WASHINGTON (BRAIN) — Brick-and-mortar retailers consistently rank competition from online vendors as one of the biggest challenges facing their businesses. Many cheered last week’s U.S. Supreme Court decision allowing states to begin collecting sales tax from e-commerce companies, even if the online retailers don’t have a physical presence in the state.
But industry observers note that foreign e-commerce vendors still have several advantages over U.S. retailers, on and offline. The Supreme Court ruling, in fact, generally increases the advantage of offshore e-commerce companies over U.S.-based businesses.
Between sales taxes and import duties, offshore e-commerce brands sometimes have a head start of as much as 21 percent over U.S. retailers.
Currently, foreign companies only collect state sales taxes in states where the company has a “nexus” — generally defined as a physical presence, like an office or warehouse, or a payroll. It’s too early to say how the Wayfair decision will be interpreted by the states or if Congress will pass legislation creating and regulating the state tax system, but currently it’s likely that …read more