faster and more efficient. Efficiency increases can pass savings on to consumers and that, along with getting the product to them faster, leads to a happy customer. The Impact of Omnichannel Changes on Sales Tax Consistency of price across channels is a given to a modern consumer and a necessity to any Omnichannel operation. If a consumer wants to buy dog food, six pounds of trail mix, and a vacuum cleaner online before picking it up in the store, they expect to see the same price at both points in time. Maintaining sales tax consistency across both channels is a piece of this. Depending on the type of difference, a retailer could be triggering anything from complaints to class-action lawsuits. If the goal of the Omnichannel experience is to drive customer satisfaction, having customers file lawsuits against you is fairly high on the list of things you would not want to have happen. In the event that the customer happens to work for the state department of revenue (example), a retailer can expect an audit and penalties if the differences lead to undercharging. With increasingly complex means of delivery, retailers will be invoking more complex tax laws than a transaction occurring at a single location. The likelihood of applying incorrect rates grows as tax departments are exposed to scenarios that they haven’t previously needed to account for. The trend towards Omnichannel is in full force and leading transformations across entire companies in the retail space. The impacts are wide-reaching and require change across departments that might not obviously be affected by that change. Overall the Sovos team walked away from the NRF event with a new outlook on the future of the retail industry and where the technology is trending. To learn more about how Sovos Sales Tax can help you accomplish your Omnichannel needs, establish a positive customer experience, and ensure accurate sales tax remittance and compliance, we encourage you to contact us today to speak with one of our experts.
