Ecommerce Website Owners: Are You Leaving Money On The Counter?

Ecommerce website owners are complicated creatures. We've got to worry about inventory, marketing, fulfilling orders, and more. But one of the most basic things we can do is just collect our money. It might sound like a silly idea but a lot of ecommerce site owners are not charging for shipping on their own websites or they're neglecting to charge sales tax in some states - as such they're leaving money on the table.

While there are plenty of arguments to be had about the right way to handle these expense items, those who fail to include them at all might be unintentionally hurting themselves by leaving potential revenue on the table that could have been collected with some minor changes and knowledge about ecommerce business law compliance.

Let's take a look at how this works before we get into some specific examples that show the problem and possible solutions.

The Basic Idea Is To Take A Look At Your Customers And Their Buying Habits.

Begin by looking at your customers on Amazon and other online retailers to find out how they actually buy. Look for the number of clicks it takes them to make a purchase and see how that correlates with their shipping costs. You shouldn't ignore these data points because the number of clicks might be low, but you still need to remember that it's a hint about what your customers want from you.

Now, look at the costs of shipping based on where your customers live. This is how transportation costs across a variety of different areas should break down (extended table from the Tax Foundation's 2012 report on state and local tax burdens in the United States ):

Tax Ratio State Tax Burden as % of Total State taxes as % of Total Alabama 0.04% 0.34% Alaska 0.02% 0.35% Arizona 4.98% 5.42% Arkansas 1.06% 1.34% California 3.48% 6.67% Colorado 2.80% 4.93% Connecticut 1.14% 2.14% Delaware 5.15% 7.22% District of Columbia 1.01% 1.43% Florida 2.34% 3.27% Georgia 3.82% 4.98% Hawaii 0.07% 0.53% Idaho 0.21% 0.81% Illinois 2.31% 3.38%% Indiana 1.23% 1.76%% Iowa 1.12 % 1 .37%% Kansas 0 .44 % 0 .81 % Kentucky 2 .24 % 2 .78 % Louisiana 3 .31 % 4 .63 % Maine 1 .70 % 2 .94 % Maryland 4 .13 % 7 .18 % Massachusetts 2 .93 % 4 .35%% Michigan 2.19% 3.09% Minnesota 1.30% 2.57%% Mississippi 0 .42 % 0 .73 % Missouri 1 .25 % 1 .80 %% Montana 0 .52 % 1 .06%% Nebraska 0.26% 0.69% Nevada 3.02% 3.38%% New Hampshire 1.18% 2.05% New Jersey 5.31% 6.91% New Mexico 3..08% 4..92% New York 7..58%% 8..75%% North Carolina 2..56%% 4..13%% North Dakota 0 ..08 % 0 ..58 %% Ohio 2 ..54 %% 5 ..

Conclusion: If you find that your state has a higher tax ratio than the national average, you might want to look into how you can lower taxes for your customers.

Stop Ignoring Your Customers' Intent To Buy.

When you look at your customers, you should also examine how they buy and what their intent is when they make a purchase. In a lot of cases, after looking at patterns of purchase for your best customers (people who are willing to pay more), it's easy to see that most people buy one or two items only from ecommerce sites before moving on to other retailers who offer free shipping or no sales tax.