Written by eBay President and CEO John Donahoe and published September 24th. 2010 in the San Jose Mercury News
For months, we\'ve all heard the economic rallying cry from Washington: jobs, jobs, jobs. With 70 percent of new jobs in the U.S. over the past decade created by small businesses, we need small business to lead the way -- and small businesses need our support.
E-commerce creates opportunity and jobs, and online retail delivers real value for consumers. However, while e-commerce is still relatively small, representing about 5 percent of total retail sales, competition is fierce and growing. Increasingly, small-business retailers with a few employees must battle it out for consumer dollars online with the same retail giants that dominate offline sales. And giant retailers are not shy about trying to use their political strength to help them in the fight.
The retail giants are lobbying in Washington for national legislation to impose new sales-tax burdens on small-business retailers. Forcing a small retailer in San Jose to collect sales taxes for every state and locality in which it sells a product over the Internet is a massive, unduly burdensome new tax scheme. It would impose new costs and complexity on small retailers and further stifle competition online, and since California is home to the largest number of online small-business retailers, our state will be hardest hit.
Giant retailers collect sales taxes online because they can combine their store chains with their websites, offering consumers the option of returning items bought online in a store, or going online to determine whether an item is in the store. These are not options open to a small retailer based in California but selling across the country.
In the Bay Area, small businesses are a critical part of the regional economy, and the entrepreneurial spirit is alive and well. The Census Bureau reports that more than half a million small businesses operate in the Bay Area, and eBay is proud to help local retail entrepreneurs succeed online.
For example, Melissa Rich started selling surplus assets from local school districts on eBay in 2004 and has since gone full time with her business, InterSchola. InterSchola employs six full-time employees and 15 independent ambassadors to serve nearly one-third of school districts in California with the sale of new and underutilized surplus goods. As an important part of its business model, InterSchola is returning money to schools, having given back $4 million since inception.
The successes of small-business entrepreneurs like Rich is encouraging, but many small retailers, particularly individual entrepreneurs and craftspeople, are not yet taking advantage of growth opportunities online. A 2009 survey by Webvisible and Nielsen found that 46 percent of small businesses still do not operate a website, and half spend less than 10 percent of their marketing budgets online.
To help spur small-business growth through e-commerce, eBay brought together more than 600 Bay Area sellers in San Jose recently to learn from each other and from experts about how to succeed as online entrepreneurs.
In order to support small businesses, any new online tax collection that emerges should exempt small businesses, and only the largest Internet retailers should face this new burden. Otherwise, new Internet sales taxes will be a clear small-business job-killer here in California, with large retailers forcing smaller retailers off the Internet as they forced them off Main Street.