At the National Retail Federation’s annual conference in New York earlier this year, it became clear that the retail industry was in the throes of major changes driven by the rapidly expanding platform economy. After all, more than 50% of global e-commerce sales were transacted via online marketplaces in 2019, according to WebRetail.com research, and that figure seemed all but guaranteed to grow.
Adapting to Change
Today, 11 months into a global pandemic that brought with it global disruption in supply chains and massive shifts in consumer demand, companies are still scrambling to adapt in an attempt to sustain their businesses while stores are closed and many physical operations are limited. In response, many retailers are intent on accelerating a transformation that was underway prior to COVID-19. Retail companies want to pivot faster, improve business processes and respond more nimbly to future market shifts while reducing supply chain friction and vulnerability. The marketplace model has been embraced as a strategic advantage, providing scale and agility to address intensifying competition, rising consumer expectations and the challenge of increasing loyalty among digitally empowered shoppers.
This makes sense, given that marketplaces enable retailers to expand their offerings while unifying their channels and providing visibility to a broader range of products and shopping data. This expanding access is generated by leveraging retailers’ own store footprints and their partners’ inventory while optimizing investment and building resilience against risks that lurk in demand volatility and supply chains like we’ve seen amid the global pandemic.
It also makes sense to recognize that as catalogs and offers grow, additional complexities arise. That’s why it’s critical to work with a marketplace platform that has powerful automation tools to help manage this added complexity and tap into an ecosystem of partners that help solve the unique requirements for launching and operating an online marketplace.
Tax Automation for Retailers
Tax marks a crucial consideration for retailers adopting the marketplace model. An average of about 50 products are added to a marketplace every second. That eye-opening statistic becomes downright staggering when you consider that each product must be properly categorized to enable an accurate tax calculation. A strong tax automation tool, especially one that leverages artificial intelligence (AI) and machine learning, will map each product to its proper classification so that tax can be calculated according to the numerous requirements of each relevant jurisdiction.
Reduce Supply Chain Risk
The need for that type of tax automation platform is why we partner with Vertex to help retailers (and companies in other industries) make the most of their platform investments – something we describe in greater detail in our new e-book, Reimagining Supply Chains in the Wake of Disruption.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information. The views and opinions expressed in Tax Matters are those of the authors and do not necessarily reflect the official policy, position, or opinion of Vertex Inc.