California BOE releases updated e-commerce study

California State Board of Equalization

California Board of Equalization: Characteristics of E-Commerce Buyers and Sellers

Yesterday, Betty Yee, First District member of the California Board of Equalization, released an updated research report on e-commerce.

“This report documents the growth and diversity of online retailing, as well as the low rate of tax compliance in this area,” said Yee. “It further illustrates the state’s need for additional tools to collect use tax from online retailers on the same terms as local, ‘brick and mortar’ outlets.”

The report analyzes data from the 2010 edition of the Top 500 Guide, a profile of the 500 largest retail websites in the U.S. Among the most interesting points in the report:

  • 60% of remote sales in 2009 occurred online (rather than through traditional mail or phone order) .
  • The sales of the top 500 online retailers, which account for 94% of all online sales (of those sales tracked by IR), added up to $126.4 billion in 2009. (Note: In February the Census Bureau released data that has that figure as $143.2 billion, an increase of 12% over the BOE estimate.)
  • In 2009 there were approximately 602 million online purchases—20 online purchases every second.
  • The average online sale was $210.
  • Only four-tenths of one percent (0.4%) of California’s personal income taxpayers pay use tax on online purchases on their tax returns. That’s approximately 55,000 out of almost 14 million personal income tax returns filed.

The report also found that a relatively small number of retailers account for a disproportionate amount of sales. Specifically, the top 50 e-commerce firms account for 77 percent of sales.

Such a disproportionate concentration of sales by the largest e-commerce companies would also suggest that sales per company are much greater for the largest ones. . . . The top ten companies average e-commerce sales of $6.117 billion per company. At the other extreme, the smallest 400 companies of the 500 average sales of $44 million each, a factor of 139 times less sales than the top ten average.

Of course, there are many more online retailers that are not in the IR top 500. In fact, we were surprised to find that even online auction giant eBay doesn’t make the list, because eBay is not considered the primary seller. Nevertheless, eBay enables over one hundred thousand “power sellers” (retailers) and has at least 60 million consumers and over $70 billion in transactions annually (according to eBay’s 2009 form 10K annual report to investors). If all those sales were attributed to eBay rather than to the individuals that sell on eBay, the figures in the Top 500 Guide would look dramatically larger.

The entire report is worth a read for the picture it paints of the state of e-commerce today.

2 Responses to California BOE releases updated e-commerce study

  1. […] rest is here: California BOE releases updated e-commerce study « blog.FedTax.net This entry was posted in News. Bookmark the permalink. ← Just What Do Podiatrists […]

  2. […] of 6.85% percent, the total sales tax due on $195 billion is approximately $13.5 billion. However, According to California’s Board of Equalization, typically only four-tenths of one percent (0.04%) of the tax due on e-commerce sales is collected. […]

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