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EDITORIAL Imperfect goods, sustainable business and taxing retail

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eBay’s launch of Imperfects – its subsite that sells slightly defective fashion from brands like North Face, Timberland and Puma – shows just how far the sustainability revolution has come. While protesters are gluing themselves to oil refineries, consumers are already looking to shop more sustainably and having a big impact, not just on the environment.

The move to a more circular way of consuming has obvious benefits for the planet and, eBay included, it offers excellent brownie points for retailers that join in and make it happen.

However, it has long been seen as a trade-off: sales can rise if you act sustainably, but it comes at a cost to business as it makes things more difficult and more expensive. But is this thinking outmoded?

It seems that yes it is. Research out this week suggests that as of 2021, sustainability initiatives are contributing some 20% of business financial results. Not only is it increasingly driving sales for the brands and retailers that adopt more sustainable practices, but it is also saving them money. It is a true win-win.

It is also ushering in a new era of collaboration between brands and retailers and their suppliers, as well as among suppliers themselves and, according to the report, this will see even more savings/revenues come from sustainability as we plough in into the 2020s.

The embracing of sustainability – and its increasing business benefits – marks one shift in retailer views on the fundamentals of business, but their almost unanimous welcoming of an online sales tax marks quite another.

With a government consultation launched in February coming to a close in May, a snap survey of retailers has revealed that 89% of them back the introduction of an online sales tax to level the playing field between physical retailers who have to pay business rates and pureplays who don’t.

The caveat is that many are also asking for some subtlety in how this is applied, with a blanket tax largely being rejected in favour of their being reductions or a complete waiving of it for essential items, for smaller retailers and perhaps even for digital goods.

The complexity of how to tax ecommerce is revealed by the almost 50:50 split in views on where click and collect sits. Half say it should be taxed as ecommerce, half don’t.

This sheds a light on the future problems that retailers – and the taxers of retail – are going to face. Increasingly, online isn’t a thing in its own right but part of the whole retail experience. The complexity of today’s shopping journey only serves to make this even more cloudy.

The rise of the metaverse, increasing use of virtual reality shopping proxies – see the trial in Barcelona that we reported last week that connects at-home consumers with personal shoppers in the fruit and veg market via VR and 5G – and the use of mobile to shop while in store are all going to make what it means to shop online rather moot.

This is hard enough for retailers to get to grips with, but the metaverse is going to prove to be very hard for the powers that be to regulate, let alone tax. Good luck with that HMRC.

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