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Published on July 30th, 2020 | by The GC Team

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Online sales tax “will do little to save High Street,” says Productsup

A sales tax on online retailers, in a bid to level the playing field between ecommerce retailers and bricks-and-mortar, has been widely advocated, and Rishi Sunak, the Chancellor of the Exchequer, is reportedly giving it active consideration.

It’s seen by some as a means of reviving the struggling High Street, but according to Johannis Hatt, CEO at ecommerce software company Productsup, such a tax is “regressive, threatens to stymie innovation and customer choice, and will ultimately fail to drive shoppers to the high street.” Hatt believes we should be focusing on helping retailers go digital and integrating ecommerce and physical retail.

“This proposed online sales tax will do little to save the high street,” he says. “The landscape for bricks-and-mortar retailers has evolved dramatically over the last year, accelerated by the pandemic, but a regressive tax that penalises innovation is not the answer. While we welcome moves by the Government to support retail firms that are struggling, customers don’t go online just because of the price point but also because of the convenience and choice afforded. As such, making things more difficult for online retailers isn’t the answer to the High Street’s woes. The focus needs to be on creating an industry where ecommerce and physical retail can work together more seamlessly, rather than throwing up barriers to trade.

For example, brands and retailers need to start combining ecommerce with physical activations to offer meaningful customer experience. A robust online offering can help drive physical sales and strengthen the relationship between brands and consumers. While it’s not something that can be done with a few clicks, this is certainly an area the UK government can, and should, provide struggling retailers support on. 

“All this isn’t to say that the future will be 100% ecommerce, as there’s still a huge appetite from consumers to interact with brands and products in real life. The point is, now is the time to develop an effective omnichannel strategy. Offering a buy online, pickup in store option is a good first step, and to do this you need to have a single view of inventory, and make it easier for customers to shop in the way they want. This way you can eliminate the pains of shipping and processing, deliver a convenient experience and give shoppers a compelling reason to visit the high street. By the same token, by moving online, many bricks-and-mortar retailers have a chance to diversify their revenue streams and spread some of the risk associated with ever-declining footfall.”

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