COVID-19: What Retailers Need to Know this Holiday Season

by TaxJar November 1, 2020

We’ll skip the unprecedented times, new normal intro and get right to it. This holiday season will look different due to COVID-19, and retailers should be prepared. TaxJar is here to help with a few things retailers should know before heading into this holiday shopping season. 

1. Online shopping likely to continue increasing

According to a survey from Adobe, ecommerce shopping levels during COVID-19 were higher than what retailers saw during the 2019 holiday season. (COVID-19 time frame is defined as April to May, 2020. The time holiday season frame is defined as November to December, 2019.)

This is of no surprise. With store closures and social distancing – people have moved to online shopping. At TaxJar, we saw this reflected in our own data with spikes in API calls.

What Retailers Should Know

Online retailers won’t have a break between the current COVID-19 eCommerce demand and the upcoming holiday season shopping. If your business has experienced this lift in ecommerce sales and it continues, then we wouldn’t expect to see a lull before the holiday season. Instead, the reliance on online shopping would continue.

Sales tax implications: 

You’ll reach economic nexus in more states, more quickly. For most states, when businesses sell a certain amount into that state, they’ll achieve what’s called nexus. Once you pass that state’s threshold and establish nexus, you are required to collect and remit sales tax in that state. 

TaxJar tip: 

Normally, we see a lot of TaxJar customers reach nexus in new states late in the year due to holiday sales. If you anticipate reaching nexus in new states, start preparing to register for a sales tax permit earlier, especially given the impact COVID-19 has had on layoffs and employee restrictions. It could take longer than usual to complete paperwork with the state. Here’s a list of how to register for a sales tax permit in every state.  

2. Holiday shopping traffic spikes

41% of shoppers say they don’t plan to shop any earlier for holiday gifts in 2020, according to a study from MarTech Series.

So while a lot has changed in 2020, the timing of the holiday shopping season will remain largely the same, with consumer behavior around holiday shopping looking similar to years past. 

What Retailers Should Know

The API speed of your website’s apps and extensions to scale with spikes in traffic, will be critical to maintain the customer experience. 

When your customers are buying online, every millisecond matters. Every 1,000 millisecond or 1 second reduction in page load time for Walmart resulted in a 2% conversion increase. Every 100 milliseconds for Mobify resulted in a 1.11% conversion increase.

Sales tax implications: 

Sales tax calculations and reporting need to keep pace. You’ll need to be sure you deliver the accurate rate, and you’re watching nexus 

TaxJar Tip: 

Check to make sure you have real-time sales tax calculations enabled on your website, and review the provider’s uptime. You don’t want to pay this out of your own pocket! Check out our uptime at:

3. Consumers intend to spend the same

The majority of consumers intend to spend the same amount as last year on holiday gifts. While we might have assumed the amount consumers would spend this holiday season would decrease due to layoffs, shutdowns and other COVID-19 implications, the survey from MarTech Series shows otherwise.

What Retailer Should Know

You should expect similar or high order volume as previous years. Be sure to evaluate inventory for all of your channels, including marketplaces. A marketplace facilitator is a business or organization that contracts with third parties to sell goods and services on its platform and facilitates retail sales of at least $250,000 during the prior 12-month period. This includes marketplaces like Amazon, Etsy, Walmart and eBay.

Sales tax implications: 

Marketplace sales will still significantly impact nexus and sales tax obligations. 

Marketplaces can cause nexus in new states quickly. Be sure to understand your potential sales for this upcoming holiday season, and be ready to register and start collecting sales tax where you have nexus.

TaxJar tip: 

40+ states have marketplace facilitator laws today. In the states where you have nexus, confirm which have marketplace facilitator laws and that your marketplace is collecting and remitting on your behalf. While these laws make compliance easier for the states, sellers must still remit sales tax for sales made on other non-marketplace platforms, when liable – like their own ecommerce store. 

How TaxJar Can Help You Prepare for the Holiday Shopping Season

While a lot may change, one thing will always stay the same: TaxJar can help you get compliant and stay compliant. We keep our finger on the pulse of sales tax news and updates so we can ensure sales tax rate accuracy and timely filing. 

From automation tools like AutoFile to the TaxJar API to our award-winning customer support team, TaxJar can help you effortlessly adjust to any state-level changes that may come. Sign up for our free trial and start preparing for the busy holiday shopping season today.  

Ready to automate sales tax collection, reporting and filing? Click here for more on how TaxJar can take the headache out of sales tax in your retail business.

The basics of US sales tax

Learn the fundamentals of sales tax.

Watch the video