“Nothing is for certain but death and taxes” and for Online Retailers the Phrase is all too Real.

In 1992 the U.S. Supreme Court ruled that retailers do not have to collect taxes in states where they lack a physical presence. That means approximately 10 Billion dollars in taxes are going uncollected annually. Slowly but surely every taxing municipality is try to figure out how to tap this revenue resource. The question is how long will it take before online retailers are required to collect sales tax on their goods and services at every municipality? Every state county and city or part of a city. When they are required to collect, how much work will it take?

While large organizations with a lot of resources can hire a team to manage tax tables, and jurisdictions, for small to medium businesses it is an overwhelming task. In the United States alone there were 459 tax changes in 2011. That does not include changes to boundaries.  To make things even more complicated there is no clear way for a retailer to be notified of the changes. Notification of tax and boundary changes are managed by independent state and local authorities and can be delivered in a variety of methods, from email to regular mail. Taxes also do not correlate to zip codes or other well-defined physical descriptions it can be down to the roof top-level.  This creates a major burden on the small and medium business owner.

So why bother maintaining them, well not collecting or maintaining the necessary documentation can cost a retailer thousands of dollars.  If and when a retailer is audited an error in tax collection of $80 can turn into a penalty of $20,000. That is a steep price to pay for any small to medium business. So what is the solution?

There are cost effective ways to manage the tax burden, and solutions are out there to enable the supply chain to sell and not worry about the rules and regulations that accompany the internet reality. One such company is Avalara, they provide a solution that maintains the tax rules and audit documentation for companies selling to the US and Canada. Companies like this can give small and medium business owners peace of mind.

To read both sides of the argument on collecting sales tax, check out this WSJ article from 2011.

The Internet is Catching On..

A good friend once told me “this internet thing might just catch on”. Last week it was confirmed that not only did it catch on but it has grown into something no one could have imagined 20 years ago. I spent the day at “Cloudforce” in San Francisco on Thursday along with 10,000+ attendees who utilize or want to utilize Salesforce for their business.  Long gone are the days where you had to drive to a local store to find something you wanted to buy or to just check it out.  Also gone are the days of handwriting (gasp!) a complaint when you were dissatisfied. Companies are moving into an era of what Salesforce calls “The Social Enterprise”, where companies buy and sell over the internet and even handle customer service using the internet to monitor sites such as Facebook, and Twitter.  Even the supply chain is being affected. The good ole days of maintaining and selling inventory from a spreadsheet are slowly slipping away.

Companies need to be flexible and good citizens among a variety of systems (ecommerce engines, VAR EDI connections and customer relationship systems) and all of them need to be accessible at any time. In today’s global economy there is never a time when a customer is not awake.  Distributors want more information around delivery time and cost from their suppliers. Sales organizations want more visibility into available inventory, margins and resources.  The internet is the fastest and most effective way to satisfy everyone’s data needs.

The internet is just not for email. It is now a place to build relationships with customers, suppliers and sales organizations. I guess my friend was right… this internet thing is catching on.

-JT

The Evolution of Margin Management in Multi-channel B2Bs

You know when you hear something all the time, how it can become commonplace. Then you hear a new twist on it that you have never heard before and it sounds interesting but you are not sure how relevant it is. Then you hear it over and over and you think, there has to be something to this. Well that happened to me this week.

When you have the opportunity to talk to as many different businesses as we do, it is always interesting to discover new revenue models and learn about what channels feed the revenue of the businesses. In almost every case they are generating revenue from new channels from where they have been historically selling and looking to expand that strategy.  Following the revenue makes sense. This also leads to interesting and evolving compensation models for businesses.

Take a firm that compensates sales teams on deal margin, not revenue.  Sounds like a rare model, doesn’t it? I thought it was when I first heard it. Then this week I heard about the same model multiple times. Businesses are asking their Sales organizations to bring more profitable business and paying them more to do it, a classic win – win.

There is a catch to this strategy. As the sales team prepares the proposal / quotation, they need to clearly and quickly have access to cost. To complete the model effectively, the construct of the deal needs to be maintained throughout the order fulfillment process so the gross profit calculated on the quote is actually produced and the expected gross margin realized.

This really strains an order fulfillment operation when you consider stocking and non-stocking (drop ship) business models for Value Added Resellers (VARs) and Distributors.

We continue to see more of this evolving business model and strive to keep our Quote to Cash process ready to completely track the margin sold with the margin realized.

With a global marketplace, unique supplier relationships and order fulfillment models, I see margin management evolving into a natural compensation model, which makes sense.

-MF