Once upon a time, things were built to last. With enough time, effort and spare parts, seemingly dead mechanical contraptions could be brought back to life. That’s the way it still works in Cuba, where the cars are all pre-1959: when one breaks down, it is fixed. Yet in many industries today, the best way to fix something that’s not working is to replace it. That’s due in large part to rapidly changing technologies. If you don’t replace older systems, you’ll be left behind.
Okay, so maybe it isn’t necessary to purchase the newest iPhone the day it comes out (surely we can wait until our current phone goes kaput). But businesses do need to meet the needs of customers, and customer needs are evolving as rapidly as technology.
Put it in the till
The cash register has had a long, illustrious career. Invented shortly after the Civil War to help curb employee theft, it was “ubiquitous” in the United States by the early 1900s and became “an essential tool in nearly every retail establishment” by 1915. Notable changes have been few and far between:
- 1974: Bar code scanners added
- 2003: Self-check-out areas go mainstream
- 2012: Mobile checkout devices created
There is no reason to think that cash registers are going away any time soon, since they do what they’re supposed to do well. Yet for many retailers, they’re no longer sufficient.
Living in a post-till world
It’s no secret that Ecommerce is seeing more growth than other areas of retail. Forrester Research suggests that Ecommerce will reach $371 billion by 2017 in the United States alone. That’s 10% of all retail sales. Even in-store shopping is being affected by the internet, now that mobile phones and tablets are snug in our pockets. In Q1 2013, “Ecommerce grew about $50 billion …, compared to 2% growth by the retail industry.” By Q3 2013, mobile commerce was outpacing Ecommerce by two to one. Researchers predict that some “60% of all U.S. retail sales will involve the web” by 2017.
The convergence of physical and online shopping is visible in another way, too. If many Main Street retailers are expanding their online presence, more and more “pure-play online retailers” are opening brick and mortar stores. They’ve recognized a need “to animate a physical presence and visceral experience for their customers, not to move products but more critically to move hearts and minds” (Practical Ecommerce.com).
Given these developments, it is little surprise that “80% of retailers surveyed expect to maintain or increase store technology investments over the next three years” and that 70% of retail executives report that “their organization is currently deploying or planning to refresh its existing software in the next three years.” On the horizon is the “convergence of store and digital technology.”
Replatform smart
Econsultancy.com suggests that to “improve on an existing platform, it is necessary to understand its shortcomings.” One shortcoming is leaving sales tax as an afterthought. Retailers contemplating a new platform should consider sales tax from the outset; to not do so “would be short sighted … and ignore the possibilities for future expansion.” New markets mean new sales tax rates, rules, regulations. A new platform should be able to seamlessly integrate new markets.
Furthermore, the market today is organic, ever-changing. Consider the growth of click-and-collect, whereby customers purchase items from a website and then pick them up at a nearby retail establishment. If the model harkens back to old catalog stores, the technology used today is fresh and new. Click-and-collect “is fast becoming a standard customer expectation, particularly in ‘bricks and clicks’ businesses” with both physical and virtual stores. Charging the proper sales tax rate is essential, but what is the proper rate? The rate at the customer’s billing address, or the rate at the location of the store where the item is collected?
According to Forrester Research, 74% of online retailers are worried that their current platforms “won’t scale with their growth plans” and 54% of Ecommerce executives are prioritizing a new platform in the next year. When retailers do replatform, sales tax should be top of mind.
Avalara partners with hundreds of providers. Our sales tax automation software can plug into existing platforms or stand alone. Facilitating sales tax compliance has never been so easy.
photo credit: Jo Jakeman via photopin cc
The post Replatforming: Life in a Post-Till World appeared first on Avalara.
