The evolution of the flash sales within ecommerce solutions has brought a new and welcome change where it’s all about targeting the local businesses and cultivating working relationships with merchants. Early this Monday, luxury flash sales site, Gilt Groupe launched their local lifestyle brand Gilt City into four more cities including Atlanta, Dallas, Washington DC and Seattle. The new expansion brings Gilt City into a total of 10 cities joining the major metropolitan areas New York, Boston, Miami, Chicago, Los Angeles, San Francisco, and Tokyo.
Ecommerce: the Gilt City that never sleeps
Gilt City offers massive discounts for locals to buy up relaxing packages at hard to get into spas, custom tastings at up and coming restaurants, and exclusive movie screenings before they are released to the public. The company targets an upscale demographic (80 percent of its users generate an income of $75K or more) and carefully curates experiences that are unique to each city’s individuality to ensure that the offers featured on its ecommerce solution are exclusive to the Gilt brand identity of luxury goods and services.
The focus on local gives merchants a fighting chance among the daily deal wave that has come over the market, with some daily deal models spitting out as many generic deals as they can just to stay competitive which, as a result, reduces a business into mere a number in the sea of discounted offerings.
Although the daily deal model is in nature, far different from Gilt’s flash sales model, the number of sites out there toting a ‘discount’ are still able to compete. What Gilt seems to have leveraged to their advantage is being an exclusive brand and is selective in who they partner with. It is refreshing that they’re not out to generate a massive number of deals.
The loyal consumer following the Gilt empire of Gilt Men, JetSetter, Gilt Taste and their other verticals have built has afforded the company an easier way for Gilt City to launch and capitalize in the local markets. As such, Gilt City (which launched in 2010) has become one of Gilt Groupes’ fastest growing verticals, boasting over 1.8 million members worldwide.
Gilt Groupe has become a brand that moves softly while carrying a big stick discount in the luxury market. This is an ecommerce company to watch in the next couple of years with rumors of an IPO swirling for 2012, solid partnerships with high profile brands, and more verticals in development, there’s a reason why this four-year old company is valued at $1 billion.
Apple announced that it will now allow businesses to purchase apps from the AppStore in bulk. Apple previously only offered volume purchasing rights to educational facilities. The new system is pretty simple: the business selects the app they want, enter the number of licenses needed, and then pay with a credit card. Apple then supplies a license for each individual iOS device. It’s not clear if businesses utilizing this new method will see bulk discounts effecting the bottom line in their mobile shopping carts.
In the past, businesses interested in purchasing an app from the App Store would have to individually pay for each license. So, if 50 employees needed a copy of the Analytics App, the company would have to purchase each copy of the app separately. The other option would be to cut each employee a reimbursement check for a whopping $4.99. Needless to say, this was a painfully tedious process.
Now all the businesses need to do is enter their credit card information, then their employees are free to download necessary apps. This will almost undoubtedly lead to higher app sales. The implementation of volume selling also lends itself to an increase in productivity apps. The next logical step for Apple would be to encourage mass purchasing of iOS devices (offering a discount would seem to be in their best interest). With Research in Motion in a seemingly downward spiral, it’s possible that Apple is looking to ease its way more into the business-oriented smartphone niche. Letting businesses add apps to their shopping cart in volume is a step in the right direction.
Businesses can also now build and sell what are called Business-to-Business (B2B) apps via iOS. “Custom B2B apps are built just for you by third-party developers and business partners to address a specific business process, integrate with a unique back-office environment, or deliver a custom interface for your users.”
Again, there’s no word yet if purchasing Apps in bulk will save businesses any money. Apple has been historically reluctant with offering discounts for those who purchase in bulk. Whereas some companies such as HP offer attractive discounts to those buying in bulk, Apple has mostly contained it’s discounts or promotions to individual purchases. For example, those add a new MacBook to their shopping cart this summer receive a $100 App Store gift card.
Social media is one of the strongest mainstream tools an online merchant can use to optimize their sales and broaden their consumer reach in ecommerce today. Heinz, one of the world’s most the renowned and well-established ketchup brands has seen a large boost in consumer brand interest since it launched a campaign combining social media and ecommerce together on Facebook.
As a result, the company is now planing to increase its social media marketing budget in 2012 by 20 percent to be used on Facebook advertising, just one major component in its multi-channel advertising campaign which includes TV, radio, and mobile.
With over 500 million active users on Facebook, more and more brands have found value in the world’s largest social network as a viable sales vehicle rather than just a place for brands to be “liked” by fans. As such, Facebook has evolved into an ecommerce platform with a proven ROI, as social shopping has become the forefront of the modern consumer’s shopping experience.
In March, Heinz launched a social media campaign that integrated the ecommerce functionality of Facebook. The company sold a limited and special edition of tomato ketchup made with balsamic vinegar exclusively on the social network’s ecommerce platform; only 1 million and 57 bottles were available.
Heinz spokesperson Lucy Clark said that the Facebook offer “seeded a lot of the interest and awareness of the limited edition and increased overall brand perception” even if it was not able to directly translate into higher revenues, the response was enough for the company to increase its advertising spending.
Although the ultimate return was the increased brand interest, for a company that has been around since 1896, this is a big win. When a company that has been in production for that long, basing its business around a simple product, trying to stay competitive over the years can be a huge challenge. It’s almost like reinventing the wheel but rather than a wheel, it’s ketchup, a common condiment, that Heinz has dominated in branding for decades now.
Social media outlets are continuing to be a way for brands to receive exposure to different demographics that they may not otherwise be able to tap into without throwing out some serious money. In terms of Facebook and its 500 million users plus, this has become the ultimate platform to do just this without breaking the bank.
However, it seems these days a post about Facebook can’t be made without some mention about Google+. Looking at Facebook’s evolution from 2004 as a small social network, to several years later as a global platform for brands and people to connect, buy, sell, and everything in between, it’s hard to not call into question whether or not Google+ will follow suit and integrate ecommerce functionality now than later as social commerce is a driving force for online businesses?
NFC has increasingly become a buzzword among payment solutions this year as it is on the brink of taking off in the booming mobile payments industry. By 2014, the NFC chip is expected to come standard in 1 out of every 5 smartphones, according to a Juniper Research study. NFC enables anyone to make a purchase with a simple wave of their smartphone, possibly eliminating the need to carry a wallet. This week, PayPal unveiled a widget that will leverage the Near Field Communications (NFC) technology in your smartphone so you can now transfer money from peer-to-peer.
Anyone with an NFC capable Android smartphone and the PayPal widget can ‘bump’ with another Android phone to transfer money. It’s like bumping chests but rather celebrating over a big sports win, it’s with your pal who owes you money.
Say you want to transfer money to another PayPal user, the user enters the amount of money they want to send on their phone, and then taps their phone up against another phone equipped with the same widget. At contact, the phones should buzz together, prompting to enter a PIN number to complete the transaction.
If you need a visual explanation, there’s a rather intense video below courtesy of PayPal showing users what to expect in their new mobile payment system.
Payment solutions have become the new frontier for larger companies looking to explore and innovate this space. With giants like Visa, American Express, Square and Google having launched their own mobile payment solutions and digital wallets this year, they are quickly encroaching in on a space once dominated by PayPal for over a decade now.
In the company blog, PayPal states it is on track to do $3 billion in mobile payments this year, however, the P2P money transfer is a free service for any PayPal account holders (with funds).
The widget does provide a major opportunity for PayPal to expand its user base by partnering with brick and mortar retailers to adopt its NFC payment system in addition to various ecommerce solutions. The widget could evolve (in time) from money transfers between peers to consumer to merchant transactions. For now, PayPal’s widget may be just a small step, as the only NFC-enabled smartphone in the U.S. is the Samsung Nexus S for Sprint and T-Mobile. However, the company has plans to expand in the future as more and more Android devices are expected to roll out this year equipped with NFC capabilities. Expect PayPal’s widget to launch later this summer.
Shipwire, a shipping ecommerce solution, has received funding from eBay and Newell Rubbermaid. Shipwire is one of the leading providers of outsourced order fulfillment. The investment follows hot on the heels of a swing in momentum in small and mid-market adoption of Shipwire outsourced shipping.
Shipwire allows businesses to remove themselves from the pains of shipping and inventory management. Merchants send their inventory to a Shipwire warehouse, and then connect their online ecommerce store to Shipwire. When an order is placed on the merchant’s site, Shipwire automatically determines the most cost effective way to pick, pack and ship the item to the buyer.
The investment is aimed at allowing Shipwire to expand its services. The company is trying to give businesses the tools to lower their shipping costs and expand their businesses, so that they can be competitive in today’s ecommerce market. This funding will support the expansion of the Shipwire global warehouse network into new countries. Shipwire competes with Amazon’s in-house FBA program, which sellers have seemed to prefer as it provides them with the huge exposure of Amazon’s marketplace. eBay had recently revealed that it would test-run a similar program of its own, and the investment in Shipwire is a logical step towards an eBay order fulfillment program.
Shipwire will undoubtedly benefit from the injection of seasoned boardroom talent. With over 100 years of combined ecommerce and shipping market experience, Shipwire gains some valuable verterans from proven ecommerce solutions. eBay VP Jean-Francois Van Kerckhove will represent eBay’s interests. Newell Rubbermaid will be represented by Amine Khechfe, the founder and general manager of DYMO Endicia, one of the leading providers of shipping and postage technology solutions. The ecommerce solution has had great success, with more than $6 billion in postage printed.
“Investments from eBay and Newell Rubbermaid are a demonstration of alignment, and of Shipwire’s competitive position in the market,” Damon Schechter, Founder and CEO of Shipwire. “Our new strategic partners bring technology, connections, and future marketing channels, to help evangelize outsourced shipping, and reinforce Shipwire’s position as the leading provider of outsourced shipping services to growing businesses.”
Online local media company Local.com announced early Monday morning that it has acquired Screamin’ Media Group (SMG), the parent company of daily deal site, Screamin’ Daily Deals (SDD).
Under the terms of the deal, Local.com agreed to purchase SMG for $12.5 million in cash, stock and debt, with the opportunity for SMG shareholders to earn up to an additional $20 million if certain financial performance criteria are met during the two-year period following the closing.
The acquisition follows shortly after Local.com’s May 2011 launch of Spreebird.com, a daily deal site hybrid which blends the traditional daily deal business model with the functionality of a local, daily deal aggregator. SDD will now operate under the Spreebird brand.
With daily deal sites launching one after another (almost ad nauseum), Local.com may be leveraging SDD to jump into the already overcrowded (yet still highly lucrative) daily deal pool. However, as deals become more localized and niche specific in other verticals, this evolution allows everyone with some daily deal site variation to swim in it. The determining factor is whether or not these other variations can stay afloat.
Just launched in 2010, SDD has approximately 60 employees offering deals across 14 markets throughout the U.S. including Los Angeles, Orange County, Salt Lake City and San Diego. Within the same year, the company generated $2.4 million in [unaudited] revenue, and in 2011, the company has already raked in $4.4 million in the first half of the year. Although SDD’s revenue may not be on par with daily deal giants like Groupon or LivingSocial, the company is however on track to develop into a possible mainstay in the daily deal sector. SDD company has taken on an initiative that will allow it to stay afloat among the plethora of daily deal sites, through its School Rewards Program.
The program allows consumers to donate 10 percent of SDD’s net proceeds from each deal to a school or non-profit organization chosen by the consumer. To date, the program has donated over $400,000 to more than 700 local schools and non-profits, and has proven to be a way for the SDD to develop meaningful relationships with merchants and consumers.
“The acquisition of SMG serves our mission of connecting brick-and-mortar merchants with online consumers by extending our reach directly to thousands of local merchants in 14 markets. This transaction diversifies our revenues and provides us with a new way to engage consumers,” said Heath Clarke, Local.com chairman and CEO.
Hello and welcome to the first-ever edition of “Guest Blogger Monday” here at Zippycart. Every Monday we’ll feature a fresh voice sharing their unique insights into the world of ecommerce. This week we have Michael Smith of eBusiness Buddy who wants to let all those small business owners in on why they should get involved with ecommerce. Do you want to guest blog for Zippycart? Check out our official information/submission page for directions. Without further ado, take it away, Michael!
eCommerce involves selling goods or services through a storefront on your website that allows for consumers to place orders and send payment online. While doing business online in any form, whether it is a basic website or social media presence can be highly beneficial to small businesses by offering valuable tools and technologies to assist in your growth and success, eCommerce can turn your online activities into a significant source of revenue, and getting involved can offer numerous advantages.
Join a Worldwide Marketplace:
Perhaps the most significant advantage that eCommerce offers is the ability to sell your products or services in a worldwide marketplace that is easy to access for both sellers and buyers, and is accessible from anywhere with Internet access, at any time of day. Selling online opens up the capabilities and reach of the Internet to help turn a small local presence into so much more, with the potential to vastly grow your customer base and revenue, discover new global opportunities, and reach your target audience no matter where they are located without the hassle and cost of expanding your existing physical presence.
Local Customer Convenience:
Even if your small business has no desire to expand sales outside of your local area, eCommerce can still be beneficial. For one, since an online store is always open and accessible it means that you won’t ever miss out on a sale because your physical store is closed or a customer is unable to travel to visit you. In addition, an online shopping experience can provide added convenience and information for your local customers with features such as an online catalog to browse and multimedia tools that can allow them to fully research your products before purchasing.
Innovations in Selling:
eCommerce can also lead to new innovations for your business. Internet technologies can allow you to outsource fulfillment and warehousing, and shift technology concerns to expert providers, all while saving you the time and cost of doing it yourself. And selling online can also result in a more convenient and near-instant order process compared to traditional paper-based or telephone ordering, improving the efficiency of your operations. You can even do away with having a physical store, and operate entirely online.
Understanding what eCommerce can offer your small business and why you should get involved is an important early step in taking advantage of all that selling online can offer. While there always risks and other considerations that come into play, and a lot of time and effort needed to fully make eCommerce a part of your business, the benefits in the end are worth it. These days, especially for a small business, it is easier and more affordable than ever to get involved in eCommerce, with many tools, services, resources, and experts available to help you make the right decisions, get properly set up, and understand how to be successful in selling online.
Great stuff, Michael. Be sure to follow our weekly posts on Twitter with #guestbloggermonday and check back every week for more news and insights that you can’t get anywhere else. Join us next week when Aura of Miva Merchant will be our guest blogger. Remember: you too can guest blog for Zippycart, just check out our official information/submission page for directions.
About the Author:
Michael Smith is a graduate of eBusiness studies with years of experience in a small business environment. He is the author of eBusiness Buddy, a blog that assists small businesses in understanding and taking advantage of doing business online.
PayPal and its parent company eBay announced their purchase of mobile ecommerce solution Zong today. Zong provides consumers the opportunity to purchase and pay for products online via their monthly phone bill, rather than a credit card. Zong will receive a cool $240 million in cash in the deal, which is expected to become final at the end of Q3.
Zong is an innovative, mobile-based ecommerce solution. It works like this: Say you’re on a site like shoes.com, and you see a pair you want to buy. You add the shoes to your shopping cart, and proceed to checkout. Instead of entering your credit card information, you instead enter your cell phone number. The site will sends you a text message, you respond, and the payment is processed and added to your monthly cell phone bill. Zong has partnered with more than 250 service providers to supply their ecommerce solution to mobile shoppers.
PayPal boasts a user base of more than 8 million merchants. Executives from the two companies hope that joining the two ecommerce solutions will help increase the availability of “frictionless” mobile payments (that is, payments involving no credit card information). PayPal has focused on frictionless payments since its inception. Last year, PayPal processed $3.4 billion in online payments.
The online payment powerhouse has been on a bit of an acquisition spree as of late. The company purchased mobile payment providers Fig Card and “Where” this year. PayPal faces increasing competition in the mobile payment world from companies like Square, which offers hardware and software for mobile credit card processing on the iPhone, iPad and Android platforms. While not entirely frictionless, Square is gaining popularity in brick and mortar stores around the country.
With the acquisition of Zong, PayPal looks to expand their international reach. Zong offers payment solutions to users in 21 languages and 45 countries. Zong also offers mobile payment solutions to Facebook users who purchase Facebook Credits for gifts and make other purchases on the social network. Executives at both companies have not disclosed how the two ecommerce solutions will join forces, but will likely be releasing more information as the merger finalizes.
TapJoy, a leading developer of mobile games, has announced that they have raised $30 million in Series D funding. The funding round was led by JP Morgan, and also had some of TapJoy’s previous investors, namely Rho Ventures and North Bridge Ventuer Partners. Just six months ago the mobile gaming ecommerce solution raised $21 million.
The company has said that they plan to use the new influx of cash to explore potential acquisitions. TapJoy currently has over 1,000 applications that touch up to 200 million consumers. The company typically uses in-game currencies to sell virtual goods to players through their ecommerce solution to help monetize gameplay. This is an extremely common tactic in online games of all kinds: Facebook, mobile, etc. – they all have an in-game currency and they all try to drive players to buy virtual goods to enhance gameplay.
As you may have read here, Apple has been cracking down on applications that try to bribe users (usually with in-game currency) if they download another app. The reason being is this technique artificially boosts some apps that may not deserve the notoriety. This has sent many applications into the top 25 that don’t actually deserve to be up there and are only in the top due to these incentives, not their content. TapJoy was the lead (largest) firm fighting against these new regulations. Mihir Shah, TapJoy’s CEO, commented:
“Regardless of what Apple did with respect to incentivized app installs, the mobile app market we power is booming. It’s booming on Apple and a variety of platforms.”
TapJoy has now stated that they plan to take their concentration off iOS and move it to, you guessed it, Android. Android already has over 35% of the mobile market share (with Apple a little under 25%). The reason TapJoy didn’t do this before is because, according to surveys, Android users don’t use in-game ecommerce solutions, or pay as much as iOS users to purchase apps. But Android does allow in-game incentives (about 60% of TapJoy’s revenue).
The company has opened a $5 million fund that can be used to help offset the cost for independent developers to port games over to the Android operating system. The program offers both developmental and financial support for the developers. The company is also exploring Windows 7 Mobile support as well.
Shah is of course disappointed that incentivized app installs were banned from Apple because he said they gave developers a monetization pathway other than the traditional ad-based and in-game currency models that are most commonly used. With the market about to hit $37 billion for mobile apps, and TapJoy at the head of the pack, it’s looking like their mobile ecommerce solution should be just fine.
The mobile shopping market, which includes mobile payments, NFC (near-field communication) chips, money transfers, and mobile ecommerce solutions, are projected to hit $670 billion worldwide in 2015. With the mobile market currently at around $240 billion, it is projected to almost triple in under 4 years. Juniper, a leading research firm, has been conducting the research and says that all mobile segments will either double or triple.
Recently there has been a lot of discussion on NFC chips. These allow a user to wave their phone in front of a receiver (within 4 inches away) and pay with just their phone, no more cards. Juniper’s John Levett wrote in an email announcement this morning:
“Some 20 countries are expected to launch NFC services in the next 18 months, resulting in transactions approaching $50 billion worldwide by 2014. Meanwhile the need for financial access in developing countries is such that active mobile money users will double by 2013 and drive transaction values accordingly.”
The report also says that East Asia and China, North America, and Western Europe will be the leading regions utilizing mobile ecommerce solutions. In fact, they will hold 75% of the market share in 2015.
Juniper senior analyst, David Snow, said that digital goods won’t grow quite as fast as mobile payments for physical goods. However, he did say that by 2015 digital goods will more than double and account for 40% of the mobile market.
Forrester, another leading research group, recently announced that they estimated mobile commerce in the US will hit $31 billion by 2016. It’s hard to tell whether Forrester’s predictions mesh with Juniper’s. Forrester is only analyzing mobile ecommerce solutions in the US, not including money transfers. Juniper’s analysis is worldwide, whilst including mobile transfers. Even with the rest of the world included, that still leaves a hefty $639 billion left.
Google Wallet, PayPal, Ericsson, and many other companies are in a dead sprint to take the mobile payment market. The largest question out right now is how tight will security be. Companies have not quite delved into that with detail quite yet.
Google+ has become Google’s foray into the social media world. Recently launched this week, Google+ is an invite-only, Facebook-like, social network that has rapidly evolved into a social club that everyone wants into, but at this point in time, no one can.
According to the site, it had exceeded its current capacity and thus put a halt to letting its existing users send invites to their friends. The site currently reads, “Thanks for stopping by. We’re still ironing out a few kinks in Google+, so it’s not quite ready for everyone to climb aboard. But, if you want, we’ll let you know the minute the doors are open for real. Cool? Cool” (yes Google, we’re cool).
The ‘good news’ is that there’s a waiting list to be part of the Google+ in-crowd, and the stranger news is that people are selling invites on eBay for those desperate to join now. Most invite offers are starting at $0.99 with “instant delivery,” whereas a handful are being priced at up to $100!
Hopefully those considering putting an invite into their eBay shopping cart will question just how legitimate the invite really is and if it’s worth the cash. However, whenever a product or service is invitation-only, a certain kind of exclusivity can draw out the impulsive side of the consumer and perhaps, a flash back to high school. People want what they can’t have and everyone wants to be a part of the ‘in-crowd.’
So what’s so amazing about Google+ that people are willing to bid on an invite that in a number of days will be free, or otherwise can get their social fix on Facebook in the meantime?
So far it seems Google+ is a hybrid version of Facebook. Many users say the interface is reminiscent of the giant social network but its design complements Google.com’s new look.
Users can ‘hang out’ through G-chat, or video chat with friends. There’s an interactive navigation bar, and so far, there are no advertisements on the sidebars (or at least for now). Of course there’s the Facebook Google+ friend streams where users can like “+1” a post, comment or photo, a friend management tool called “Circles,” and what’s leading the pack is the data management. Users can pick up all the data they have collected on Google+ and walk away if they choose. It’s a win-win on privacy issues as well.
Rumor has it that Google+ will also be adding social games like FarmVille, CityVille, and the other ‘villes’ to its platform dubbed Google+ Games. It seems like a natural move for Google to make since investing more than $100 million in Zynga in 2010 and the runaway success Zynga has become.
Google+ has potential to compete head on with Facebook, some users even go as far as to say it could be a Facebook killer and fade away like MySpace My [_____]. Google+ will be a project worth watching because success doesn’t come over night. It’s obvious, even now, Google+ has a few kinks to work out and develop distinguishable functions to prove it’s a better alternative to Facebook. For any social network, it will take time to build a loyal user base and features, that is if people can get an invite.
We’ve all heard the phrase ‘there’s an app for that.’ Well now it seems there’s also ‘a flash sales site for that’ as well. The private flash sales business model is becoming the next gold rush for many start-ups in ecommerce. This market is expected to reach a value of $6 billion by 2015. This trend has created a type of fragmentation that has lead companies to join with top ecommerce solutions in order to claim their territory in the next lucrative market — food, wine, travel, there’s a dedicated flash sales site for that.
Now comes The Clymb, a Portland, Oregon-based start-up out to stake its claim in the $46 billion active outdoor lifestyle market with a members-only site. The company has reached a big milestone this week by closing more than $2 million in Series A funding led by the Oregon Angel Fund and Walden Venture Capital, with help from existing investor, Xbox creator, and former Micorsoft executive, J Allard.
The company was co-founded in 2009 by two veterans of the sportswear apparel industry. Boasting resumes that include Adidas, Airwalk, Mossimo, and Liz Claiborne, co-founders Cec Annett and Kelly Dachtler set out to bring their passion for outdoor activities into an all ecompassing active outdoor lifestyle on The Clymb. The site offers 72-hour flash sales on durable gear such as tents, sleeping bags, shoes, climbing equipment and more, for up to 70% off the original retail price on its ecommerce solution.
The fresh capital will be used toward expanding its network of brand partners. The Clymb is currently partnered up with more than 150 leading outdoor brands, including Arc’Teryx, Burton, KEEN Footwear, Mountain Hardwear and Salomona.
However, the company will also focus on enhancing its ecommerce solution to include social shopping tools for members to share experiences and gear tips through social media channels while earning consumer rewards. Like the natural evolution for most flash-sales sites such as Gilt and Exclusively.In, The Clymb will also tap into other verticals, one of which seems to be taking the shape of discounted local and global adventures personally curated by the company’s team of outdoor enthusiasts and experts.
The Clymb appears to be on its way to creating a strong foothold as a provider of quality outdoor gear, with the buzz word ‘deep discount’ lingering in the consumers’ ears, 1 million unique visitors to its site each month, a membership base of several hundred thousand, and verticals mainstays in the making, the company may be a big competitor for REI, Columbia Sportswear and other established leaders in this space.
The US-based ecommerce solutionAmazon announced that they could bring 5,000 new jobs and $300 million in capital investments to Texas over the next three years in exchange for a four-and-a-half year exemption from sales taxes. The company went online in 1995 and since than has become the largest internet retailer in the U.S. Apparently they are starting to use their power as a bargaining chip to increase revenue.
The news of the deal was originally reported by the Austin American-Statesman, which claimed to have cited documents they had obtained. The deal from ecommerce solution Amazon would be attached to Senate Bill 1, which will be debated in a special session.
The story however doesn’t end there. This news comes after Comptroller Susan Combs told Amazon that it owed $269 million in sales taxes that it should have collected in Texas from the years 2005-2009. Amazon responded to the allegations by threatening to close a distribution facility in Irving, and later laying off 119 workers, according to the Dallas Morning News.
This isn’t the first time the Washington-based giant has battled sales tax in a different state. Ten days ago it was reported that Amazon severed ties with its Connecticut-based sales associates because of a new sales tax law that would force the company to collect sales tax there. Jeff Bezos, CEO of Amazon, a man who strictly lives by the constitution when it affects his shareholders called the tax “unconstitutional.”
If you were wondering why states have been so adamant on collecting sales tax from ecommerce solutions recently look no further. A recent estimate claims that states are missing out on as much as $23 billion a year in uncollected sales taxes from these retailers.
Some may think the idea of Amazon striking a semi-shady deal with Texas is unlikely but it has already happened. In May the company struck a deal in order to thwart efforts to get Amazon to collect sales taxes in South Carolina.. Amazon won tax-collection exemption in exchange for agreeing to create 2,000 jobs and invest $125 million in the state.
There is an interesting survey making its way around the web that will most likely have an effect on how the daily deal industry will operate in the future. PriceGarbber, a part of Experean, released results from a Local Deals Survey wherein they collected some revealing and interesting statistics. 44 percent of respondents said that they use, search, or otherwise take advantage of daily deal websites. However of those, 52 percent expressed feeling overwhelmed by the number of bargain emails they receive on a daily basis. The survey is composed of 2,088 U.S. online consumers, and was conducted from May 20 to 25, 2011.
This new information may come as a surprise to an industry that’s slowly refining their business model. Overloading customers with emails isn’t the only thing that has now got the industry worried. According to a Rice professor, not enough businesses are throwing in with the daily deals groups – they run one deal and never come back.
Professor Utpal Dholakia was quoted saying, “The major take-away from the study is that not enough businesses are coming back to daily deals to make the industry sustainable in the long run.” Dholakia also said, “And our results from three studies and close to 500 businesses surveyed show that the deals are nowhere close to the rates of financial success for participating businesses that some companies claim to be having.”
This however doesn’t mean consumers aren’t adding daily deal items to their shopping carts. According to PriceGrabber, 63 percent of consumers receive emails from two or more local deal Websites a day. But once again some bad news, 60 percent of polled respondents said they feel the daily deal industry is getting flooded with too many sites.
The company that issued the survey, PriceGrabber thinks that they may have a solution to the problem. On June 1, 2011 the company launched their own solution, a one-stop shop for consumers who want to browse thousands of deals from more than 20 local deal sites. In addition the company harasses its users much less by providing only one single email per week.