Online retailers in the U.S. have a huge financial advantage compared with their counterparts in over-the-counter trade. Due to a loophole in legislation, they can usually get away with not adding VAT to their prices, but the U.S. Senate has now approved a law which could change this.
In the U.S., both large and small online retailers tend to be cheaper than their over-the-counter counterparts and are therefore winning the price wars. This is mainly because online retailers are only allowed to charge VAT (Sales Tax) in states where they have a branch.For consumers, this means prices which can be lower than 7 percent compared with large over-the-counter chains, which tend to have branches all over the USA. According to the German price comparison website, Heise:
“This meant that small online shops in particular were unable to sell their goods to customers in other states at lower prices which couldn’t be guaranteed by large chains with branches and warehouses all over the country.”
The bill does, however, still require the approval of the House of Representatives before it can enter into force.
Online retailers in Europe recorded a turnover of €312 bn last year. This is equivalent to a growth of 19 percent, concluded the industry association ECommerce Europe. With €96 bn, the UK is the nation with the highest sales. Germany takes second place with an industry turnover of €50 bn, closely followed by the French with €45 bn. This means that more than 60 per cent of e-commerce sales throughout the whole of Europe is generated in the UK, Germany and France (€191 bn).
In the rest of Europe however, online retailers also have a reason to be happy. The industry association reports unabated growth, even in those states that are particularly affected by the euro crisis. As such, the association records a growth of 61 percent for Greece. This means that Greece ranks number two in the list of nations with the highest growth and is topped only by Turkey with a growth rate of 75 percent for online shopping.