Alert! Online Shopping in Jeopardy and Peril!

Recently the Marketplace Fairness Act passed the US Senate, and is currently being considered by the House. So, what is it? The Marketplace Fairness Act (also referred to as “The Amazon Tax”) would grant states the authority to force online and catalog retailers ("remote sellers") to collect sales tax at the time of a transaction, just like local retailers do.

Many of the businesses and merchants that would be affected are lobbying against the act, citing the complexity of tax laws, and the auditing costs for small businesses to remain in compliance.

Online shopping alone generated more than 289 billion dollars in sales in 2012, so obviously the MFA would have a huge impact. One wonders if such legislation had been in place when remote shopping began, what would have been its effects on the industry’s pioneers? Let’s take a look at how this all began...

A Brief History of Remote Shopping

1744: Benjamin Franklin creates a catalogue to sell scientific and academic books through the mail. At the same time, he also is believed to have created the first mail order guarantee: "Those persons who live remote, by sending their orders and money to B. Franklin may depend on the same justice as if present".

1838: Hammacher Schlemmer establishes its mail-order business in New York City, unaware that someday their products would help travelers pass the time by becoming the star attractions of “Sky Mall.”

1872: Aaron Montgomery Ward produced the first mail-order catalogue for Montgomery Wards. This catalogue consisted of one sheet of paper.

1894: Sears publishes a 322 page catalogue that offered almost everything imaginable, including cars. (Real ones, not toys)

About a hundred years later, something called “the Internet” took off and websites became the catalogues of the vast majority of companies. Many mail order businesses went the way of the dinosaur, but some like Haband, founded in 1925, continued to grow and prosper, taking advantage of the increased opportunities to reach consumers via the Internet, as well as through the Postal Service.

On a somewhat related side-note that shows retailers do keep up with the times and aren’t always about the money, last year Haband won a “Proggy Award” from PETA for pulling all down-filled items from its website, vowing to never to sell them again. On another somewhat related, ironic side-note, if you want to know more about the history of remote shopping, you can buy the book “Catalog: The Illustrated History of Mail Order Shopping” on the website of the company most likely to be most affected by “the Amazon Tax.” Guess who that is?

Back To The Present

So, what will the effects be should the Marketplace Fairness Act become law? Will it make remote shopping a footnote of history? On the one hand, it would increase revenues for cash-strapped state governments. On the other hand it would make things cost more for consumers, at least on a tax-added basis. Would merchants like Haband pass the costs of implementing the provisions of the act onto consumers, or would they possibly offer more discounts and coupons to offset those price increases, if they were to occur? We shall see.

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By: Peter

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