Cyber Week Generates Unprecedented Revenue – and Sales Tax Challenges – for eCommerce Sellers - Taxify
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Cyber Week Generates Unprecedented Revenue – and Sales Tax Challenges – for eCommerce Sellers

Over the past several years, traditionally strong Black Friday sales have begun to flatline as more consumers have taken to holding out for online deals on Cyber Monday. While this may not be a welcome trend among retailers that focus primarily on brick-and-mortar sales, it’s great news for the many smaller vendors selling in the skyrocketing ecommerce channel.

Ten years ago, Black Friday was easily the biggest on-premise sales day of the year in retail. Now, however, the days spanning between Thanksgiving and Cyber Monday is known collectively as “Cyber Week,” as online retailers have begun to hold big promotions and sales on different days throughout this period to potentially gain a larger share of the market.

While sales during Cyber Week have continued to grow steadily over the past decade or so, this year’s edition was unprecedented in both volume and revenue.

 

A record-setting Cyber Week for ecommerce businesses

In 2018, sales were up over last year across the board – including Black Friday sales – but they were most dramatically improved in ecommerce. This Cyber Monday was the biggest ecommerce sales day in U.S. history, as consumers bought $7.9 billion of goods from online retailers – a 19.3 percent uptick from last year’s numbers.

Likewise, there was an uptick in orders placed online and picked up in person on Black Friday, while overall foot traffic reportedly decreased by 1.7 percent year-over-year and brick-and-mortar sales fell as much as 7 percent. The contrast between the continued growth in overall sales and the decline in store visitors is yet another reminder that the future of retail primarily resides online.

 

Mobile ordering is the next big ecommerce trend

One of the biggest developments this Cyber Week was the stratospheric rise of purchases made on mobile devices, a stark departure from historically-dominant brick-and-mortar sales and desktop sales alike. Orders placed using mobile devices accounted for 53 percent of all orders placed during Cyber Week. On Cyber Monday, the share of purchases made on mobile devices was “only” 43 percent, but that was not enough to prevent mobile from being the primary buying source overall.

This development could have huge ramifications for ecommerce sellers going forward. The customer’s buying experience can be a huge influence on their propensity to buy in the future, and outdated or malfunctioning mobile interfaces for selling platforms could inhibit future growth.

 

South Dakota v Wayfair’s impact on Cyber Week

As you’ve likely heard by now, the Supreme Court ruled in June to redefine what constitutes “nexus,” effectively paving the way for states to place new sales tax obligations on remote sellers. Over 30 states have already jumped at the chance to impose new requirements on the ecommerce channel, with more undoubtedly on the way. Many of those states have already applied those new standards, despite the relatively tight turnaround window. As we noted in October, this movement could potentially create new burdens for remote sellers exceeding these new thresholds.

Retail is moving online in general, and continued growth in the ecommerce channel has inadvertently brought a new burden upon sellers exceeding certain thresholds across the country. Greater revenue means greater complexity of regulatory and compliance requirements for ecommerce businesses. As states begin to crack down on remote sellers, automated sales tax solutions can help these vendors solve tax for good.

See how Taxify by Sovos can help ease the burden of sales tax compliance in every jurisdiction.

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