Column: CRE Deserves an Apology; Jupiter Needs a Whack

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First, I owe a bunch of people an apology, in particular Jay Schwedelson, corporate vice president at Worldata and outgoing co-chairman of the Association for Interactive Marketing's Council for Responsible E-Mail.

In my last column, which popped off on the Direct Marketing Association for failing to handle e-mail issues properly, I included a brutishly worded sentence saying "the CRE so far has accomplished little of note other than to publish e-mail merge/purge guidelines and recommendations on how best to append e-mail addresses to postal files while upsetting the least number of people."

Ouch. Not nice. The sentence was a lame attempt to point out that a council run by a bunch of people with day jobs can accomplish only so much. Instead, it denigrated the accomplishments that these people with day jobs have, nonetheless, been able to make.

Though I still contend that the DMA deserves a bust in the negligence hall of fame for its failure to provide an educated, credible voice for the direct marketing industry on e-mail issues, I apologize to every member of the CRE for belittling their hard work.

Now, on to belittling someone else's work. This column's first-ever "wacky logic" award goes to Jupiter Research for a report released this month contending that collecting sales taxes on online purchases will not impede the growth of e-commerce.

Most online shoppers reportedly either are unaware that sales taxes can be avoided by searching among multiple merchants, or don't see it as a reason to choose one merchant over another, Jupiter claims believably enough.

However, in a release announcing the report, "Sales Tax: Avoidance Is Imperative to Few Online Retailers and Ultimately Futile for All," Jupiter said, "while it is likely within three to five years that tax will be charged for online transactions to residents of all states and localities that impose sales taxes on retail transactions, this will not be a significant impediment to the growth of the online retail channel."

In a survey conducted in November, 46 percent of consumers said they were aware they could avoid sales taxes on online purchases by comparison shopping, according to Jupiter. Of those who said they knew, 61 percent do not go out of their way to find online retailers that don't charge sales taxes, Jupiter said. Thirty percent of the "aware" group said they sometimes look for online merchants that do not charge sales taxes, and 9 percent said they always look for merchants that do not charge sales taxes.

"With budget deficits on the horizon, state and local governments have stepped up their efforts to collect sales tax from online retailers. The collection of taxes is no longer an if but a when," Ken Cassar, senior analyst at Jupiter Research, said in the press release. "Fortunately for online retailers, only a minority of their customers are aware of the fact that they can avoid sales tax by shopping around."

First, since when does Jupiter have the inside track on legislative issues as complicated as this one?

Also, just because "only a minority" of consumers are aware -- 46 percent is a pretty big minority -- that they can avoid sales taxes doesn't mean that price increases resulting from collecting previously uncollected sales taxes wouldn't affect their buying decisions.

Consciously or not, everyone has a mental make-or-break price when they hunt for a good or service. As a result, a significant percentage of consumers may put things in their online shopping carts but balk at checkout once shipping and sales tax are added who would not have balked were the price, say, 6 percent less. Whether they currently shop around for merchants that do not impose sales taxes is irrelevant.

The 61 percent who do not go out of their way to find online retailers that don't charge sales taxes may not go out of their way when shopping, period.

Moreover, as the long history of direct marketing attests, consumers cannot be trusted to report their shopping activity accurately. The only way to know how consumers will react to online sales taxes is to impose them. (And, no, that was not a pro-Internet-sales-tax argument.)

Analyst outfits such as Jupiter are often criticized for questionable forecasts, but this one was more than questionable. It was irresponsible. The issue is complicated enough without reports such as Jupiter's mucking up the debate.


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