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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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Emma Herrod, Editor, InternetRetailing

 

The US Supreme Court has ruled that sales tax can be collected from online retailers regardless of whether or not they have a physical presence in the state. This overrules earlier rulings that said that they were exempt from collecting sales tax from customers. The ruling is applicable to South Dakota following a case of the state vs online retailer Wayfair. Justice Anthony Kennedy said that the internet’s prevalence and power have changed the dynamics of the national economy. “This expansion has also increased the revenue shortfall faced by states seeking to collect their sales and use taxes,” he said.


Other states are expected to follow suit. Many leading US-based online retailers already collect sales tax in different states due to having a physical presence in the form of a warehouse or stores. Meanwhile, Amazon and Whole Foods Market have extended free two-hour delivery of groceries from Whole Foods Market through Prime Now in Baltimore, Boston, Philadelphia, Richmond, Chicago, Houston, Indianapolis, Minneapolis and San Antonio. Along with the free two-hour delivery, members of Amazon Prime can pay $7.99 for one-hour ultrafast delivery if they spend $35 or more. Deliveries are made between 8am and 10pm. The service, which launched earlier this year, is now available to members of Amazon Prime in 19 cities. The companies plan to continue expanding the service across the US throughout 2018.


“We’ve been delighted with the customer response to free two-hour delivery through Prime Now, and we’re excited to bring the service to our customers in Baltimore, Boston, Philadelphia and Richmond,” says Christina Minardi, Whole Foods Market Executive Vice President of Operations. “Today’s announcement is another way that we are continuing to expand access to our high-quality products and locally-sourced favourites.”


Also in the US, department store Neiman Marcus has seen total site traffic increase by 17.9% in the past year. This increase is even more significant as it is primarily due to an increase in direct traffic, which grew 50% between March 2017 and March 2018, according to SimilarWeb. Its blog reports: “Direct traffic is a huge indicator of brand loyalty, and its growth shows huge online success for a brand that is primarily offline. We’ve been able to identify that over the past year Neiman Marcus has successfully invested in strategic keywords that have both leveraged brand exposure and luxury associations, correlating with increases in brand loyalty.”


In the EU, Forrester predicts that €1 trillion of EU retail sales will be digitally impacted by 2021. The analysts forecast that 55% of EU retail sales will either take place online or be digitally influencing offline sales by 2021, as an increasing number of customers spend time researching online before purchasing. In addition, smartphones and tablets are expected to influence €620bn (£546bn) of retail sales in 2022, up from €306bn (£269bn) in 2017. These will account for 81% of all digitally-influenced retail sales. Carrefour and Google have signed a strategic partnership to innovate on new distribution models and commerce experiences for shoppers in France. This will see a new grocery shopping experience launch in early 2019 utilising Google Assistant, connected speakers like Google Home and a new experience on the Google shopping website in France.

 

Working from a new innovation lab in Paris, which is due to open this summer, Carrefour engineers will work alongside Google Cloud AI experts to co-create new consumer experiences. Trouva, a curated marketplace for UK bricks and mortar boutiques, has expanded to Berlin. The move connects an initial 20 independent fashion and homewares boutiques with online shoppers. The expansion marks Trouva’s first step in becoming a “global destination for the best of independent retail” following investment of $10m (£7.57m) through Series A funding. Boutiques selling through the Trouva platform can access the company’s in-store inventory management software, real-time logistics platform and AI machine learning, along with offering same-day click and collect and worldwide shipping for customers.

 

At the other end of the scale, Chinese marketplace JD.com has taken over an entire freight train to move products from Europe to customers in China. The company says that the China Railway Express was faster than sea and cheaper than air when it completed its inaugural journey from Germany to China. Since JD handles all customs procedures, retailers and suppliers also benefit from a one-stop shop service solution, with JD handling every aspect of the freight process from the train station in Germany to the consumer’s doorstep in China. JD is also building out a transfer centre in Hamburg to extend this convenience to more merchants across Europe. Moreover, the train functions as a mobile warehouse; as soon as goods are logged and loaded onto the train in Germany they can be listed for sale immediately on JD.com’s ecommerce platform in China. This means that consumers can place orders for the products even while they’re in transit, shortening wait times for consumers while further reducing warehousing costs and increasing stock management efficiency for brands and retailers.


Liu Han, General Manager of International Supply chain, JD Logistics says, “At JD, logistics innovation and efficiency is all-important because we know that speed, cost and choice are what matter most to our suppliers and our consumers. Through our use of a train Germany to China fully dedicated to carrying goods destined for JD.com, we are dramatically reducing the time to market for European retailers and suppliers and providing our consumers with even more product choices at cheaper prices. With demand for imported European products soaring on JD, we expect to launch a regular service later this year and we look forward to seeing this train make many more trips in the months and years ahead.” JD has also partnered with electric vehicle company NIO to enable deliveries to be made to a car boot. The new service allows customers to have their purchases dropped off in the boot of their car, whether their car is parked at home, at the office, or in a wide range of other approved areas.


GARY TERVIT, INTERNATIONAL DIRECTOR, P2P


UK retailers wishing to explore the lucrative Australian market are now obliged to negotiate new import tax laws. From 1 July 2018, Australian goods and services tax (GST) has applied to consumer sales of low value goods imported by consumers into Australia.According to figures from the Office for National Statistics, Australia was the UK’s 16th largest export market in 2016, with £8.6bn worth of goods and services accounting for 1.6% of total UK exports. The new goods and services tax is designed to give Australia’s domestic businesses a level-playing field in recognition of the continued growth of online sales.GST applies to any business that sells more than A$75,000 (£41,930) of taxable supplies a year to consumers in Australia. These rules also extend to electronic marketplace providers (or ‘electronic distribution platform’ providers such as eBay) and goods ‘re-deliverers’. Previously, imports of goods worth less than A$1,000 (£559) were exempt from GST but, under the new legislation, Australian consumers have to pay 10% GST on all online goods bought from overseas. As a barometer, Australians spent around A$40m (£22.43m) on such items online in the last financial year.


The new GST ruling places an administrative burden on overseas retailers looking to sell to Australia. These businesses will need to register for GST, charge it on sales of low value imported goods, and lodge returns and remit the GST to the Australian Taxation Office. Retailers will have to declare the 10% GST on receipt and commercial invoices to consignees. As with any tax process there is pressure to ensure compliance, with penalties for businesses that don’t comply.


ANTHONY CAPANO, MANAGING DIRECTOR EU, RAKUTEN MARKETING


Globalisation is nothing new. With key markets such as the UK and the US already well developed, many brands are looking beyond their traditional customer bases in search of new opportunities and sources of growth. Thanks to the evolution in ecommerce platforms, translation tools and most importantly, freight forwarding, overseas shoppers have abandoned their concerns around confusing websites and long delivery times. They now actively seek out products to buy from UK brands, based on the promise of quality and value. Based on interviews with over 400 UK marketers, Rakuten Marketing’s ‘New Horizons’ report examines business readiness in response to growing demand in emerging markets for UK brands.


Among the key findings:


89% of UK marketers are now in a position where they are currently managing international campaigns. More than half (55%) are actively managing campaigns across Europe and a further 14% state they are also managing campaigns further afield; While nearly a quarter of marketers are in the privileged position of having a centralised global marketing team, just 11% say they have local marketing teams in overseas markets able to carry the responsibility for rolling out international campaigns. The majority (61%) are reliant on UK teams to take charge of global campaigns; Asia-Pacific (APAC) is a region that is quickly growing in importance for UK marketers. To reach APAC effectively, UK marketers are personally using WeChat (36%). Similarly, 30% have tried Weibo and 18% have tried Renren. In the UK alone, more than 35% of transactions driven for Rakuten Marketing clients are now taking place overseas, highlighting the significant international growth opportunity for UK brands.

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