• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

We recently published a (mini) Black Book on the topic of e-commerce.  We explored two primary areas which we believe are most relevant to today’s retail landscape.  Growth in multi-channel retailing and the implications for an internet sales tax.  In both cases, we believe the pendulum is swinging in favor of traditional bricks & mortar retailers.   We explore the following areas in detail:

Growth in multi-channel retailing is increasing at its fastest pace in years, driven by a culmination of factors:

  • Convenience
  • Selection
  • Content/Editorial
  • Conspicuous Consumption

The internet sales tax debate is as hot as ever, with the recent introduction of the Main Street Fairness Act. We answer the following questions:

  • Why isn’t there a tax on e-commerce sales for “online only” entities to begin with?
  • What exactly is the Main Street Fairness Act?
  • What is the Streamlined Sales and Use Tax Agreement (SSUTA)?
  • What are the tax revenue implications from a tax?
  • Who’s in favor of the legislation? Who isn’t?

In the absence of meaningful physical store growth, e-commerce has emerged as the single biggest source of incremental revenue and market share gains for traditional retailers.  Interestingly, neither the Street nor the companies themselves spend much time on the topic.  Yes, there are a few exceptions including Williams-Sonoma and J Crew that have embraced the internet as a full-on profit and growth center, but there are many more that are just beginning to make meaningful inroads online. 

If you’d like a copy of the report or would like to discuss this topic in further detail please let us know.  In the near-term we expect this will become a more meaningful area to watch within the incumbent retail landscape.  In the near, near-term keep an eye on the Main Street Fairness Act.  State budgets are in turmoil and a quick fix lies within leveling the playing field between those with a tax advantage (i.e Amazon) and those without.

Eric Levine

Director