Aug 2017
18m 48s
ER 012: Sales taxes, Amazon Private Label Brands, Email Collection, PPC, Facebook Ads
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Online sales tax amnesty program
Amazon owns a whole collection of secret brands
This is The Ecommerce Roundup, Podcast 12, today is August 11, 2017, I’m your host Bryan, and here’s the ecommerce news roundup for this week –
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Sales Taxes
Sales taxes are a black box. If you want to know more information about sales taxes, speak with a qualified CPA who understands e-commerce. I’m not a tax professional so I can’t give you advice.
But, I know the question of sales taxes online has been an issue for a long time. Governments want taxes badly. They’re all operating at a deficit, have loads of debt, and they see e-commerce sales as gaming the system by not paying taxes. I think it’s only a matter of time before sales tax on e-commerce sales becomes a reality.
Actually, this is one thing that gave Amazon a competitive advantage for a long time. Prices are cheaper if you don’t pay taxes! So of course you’d want to buy from Amazon if you didn’t have to pay taxes. Now states are coming to collect the bill. Because it’s a $2 billion tax bill.
A multi-state agreement is rolling out an amnesty program that would allow online sellers to waive any past tax obligations and liabilities. Meaning, all those sales you made in the past, the government isn’t going to come after you to collect taxes on them if you sign up for this.
13 states are already in. 8 more are considering this proposal.
For three months starting Aug. 17, sellers with potential tax liability can sign up with the Multistate Tax Commission (MTC), enabling them to become compliant and pay taxes only on future sales.
Here’s the issue. With online sales, merchants are not required to collect sales tax if they don’t have a physical presence in a particular state.
But, Amazon ships your products around to warehouses across the country and ships to customers from them. So states are arguing that because of this sellers DO have a physical presence in states.
However, Amazon doesn’t report where our goods are. Where they are going. And Amazon doesn’t let us decide where our products go.
So a question is – is this tax liability on sellers or on Amazon? Is it Amazon’s problem or is it a sellers? And do you charge sales tax from the state where your products are stored in Amazon’s warehouse or from the state where your customer lives? Because those could be two different states! And each state would want their sales tax! From what I’ve seen right now it’s from the state where the customer lives.
As far as I know the technology isn’t even set up correctly to track this well. I imagine that states are going to go after big sellers first, and then this will work its way through the courts so that sellers know what to do.
The truth is that Amazon could easily set up the technology to track all of this and collect taxes. But they don’t. And they probably don’t want to because taxes will increases the prices of products on Amazon.
The bottom line is you should talk with a qualified CPA to make sure you’re compliant, and I hope Amazon offers a solution for sellers regarding this in the near future.
I’ll leave a link in the show notes about this: https://www.cnbc.com/2017/08/03/some-amazon-sellers-can-avoid-paying-back-sales-taxes-through-a-temporary-amnesty-program.html
Amazon’s private label brands and you, should sellers worry?
There’s an article in Quartz about Amazon’s collection of secret brands it owns. I’ll link to it in the show notes: https://qz.com/1039381/amazon-owns-a-whole-collection-of-secret-brands/
The article identifies 19 brands that are owned by Amazon and sold on the marketplace.
These are the categories: Lingerie, Cosmetics, Tools, Shoes, Food, Clothing, Baby products, Tech accessories, Linen, Frozen food, Furniture, as well as other categories Amazon is moving into like: household goods, leather goods, handbags, car products, and Motor homes.
That last one is crazy. Can you imagine an Amazon RV? Maybe you’ll be able to get a Prime delivery from a drone when you’re on the road!
Here’s the question. Should you worry if you sell in one of these categories?
The answer is no. Not if you’re doing a good job building a brand for yourself. Not if you’re collecting email addresses, running social media, and building an audience. People like variety. I also don’t believe just because Amazon is moving into your category that it means Amazon is going to be successful. Amazon is a huge company, and the bigger it gets, the harder it’ll be for it to move fast and innovate. For now, I’d take it as a sign that your market is big and getting bigger. So that Amazon thinks it’s worth their time to invest in it. Then I’d keep doing what you need to do to build a solid brand on and off Amazon.
Getting email addresses from your website
Alright, so I changed my mind on something I mentioned in previous podcasts.
There’s an app I’m seeing a lot of stores use, which is a carousel spinner that’s a popup asking for visitors to your website to enter their email address for a chance to win a prize.
When I first saw this I really didn’t like it. I thought it was annoying and obtrusive. But, we implemented it onto Shopify stores we work with and the thing works like crazy.
We’re getting a lot of email signups from it. It is fun to play and I guess people like the chance to win.
However, I think a lot of the email signups we get from it are low value because people just want to see what it’s all about. Nevertheless, and low value email address is better than none at all, because you can always delete that person from your email list if they don’t engage with your list. And who knows you might get them as a customer down the road as you build a relationship with them over the email campaigns you send out. Moreover, you can use the email addresses to build Facebook custom audiences, which is something I’m loving right now.
To get this app, go to the Shopify app store and just search for spinner. There’s a few out there. If you don’t have Shopify then you should switch to Shopify. But in the meantime there might be a spinner that works for the other ecommerce platforms out there if you search for it.
Amazon PPC
Next, I want to talk about Amazon PPC. People have been grumbling that it’s been getting more expensive. I looked into some data and found that yes it has been getting more expensive before and just after Prime day.
However, this past week we’re seeing Amazon PPC costs fall.
My guess is that before Prime Day everyone ramped up their ad spend to get ready for the traffic. Which was a good idea, because this was the advice for the time. And then after Prime Day people forgot until they saw their ad accounts burn through cash and then they lowered bids back down to normal.
This fear that Amazon PPC is headed to the price apocalypse comes up a lot. But for now, we’re seeing prices stabilize back to what they were earlier in the summer.
Also, Amazon ads are becoming more dependent on relevance, and this is also cleaning up PPC. As long as you have an amazingly optimized listing, and bid on relevant keywords, I think your PPC costs will be fine.
Facebook Ads
We’ve been running Facebook ads for years but, I’ve really been diving deep into Facebook ads for the past two weeks and I’m loving what I’m seeing.
The algorithm is getting really smart.
One old but new strategy I like right now is sending really cheap traffic to content, specifically blog posts or pages on your website, and then retargeting those clicks with an offer to get an email address.
There’s been so much talk lately about video on Facebook I feel like people forgot about this strategy.
To do this use an image ad, with just one image, no carousel, with a goal of link clicks. If you use a video you’ll get fewer clicks. Test different imagers and ad copy combinations and run it to a huge audience. I’m talking like an audience of 100 million people. You need to run it for a few days because Facebook needs to figure out who to serve it to. But I’ve been seeing link clicks for 20 cents which is awesome. Then you retarget the people who clicked the link with an offer and you’ve got an affordable lead gen system.
Wall Street Segment
Got a short segment for you today.
Just when you thought you were finished with Amazon’s Fire Phone which was a huge bust, Amazon announces that they’re investing a lot of money into a new business started by the guy who created the Android operating system.
Amazon teamed up with Tencent to back a smartphone company called Essential. Why is Amazon doing this? Because smartphones are the most important devices in the world right now. Most people have them. And most people are using them constantly. These days smartphones are like a third hand. Can you imagine being without your smartphone? We do everything with them.
Amazon realizes this and they want a piece of the action. I see websites and online stores that get twice as much traffic on mobile as they do from desktop and tablets. We’re doing more and more on our smartphones and Amazon knows that they can control more of the customer shopping experience if they have their own smartphone.
Will it work? I doubt it. Who’s going to switch to an Essential smartphone from Samsung or Apple? Unless it blows us away, I think this will be a second Amazon smartphone fail. But, you have to respect them for trying again.
Amazon stock has dipped recently to back below 1,000. This might be a good buying opportunity for you. Wall Street analysts think the growth of AWS, e-commerce, and Prime Subscriptions will drive the stock to over 1200 dollars by next year.
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So that’s it for today. Thanks for listing.
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Until next time, keep selling and keep growing.
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