Shopping Online: The Sales Tax Issue

As Pennsylvania becomes the newest state to require online retailers to collect a sales tax on residents, Pennsylvania Secretary of the Department of Revenue a.k.a. chief tax man Dan Meuser says it will level the playing field for brick-and-mortar businesses. But will collecting a sales tax really level the playing field?

If brick-and-mortar businesses really believe that, then they have fallen behind further than I ever thought. According to eMarketer, more than 72.6 percent of Internet users bought online on 2011, representing 148 million people (ages 14 or more) who made at least one purchase. Thirty million more are expecting to join them by 2015.

There have been dozens of studies published about the motivation of online buyers. And almost none of them place avoiding sales tax at the top of the list. What are some of the reasons people shop online?

Ten reasons that people shop online instead of offline.

1. There are no store hours online so they can shop online any time.
2. They can comparison shop between stores and find better prices.
3. They are given discounts to shop online by brick-and-mortar stores.
4. They never have to worry about crowds or checkout lines.
5. They can find things easier instead of searching racks and shelves.
6. They don't have to associate with cranky salespeople or pitches.
7. They are never sent to another store because of out-of-stock items.
8. They don't have to spend money on gas, driving to different stores.
9. They can see what other people are saying about products and stores.
10. They can do it alone and from home, wearing whatever they want.

Sales tax doesn't even register. Other then discounts and clearance sales, the biggest incentive that online buyers look for is free shipping. Shipping is something people prefer to avoid. That's about it.

But in looking at the list, brick-and-mortar stores have much more work to do than worry about sales taxes. In order to compete with online retailers, they have to create experiences online transactions can't offer their customers as well as capitalize on the reasons people sometimes prefer to shop offline.

Ten reasons that people shop offline instead of online.

1. They enjoy store-hosted events and special appearances.
2. They are still wary about online privacy and security.
3. They want to try on clothes/shoes and match up outfits.*
4. They find it easier to take in the entire store at a glance.
5. They like to window shop and visit other stores in proximity.
6. They consider shopping a social experience and enjoy it.
7. They don't have to wait for the item to arrive by mail.
8. They like knowledgeable employees on hand to help.
9. They don't worry about being spammed after one purchase.
10. They enjoy making discoveries they would have missed online.

*This includes hearing a sound system or test driving a car, etc.

There are more, but most of it revolves around the experience. The question brick-and-mortar stores have to ask is whether or not they are giving shoppers a reason to come in the store. With the exception of best practice independents (e.g. Book People in Austin, Tattered Cover in Denver, Amoeba Records in Hollywood), most stores don't.

Some of them (especially bigger brands) effectively cannibalize their own in-store customers by trying to convert them to online shoppers by offering better follow-up deals than their customers could ever find in the store. In essence, the online component of transitioning brick-and-mortar stores is creating a self-fulfilling prophecy. Instead, retailers ought to be working to erase the online/offline distinction.

The future of brick-and-mortar and online retailers. 

Although I often wonder how many times government can tax the same dollar (taxes are levied, frequently more than once, every time money moves from one place to another), requiring online retailers to pay online state sales tax has very little to do with fairness and everything to do with state tax revenue. They might as well stick to that statement because they aren't helping brick-and-mortar stores, most of which are trying to develop some semblance of an online presence or online storefront.

Right. The reality is that brick-and-mortar stores as we knew them are nearly obsolete as even independent sellers have to develop an online component where they can increase sales beyond walk-in traffic and/or stimulate walk-in traffic with special appearances or events. What many haven't done yet is map out the potential symbiotic relationship between high tech and high touch, but they will. Eventually, every store will be best described as brick-and-click and not one or the other.

The future of retail is one where you can use mobile apps or online sites for in-store assistance, with off-site solutions when you can't find the size or color or whatever you want on hand. It's one where if you purchase a book from the store, you might receive an email or posting any time that author makes a book tour visit. It's one where you can try something on in the store and save your sizes or preferences for updates, referrals, and future purchases (online and offline). It's one where search engines are somewhat circumvented because the store earns consumer trust and loyalty. And so on and so forth.

Dueling Studies: Labor Day Blues Or Silver Lining?

According to the New York-based Conference Board, consumer confidence fell to 60.6 in August, down from a revised 65.4 in July and the 66 level analysts were expecting. As published by USA Today, the index now stands at the lowest it has been since November 2011 at 55.2.

But according to the Thomson Reuters/University of Michigan, the final sentiment index climbed to 74.3, a three-month high, from 72.3 in July. As published by Bloomberg, this gauge averaged 89 in the five years leading up to the recession. (Bloomberg reported confidence was down a few days earlier.)

The causes are easier to understand. The economy is struggling under the weight of rising gas prices, economic uncertainty among business owners facing more regulatory burdens, and the high unemployment rate that remains above 8 percent (but is even higher when people who have stopped looking for a job are factored into the equation). There are other factors too.

Sentiment, on the other hand, is not only elusive but also relative to who you are, where you live, and what you read. We live in a world with too much information for its own good, and some of it is suspect.

How media selection can dictate consumer confidence and economic perception.

When you look at headlines from various news outlets, the message is as mixed as the reality. "Consumer sentiment is a bit brighter in August," reads one. "Consumer confidence takes unexpected fall," reads another. "U.S. consumer confidence rises but outlook still grim," claims one. "Consumer confidence crash stifles gains from housing report," states another.

None are wrong or right. The variations in reporting are dictated by which studies are reported, how they are reported, headline semantics, and in-story sources. It's kind of a mess.

But the point here is that dueling studies and sources, along with what people share across social networks, can skew how people see the world. People are more likely than ever to self-select the reality they want and then see all of the other media outlets as biased.

At the same time, the media have increased its own online analytics, carefully tracking what people are looking for and then delivering based on those results. If one story gets more attention than another, someone is sure to say "we need more like that." This isn't really new, but it does seemed pronounced.

How individuals can navigate the influx of communication overload.

Without a doubt, relying on affirmation media will bias an individual's perspective even if the media stories themselves are not intensionally biased. Instead, it's best to develop a slate of media outlets that challenge ideas as much as confirm them. Once you focus in on a story, check up on the sources.

When most people read news stories, there is an assumption that the newspaper has already vetted the source. This isn't always the case. So when it comes to business stories in particular, take a few minutes to look up the sources. Even if the journalist isn't biased, the sources within the story might be. If they are, you can weight their contributions accordingly.

Along with those sources, find a few more on your own as well as any your social connections might turn to from time to time (preferably with ideas that confirm and challenge your own). This composite of information can be augmented and adjusted based on your geographical location, industry, company, and individual anecdotal observations (adjusting for your own bias).

When it comes to the economy today, nobody really agrees. Most of it depends on what indicators people want to focus in on to prove their point. The real tells are a little bit different. Most people don't feel better off than they were four years ago, which is what continues to shake consumer confidence. Even those who might be better off on paper, feel pinched because the same money doesn't go as far.

At the same time, this doesn't necessarily mean that the news stories ought to influence individual and business decisions. Some companies do very well in a recession while other do not. Some local economies are recovering and some are not. In other words, while individuals and small business owners can think of the news as the canvas they paint their story on — the story is still their own.

Being Duped: From Political Outrage To Social Spoof

When my cousin shared the newest outrage from Senate challenger and Congressman Todd Akin earlier this week, I had to look twice. The Daily Currant ran a satirical news story with the headline Todd Akin Claims Breast Milk Cures Homosexuality. But the real story had nothing to do with Congressman Akin.

The real story has to do with how most people didn't look twice. People who already felt disgruntled by the politician's extreme pro life position were outraged and responded. Some ''quasi" media outlets even republished the entire story as if it was fact, forgetting that the site is satirical.

The corrections are starting to mount up — Rockford Register Star and The Celebrity Cafe among them. Others were so embarrassed that they have deleted the posts, leading search engines to empty pages. A few, for whatever reason, have let it stand as fact. And Twitter, no surprise, took the lead in spreading the satire as real news, followed by forums on the opposite extreme of ideology.

News spreads fast on the Internet. Faux news spreads even faster.

While it's no surprise that the original outrage left people susceptible to believe anything, it also reinforces how social media is a mixed blessing. Few people check sources before sharing, especially when the story affirms what they want to believe. Not everything on the net is grounded in truth.

The story that was buried in the wake of the satire might be more of a surprise. Rep. Akin is leading in some polls and the race itself is still tightly contested across most polls. The reasons are simple. His opponent is weak and the majority of Missourians are ready to forgive the misstatement in order to see her go.

The fact that he is still very much a viable candidate demonstrates something else about social media. While numbers and news stories, back links, and opinions across the whole of the Web matter, they are not always aligned with the realities of a geographical region. Missouri knows the 6-year story better.

Of course, that has nothing to do with my opinion of what Rep. Todd Akin had said. There is a better sense of that in my original piece. I thought it was a travesty, but maybe not the campaign killer that many people expected it would be. His rebound suggests the Missouri race is very much up for grabs.

Branding Threads: How People Connect To Brands

Author Geoff Livingston wrote a great thought piece on brand relationships that might make you think. He said customers don't care about our online brand conversations. And mostly, he is right.

Why should they? Most brand conversations are being developed for the brand, not the customer. Many brand conversations, including offline word of mouth, don't happen with the brand as a participant anyway. And brand trust needs considerable reinforcement from peers to be believed. 

His point isn't to dismiss online engagement, conversation, and activity outright. It's merely a means to remind brand managers and marketers that short-sighted social media without integration won't do much to enhance the brand relationship outside of a few online loyalists, assuming the brand has any.

What struck me as especially savvy about his piece was how much more thought needs to go into how businesses approach social media (especially if a company keeps its social media efforts isolated from the broader spectrum of marketing, advertising, and public relations). It made me wonder who really owns the customer relationship? It's not always the brand. 

How branding threads are created and who owns the relationship. 

I have an appointment this week with my dentist. About a month ago, the practice called me to reschedule my appointment because my hygienist no longer works there. I was surprised to learn it. 

I was surprised because this hygienist and I had formed a relationship. We were partners on a project; the project is my teeth and gums. But this week, she won't be the person working on the project.

Of course, this relationship didn't always exist. When I first chose this practice, I did it because I wanted the best practice available to replace a practice that had broken its brand promise (and our relationship) after 20 years.

The decision to try the new practice was made based on its communication (which is how I found them) and reputation (online and offline recommendations, reviews, and news). All of it constituted a brand promise, even statements or opinions that might not have been their own.

The practice has exceeded the brand promise over the years, including one surgery. I trust the doctor implicitly. So why is there some trepidation about the upcoming visit? Easy.

My routine visits were scheduled on Fridays and the doctor didn't work on Fridays, the brand relationship was left to migrate from the practice (and doctor) to my most engaged point of contact — the hygienist. She earned it. 

None of it was intentional. Like many good employees, she created multiple threads to strengthen the connection whereas the practice (like most brands) maintained a singular connection (the ability to deliver on its brand promise). After three years, she knew me and I knew her. Beyond a casual interest in our respective families, the real deal was that she understood my project goals and could meet them.

There are finite possibilities to strengthen a one-thread connection. 

The point is simple enough, much like I commented on Livingston's original piece. There are finite brand possibilities associated with transaction-based connections. If you want to strengthen a relationship between a customer and a brand, then more threads need to be established beyond the transaction. 

If you don't, then the relationship could become diluted or migrate as more weight is given to other relationships — like a hygienist or perhaps other customers or maybe a news report and public outcry. Sure, those things could jeopardize the strongest brand relationship too, but maybe not to the same extent if the brand relationship is reinforced from multiple communication streams and third parties.

In other words, engagement can work but that assumes it is the right kind of engagement. If it only consists of a direct response message, then the relationship isn't strengthened. And, like many online connections are made and reinforced, those relationships can migrate to the individual making them if there is no other point of contact. Interesting stuff, these fragile brands.

Dropping Confidence: Marketers Need To Adjust Expectations

One recent survey by an online coupon site doesn't see the holidays shaping up to be as strong as last year. In researching shopping attitudes and behaviors, its results revealed more than 7 in 10 consumers (71 percent) have a dismal view of the economy. One in four are worried about being able to make all the necessary purchases. Only three percent felt the economy was in "good shape."

The survey from RetailMeNot.com coincides with deeper studies, including one published by Bloomberg. The latest decline marks the longest series of declines since 2008. Part of the problem is that gasoline and grocery prices have risen, but there is no real job growth.

The first study mentioned was designed to look at how consumers plan to shop for the remainder of the year. And RetailMeNot concluded that the lackluster economy has helped to create a demand for discount shopping (namely coupons). We have another tip for marketers following study highlights.

Highlights from the RetailMeNot consumer sentiment study. 

• Women (46 percent) are more likely than men (31 percent) to start shopping earlier than November.
• Most (23 percent) will start shopping in early November; Some (12 percent) on Black Friday/Cyber Monday.
• An increasing amount of people (15 percent) plan to wait until after Cyber Monday to begin shopping.
• 54 percent of respondents will finish between Black Friday and their gift-giving holiday.
• 31 percent said that they will be done with their holiday shopping by the end of Cyber Monday.
• Women (58 percent) are more likely than men (50 percent) to finish shopping after Cyber Monday.
• Nearly a third of respondents (31 percent) intend to do their holiday shopping online.
• More than 70 percent of consumers (71 percent) think the economy is in "bad" or "terrible" shape.
• A quarter (25 percent) believe the economy is "okay;" fewer than 1 in 20 think that it is "good" (3 percent).

One of the most compelling statistics is that 4 in 10 respondents (40 percent) say that they should be able to get most of what they want, but cannot afford it all. Only about a third of respondents (36 percent) are not worried about being able to buy all the things they need in the coming months. Nearly 1 in 4 feel it will be difficult to purchase things they need over the next several months, let alone what they want.

Marketers might have to try something new if sentiment doesn't shift. 

What is most concerning about consumer confidence is that what was once called the "new normal" is beginning to erode into a self-fulfilling acceptance that things might get worse. There is little faith that the existing administration can do anything.

Marketers might be able to help consumers (and themselves) three-fold. Market first (people will be making shopping decisions earlier), market online (people are making decisions online even if they are planning to shop offline), and market fair (offer discounts that might help stretch the budget). All three might seem like common sense, which is why there are two more worth consideration.

Marketers could make a lasting impression by making purchases more experienced based. Shopping for experiences is one of the few types of purchases that hasn't slowed down (e.g., travel is up). The reason is pretty simple. People are looking for distractions that give them a chance to breathe.

Second, although this might sound like contrarian advice, is to ease up on push and plus marketing. If there has ever been a time to help consumers find exactly what they need as opposed to padding sales, this might be it. The trade off is an exchange of short-term gain for long-term loyalty.

When consumers are in a slump, customer satisfaction becomes too important in establishing long-term relationships. Given how many marketers claim they want long-term relationships online, it only makes sense that they adjust their objectives accordingly. Too much urgency or attempting to plus sell the transaction could pressure consumers into making an unexpected decision — buy nothing at all.

Being Quotable: Akin To Politics

"The interesting thing here is that this is an individual who sits on the House Committee on Science and Technology but somehow missed science class." — President Obama 

That is the most recent quotable from President Obama, shared during a fundraiser in New York City. Expect more of them. The President and his campaign team believe that running against select members of the Republican Party is easier than their opponents. It also distracts from real issues.

The outrageous quote from Senate challenger and Congressman Todd Akin won't last as long as the President would like. It's flash in the pan, especially since most members of the GOP (along with the Romney/Ryan campaign) readily denounced it and asked Akin to step aside. After Akin apologized, he says he won't step down despite his high profile quote being published everywhere.

“If it’s a legitimate rape, the female body has ways to try to shut that whole thing down,” Rep. Akin said.

With one poorly thought-out quote (and questionable science sourcing), Akin proved that proverbial campaign killing silver bullets may exist, provided they are self-inflicted. Rasmussen noted he dropped in the polls to 38-48 percent of the vote, down from leading 47-44 percent. The reversal is so strong that even his opponent, Claire McCaskill, has said that the Republican leadership should leave him alone and let him run. She sees a win ahead. She's not alone.

As Rasmussen pointed out: most Missouri Republicans want Akin to quit the race while most Missouri Democrats want him to stay. Without any doubt, Akin is still hurting himself while continuing his apology tour too. He might be apologizing without proper explanation, but it's for the wrong thing.

Breaking down the Akin blunder from a communication perspective. 

People really focused in on the word "legitimate" as the catalyst for the crunch. It's also the word Akin has taken to in framing an apology. There is no such thing as a "legitimate" rape, he has said.

But the real problem with his statements was something else (beyond demonstrating an almost unforgivable lack of empathy). It's this idea that women can prevent themselves from becoming pregnant. It was such an odd statement that I had to look it up.

The Los Angeles Times believes it comes from a book published in 1971. Mostly, it notes that the trauma associated with rape makes pregnancy less likely. There are other unrelated fertility studies that can be misused to bolster the concept beyond trauma. But none of it is as conscious as one could infer from Akin's quote. Likewise, even if people assume the occurrence is rape, then exceptions still exist.

The reality is that while the GOP party is seen as largely pro life, the majority of its members fall somewhere along a very broad spectrum (much like Democrats do along pro choice) of what that means. So there is no question Akin bungled it. After all, abortion is a hard enough topic to address without picking up on the even harder and more extreme issues that revolve around it.

Akin would have been better off considering former House Speaker Newt Gingrich's position, a carefully weighed opinion that separates his personal belief from what is politically manageable. Akin makes it unmanageable because before you start addressing exceptions, you have to reach an agreement on more basic principles, e.g., when does life begin. Until that question is answered in the political conscience of the U.S., it's nearly impossible to discuss fringe issues.

In a nutshell, the Akin's personal position is that life begins at conception and therefore, any new life ought to be protected regardless of circumstance. That is what he meant. It's an extreme pro life position, because it also extends the psychological and physical damage (which is horrendous enough) from a single event to a minimum 9-month ordeal.

I get that he brought it up because he wanted to paint himself as someone who doesn't run from his convictions. But he omits another fact. It's unlikely, if not impossible, to think one congressman or future senator could readily enforce such a belief. Even if he could muster enough bipartisan support to make this into a law, it would still face legal challenges from laws like Roe v. Wade.

The dilemma of dangerous issues. 

Having previously worked in politics, I know discussing pro life/pro choice issues is difficult for candidates. It forces them to take a position, even though most people haven't made up their minds across every nuance. Why would they? Most people cannot muster an authentic soul-searching response until they face the choice.

In some of the less usual circumstances that surround abortion, none of us really knows what we would do or could do. On this issue, many people also experience an opinion shift as they are confronted by those experiences. Yet, there are many voters who demand an answer (with some being single issue on this point) despite the fact it is a personal issue and always subject to change.

The law on the other hand is less subject to change. Most proposed laws are pinned to funding and time. Generally, the debate around funding is a question of whether it is fair to use taxpayer money to fund projects they are morally opposed to or whether limiting any such funds unfairly limits choice to those who cannot afford to make such a choice on their own.

All of this is important to consider before making any communication observations, especially because it underpins what Akin says he wants to do but never did. He said he wanted to have adult discussion.

Should Akin drop out of the race? It depends on who you are.

At the end of the day, Akin bungled it more than he realizes. He chose a topic that requires empathy and demonstrated none of it because empathy isn't exclusive to one party but all parties.

Does that mean he should step aside? Given the race is under 90 days away, there is time for him to recover even without party support (short of his party organizing a write-in candidate that might split the ticket). His electability is up to the people of Missouri and their priorities. Someone on the outside can only guess whether his personal position and careless comment outweighs whatever else he is running on.

If he wanted to pursue a long-shot recovery, it seems to me that he would need to demonstrate he learned something about being human (beyond semantics), demonstrate he can have adult conversations about abortion (arguing a fringe position is not a discussion), look into the science that made his argument sound so ignorant (unless it's a conscious choice, it doesn't count), and learn how to address the issue and then shift away from it toward issues that are important to the people of Missouri (which he hasn't really done) so it's not all about him.

That and, even if he has lost the support of his party, he ought not whine about it. He needs to accept their rebuke and find his funding elsewhere. Like it or not, some people share his views.

Naturally, his party would be better off without him for the short term and maybe the long term as Akin will likely remain the poster child for ... what? Politicians who confuse 'having values' with 'wanting to legislate values.' Sigh. Maybe we'll learn that no one can really legislate 'values' in either direction one day. I somehow doubt it.

At the same time, it seems that some Democrats are relishing what Akin said too much. It may or may not be a campaign killer for him, but it's still a pretty thin case to act like he's a rule and not an exception. If they keep pursuing the easy potshots, it only solidifies their overemphasis on vilification.