The apparel chain filed for bankruptcy in January and closed its e-commerce site and stores.
Only 8% of online shoppers cite sales tax as a factor, a study finds.
The controversy surrounding a proposed nationwide system of online sales tax may have little to do with how online consumers shop, according to a study released today by Forrester Research Inc. and Bizrate Insights that finds only 8% of online shoppers say sales tax is a major factor in their buying decisions.
Even as many states change their laws to require more online sales tax collection by web retailers, that “is not likely to be a game changer” for merchants, the study’s author, Forrester vice president and principal analysit for e-business Sucharita Mulpuru, says in a blog posting today. “Only around one-quarter of buyers said that the introduction of sales tax would cause them to switch retailers,” she notes.
The study, the Bizrate Insights/Forrester Sales Tax Flash Online Survey, Q2 2011, compiled responses from 34,022 online shoppers in the second quarter who had recently shopped online.
The study also found:
● 59% of respondents said sales tax was a factor in online purchase decisions, but 22% said it was not of high importance and 29% said it was only one of the factors they considered; that left just 8% saying sales tax was an important factor on its own in making purchasing decisions.
● Among the 41% of respondents who said sales tax was not important in online purchase decisions, 27% said sales tax was simply not important or even considered; 8% said it wasn’t considered because “all retailers I looked at charged sales tax”; 6% said they wanted to purchase from a particular retailer regardless of whether it charged sales tax.
● Among shoppers who said they didn’t pay sales tax on their most recent online purchase, 25% said they would have purchased from a different retailer if sales tax had been charged. Of these shoppers, 68% said they would have purchased from a different online retailer that didn’t charge sales tax, and 32% said they would have purchased from a local bricks-and-mortar store.
● Among shoppers who said they paid sales tax on their most recent online purchase, 22% said they considered not making a purchase to avoid the tax. Of these shoppers, 64% said they made the purchase anyway because of other reasons more important than cost, and 36% said they went ahead with the purchase because the total cost was still lower than at other retail sites.
● 60% of respondents said that sales tax matters more to them as the value of an item increases.
● Consumers are more likely to resist buying online because of sales tax in certain product categories, such as consumer electronics and computer hardware, because such categories offer ample buying alternatives across both web-only and multichannel retailers. For example, 55% of consumer electronics buyers avoided sales tax, compared to 24% of those shopping for health and beauty products.