Smart Shopping

Everybody loves a bargain. It doesn’t matter how much money your household earns, or how much disposable income you have. It really doesn’t. There’s something fundamental and instinctive built into human DNA that means that, when we feel like we’re saving money while making a purchase (a contradiction, surely?), then we feel a euphoric high. So, when the internet worked its way into most of the world’s homes, it didn’t take long for internet shopping to take a hold. Convenient, exciting, easy and, thanks to some lax tax laws, capable of showering the home-shopper with bargains galore.
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And then it all changed. Amazon, as well as other sites, started supporting online sales taxes, and the savings became less and less. They’re still there, but they’re not as definite, or easy to find.

“It’s beyond frustrating that Congress waited until Amazon became so dominant that having a massive tax advantage is no longer essential to its strategy,” said Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, to Forbes. “The right time to fix this was a decade ago, when it could have saved many local businesses.”

That quote is key, because it reminds us that while we were making savings, small business with storefronts are suffering due to what they consider an unfair advantage on behalf of the online stores. Whether the changes in the laws remains to be seen, but Amazon is finally embracing sales tax, despite Amazon founder Jeff Bezos once famously saying that he investigated setting up Amazon on an Indian reservation to avoid taxes.

Back in November, The Onion ran a satirical piece called “Online Shopping vs. In-Store Shopping,” which, while very funny, touched on the truth (like all great Onion pieces). Included in the list of benefits of online shopping is: Don’t have to use legs, ability to read 1,634 reviews of $12 iPhone case before committing to purchase, and can avoid facing the employees you are taking away from loved ones. On the side of in-store shopping, they included: less time wasted wading through convenient shipping options, shopping with friends can be a bonding experience for people who otherwise have nothing to talk about, and screaming at clerk to unlock video game display case still counts as human contact.

Again, The Onion excels at taking the truth and exaggerating it, creating something hilarious and scathing. The fact that people “don’t have to use legs” when shopping online genuinely is appealing (though they wouldn’t want to word it like that) for people who work long hours and have a family. Similarly, on the other side of the coin, a brief bit of human interaction with a clerk can be attractive to people who have no time for a real social life.

There are other things to consider too, like the fact that free shipping (something that online consumers consider vital) ends up costing retailers, so they’re often forced into losing money, or abandoning a sale. There is also the fact that more items are returned in the mail following an online purchase, though this can in part be put down to people buying clothes in more than one size on purpose so that they can deliberately send one back.

There’s also something that CNBC calls the “race to the bottom.”

“The digital shift has made it easier for shoppers to price compare. While that’s great news for consumers, it’s not so great for retailers, particularly those who carry the same items as their competitors. This results in companies slashing their prices, in what pricing firm 360pi has called a race to the bottom. But this online transparency isn’t only tied to price tags, Mader said. Shoppers can quickly skim companies’ websites to see who offers same-day delivery, pick-up in store or other convenient fulfillment options, creating another arena in which retailers compete.”

In addition, there’s the fact that items like candy are selling less because of the “walk by” factor. When shopping online, we aren’t forced to walk by a wall of candy, pop, chips, jerky and the like, throwing up endless temptation. We don’t deliberately buy candy online, so sales are down. Whether this is a good or bad thing comes down to where you sit in the food chain.

According to the Houston Chronicle, “Businesses with an interest in online retailing can go any one of several routes. Some businesses, such as Amazon and Netflix, dispense with the cost and staffing requirements of a brick-and-mortar store and exist only on the Internet. Other companies, such as Barnes & Noble, use their store and their website as two separate sales channels. In addition to conventional retail, online sales also include business-to-business transactions and consumer to consumer sales, such as eBay offers.”

The article goes on to say that, “Using the Internet as your primary sales channel offers multiple advantages. Building a website is cheaper than opening a store, and you can reach customers online anywhere in the world. Shopping is easy and comfortable for customers, and you can customize their experience based on past sales and preferences. Some businesses still work better offline, however: Clothes shopping, where there’s no way to confirm the fit until the customer tries the outfit on, doesn’t adapt as well to e-commerce as selling books or ordering flowers.”

Here in Colorado, we’re tied up by the fact that the state requires us to pay a consumer use tax on all of our online purchases if the online retailers don’t charge sales tax. This can get complicated, because, according to 9News, consumer use tax must be paid by individuals (and businesses) for purchases that did not include Colorado sales tax. Sometimes when you buy something online, by phone or by mail order, the price does not include tax. Some even view it as an incentive to buy something online.

“I think for many years people have thought that they would get away without paying sales tax,” said Colorado Department of Revenue spokesperson Ro Silva. “But, if you see on your receipt that you didn’t pay any Colorado sales tax at all, Colorado local government tax, you need to pay use tax.”

That’s what it all comes down to. The savings just aren’t there anymore. However, habit is a difficult thing to break, and consumers are so used to the convenience of online shopping that, as long as they’re not paying more money, they may be happy to keep with the mouse clicks.

Some stores have it tougher than others. If the product that you sell is also available digitally, as is the case with reading material, music, movies, etc, then you’re fighting two battles – hard copy vs. downloading, and online sales vs. retail. That has been the case with Bart’s Record Store in Boulder, which seems to have been fighting numerous battles for years.

Of course, this isn’t only a problem for Bart’s store. The industry has, for a long time, recognized the need for reinvention. But Bart’s has suffered more than most, in part because of the floods which only piled on the misery. The store is still here though, having moved from a shack on Pearl Street to a larger space on Folsom Street in 2013.

Bart Stinchcomb told the Daily Camera back then that, “The blessing was that we were planning to move. It was a scramble to get set up, but so far I’m certainly pleased with the turnout.”

That, “Hey, stuff happens, we move on,” attitude plays a big part in a store’s survival. Bart’s is still here despite the floods, the online music revolution, and the thriving online shopping mentality in consumers. They have simply evolved, although, perhaps unusually, they don’t haver a massive web presence. The store simply survives thanks to a loyal customer base and a determined owner.

Boulder Body Wear

It is not only the record stores that have had to alter their thinking though. Boulder Body Wear is an independently owned clothing store in Boulder that largely markets to dancers. Owner Amy Kennedy says that the online shopping phenomenon is something that they’ve had to evolve around. “Unfortunately, I think small, independent stores have a larger learning curve as far as how to navigate all of that,” she says. “It’s not really about having your own online presence, but it might be about learning how to compete with it and looking ahead to the next big thing. If you’re just thinking about putting together another website to compete with whatever other big website is out there, you might not be going the right route. You might need something that’s more applicable to a small business like a certain type of app or catering your online business to serve your local community in a way that a large guy can’t.” Boulder Body Wear does sell online, but the percentage of their sales that are online is very small, and they see it more as a marketing tool. Kennedy certainly doesn’t envisage a future without a brick and mortar store. “I don’t envision that at all,” she says. “Brick and mortar won’t go away, but how we do business will change.”

“Brick and mortar won’t go away, but how we do business will change.”Amy Kennedy

The book industry has been facing similar problems, particularly since the Kindle revolution. Even more so than CDs, people find the idea of not having to carry piles of books around attractive, so it has become a collector’s market (again like CDs and records). Just as Tower and Virgin saw branches close at a scary rate years ago, now Borders and Barnes & Noble have suffered the same fate. Meanwhile, used bookstores are evolving.

Writing a piece for Slate back in 2011 called “Don’t support your local bookseller, Farhad Manjoo detailed the advantages of buying books online. “Compared with online retailers, bookstores present a frustrating consumer experience,” he wrote. “A physical store—whether it’s your favorite indie or the humongous Barnes & Noble at the mall—offers a relatively paltry selection, no customer reviews, no reliable way to find what you’re looking for, and a dubious recommendations engine. Amazon suggests books based on others you’ve read; your local store recommends what the employees like. If you don’t choose your movies based on what the guy at the box office recommends, why would you choose your books that way?”

Manjoo has a point, but he’s missing another. For many readers, part of the book-buying experience is visceral. It’s about leafing, yes physically, through many books until you find one that strikes a chord. It’s about the smell of books, both old and new. It’s about the knowledgable staff, the regular book-readings and signings, the leather sofas and perhaps the little coffee shop at the back. It’s an experience. Or at least it should be. Or was.

Boulder Bookstore

The Boulder Book Store is, according to the website, “Boulder’s largest independent bookstore with 20,000 sq. feet, more than 100,000 titles, and three floors. We host more than 200 events in the store and in the community every year. Boulder Book Store has been named “Best of Boulder” by local papers every year since 1987. As a founding member of the Boulder Independent Business Alliance (one of the first of its kind in the country), David Bolduc, owner of the Boulder Book Store, has been at the forefront of the “shop local” movement for over a decade.”

It’s a local institution, hosting regular events and stocking thousands upon thousands of books of all genres. Arsen Kashkashian is the head buyer, and he echoes the Boulder Body Wear statement that online sales represent a very small percentage of their business. He does say that business has suffered though.

“In the book business, it’s been going on for about 20 years,” he says. “Amazon started 20 years ago. So there’s been online shopping, one way or another, for years and years. It has suffered from what it would have been. But there are less physical bookstores too. The whole Borders chain went out of business. So in that sense, if you’re one of the ones left standing, you have less physical competition than you wound have if online didn’t exist. It’s a complex thing to figure out.”

“For us, we’re more nimble,” Kashkashian continues. “We’re able to suit the store for the community. We’re in the community every day. We’ve got a great location. The store feels like a unique experience when going in. That was a disadvantage Borders had and, to some extent, Barnes & Noble. The people who were deciding not to shop online want an experience, and they don’t want the same experience everywhere from place to place. That was one of the problems Borders had. You’re not offering enough difference to convince somebody not to online shop.”

Again, the Boulder Book Store does offer online services. “We do have some regular customers who like to buy online but they tend to pick up the book here,” Kashkashian says. “Rather than call us to order a book, they’ll order online, we’ll email them when the book’s here and then they’ll come in and get it. You can also download the books on our website but, again, it’s a very small percentage. We decided very early on that our future is the physical world. The economics of downloaded books does not support paying rent or employees or any of that stuff. If we sell 100 copies of a hardback, and say we didn’t sell them but they were all downloaded, our profit would be one fiftieth. You can’t survive on that.”

Kashkashian thinks that there will always be a place for brick and mortar book stores. “It’s interesting – a lot of new stores are opening, and at the same time a lot of stores are closing every year,” he says. “People are finding new opportunities, and other people who have been doing the same thing or are in a community where it’s tough, aren’t able to make it work anymore. There will always be some level of independents. Right now, they’re on the increase. E-book sale numbers seem to have flattened out, so right now we’re in a good place, temporarily at least. We’ll see if that holds up.”

If there’s a conclusion to be made here, it’s far from an obvious one. The means to survive will certainly be different for a book store when compared to a clothing store, a record store next to a sporting goods store. But one thing that stands out when talking to any of these people is that remaining static, a stubborn refusal to accept new technologies, is unlikely to reap reward. Brick and mortar stores aren’t going anywhere anytime soon. But, just like a magazine like Yellow Scene uses our website and social media to compliment our hard copy publication, so stores can do exactly the same thing. It’s a tough world out there for retail stores and online stores alike, standing out from the crowd. The taxes that stores like Amazon now have to pay have evened up the playing field somewhat, but it is still a world that requires a thick skin and some ingenuity. Thankfully, there is a means of survival that places like Bart’s, Boulder Body Wear, and the Boulder Book Store have tapped into. Long may it continue.