Changing Consumer Expectations Affect Tax

Retailers are taking omnichannel to the next level with connected commerce, a seamless integration of physical and digital channels that delivers a unified shopping experience. In a recent post, I looked at some of the benefits that companies are seeking to achieve right now from a connected commerce strategy. But what comes next? The pace of change in retail is intense, and tax leaders need to keep an eye on the horizon because many of these shifts affect tax compliance activities. 

The Winterberry Group report I previously discussed includes some eye-opening predictions for the next phase of connected commerce. Retailers will expand their quest for enhanced physical/digital integration to include interactive kiosks, augmented reality (AR) displays and virtual fitting rooms. They will explore deliveries by drone and autonomous vehicles. They will leverage AI for operational enhancements and optimization of marketing content, as well as campaigns keyed to individual customer behaviors.

Consumer expectations are also evolving at a swift pace. Here’s what the Winterberry Group research suggests shoppers will soon prioritize: 

• Effortless movement among channels: Shoppers want seamless transitions among online and physical modes. “For instance, starting a purchase on a smartphone, checking out in-store and managing returns via an app is now the baseline expectation,” the report points out. “AR tools that let customers ‘try before they buy’ are driving purchase confidence and reducing returns.” This has important implications for tax, as we pointed out in a recent Vertex survey report. In an omnichannel world, “customers may purchase from one channel and return in another, often spanning across different taxing jurisdictions – among 13,000 in the U.S.” In addition, sellers that want to introduce new products and bundles must pay careful attention to taxability and tax calculation. “This demands comprehensive tax content that is up to date with the ever-changing monthly updates, configurable rules and automation tools to streamline the process, ensuring seamless handling of any product in any location.”
• Personalization at scale: Tailored recommendations powered by AI and data analytics will become the norm across all channels. Predictive engines will provide hyper-relevant options. Dynamic pricing that changes in real-time will become more common.
• Social commerce and immersive experiences: Social media platforms and influencers will increasingly drive customer engagement with live shopping events as well as AR and virtual reality experiences.

The drive towards multichannel and connected commerce shows every sign of acceleration. Online retail traffic is surging; in the Vertex survey, 77% of respondents said that they plan to shop more online, or a mix of online and in-store; only 23% said that they expected to buy more in-store. Sixty-four percent of respondents said that they choose to shop through a trusted online marketplace.