How the GOP Tax Plan Affects Online Retailers

On December 22nd, 2017, the President of the United States Donald Trump signed the GOP tax bill into law. As the President said, because of the massive tax cut, “Corporations are literally going wild”. According to analysis, the new tax plan will give a major push to the development of retailers by cutting the corporate tax rate, which is a great opportunity for small and medium e-commerce business owners to stay competitive in the international market. The GOP Tax Bill will bring the following benefits for online retailers.

Taxes

Better sales performance.

One purpose of the GOP tax plan is to stimulate consumer demand. Benefiting from the temporarily individual tax cut and the salary increase brought by the   permanent corporate tax break, Americans will have more cash in their pocket, which means people may step up their spending, and create more demand. This for sure is a good news for online retailers, because according to a study in 2016, 8 in 10 Americans are now shopping online. The increase of the money for consumption will bring more orders to the online retail industry.

 

Stronger margins to increase the service.

Starting in 2018, the corporate tax rate will be cut from 35% to 21%. This is the retail industry’s biggest public policy push for years, which the e-commerce business owners can really use. As I just mentioned, American can afford to buy more due to the deep tax cut, but it doesn’t mean all the e-commerce business can make more money. It is reported that consumers are spending more on experiences than things, that’s why Apple Stores are always full of customers despite anyone can purchase an iPhone online easily. So it’s wise to increase the service budget after the profit margin increases. Some might say online stores have natural short slabs on service compared to physical stores, it’s not really the way it is, there are a lot of things can be done. With the help of fast global shipping and brand upgrading services, online retailers can provide a more thoughtful door-to-door service for consumers.

 

Greater competitiveness at the international level.

The United States has had one of the highest rates in the world, put the country at a competitive disadvantage compared to lower-tax nations. Since the rates are much lower now, American companies are able to earn more domestic profits, e-commerce business owners in the USA can pay more attention to the American market. More than that, the permanent corporate tax cut brings the USA closer to that of countries like Canada (15%) or Ireland (12.5%), gives USA based e-commerce business greater international competitiveness. In this case, sourcing products from countries with developed manufacturing and cheap labor, such as China, and selling to America domestic consumers seems a good idea now. Thanks to the global economic integration and the quality international order fulfillment service provided by companies like ChinaDivision, American e-commerce business owners can seize the opportunity brought by the tax cut, and seek substantial business growth and expansion.

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