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Chain Reaction Cycles and Shimano

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Chain Reaction Cycles and Shimano

Old 12-21-18, 04:21 PM
  #76  
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Originally Posted by Psimet2001
...We're speaking of the enthusiast market. That's the market that buys from PBK, Wiggle, CRC. The demographics of the enthusiast market is male, 20-55, college educated, white, earning $40k-$150k annually always outliers to both ends but this is a pretty easily defined sub market...
Your insights have been really interesting on this topic. It has always struck me as odd that as an outlier enthusiast who spends thousands of dollars a year on cycling, there's hardly any reason for me to ever go into a bike shop. I don’t have anything against bike shops, and don’t really mind paying higher prices. They just don’t stock the things I buy (of which shimano spare parts are a tiny fraction). I used to ask them to order things for me, but many years ago, an owner told me that he doesn’t make any money on my special orders, so it would be better for both of us if I just placed the order online myself. After that, I never really had any reason to go into a bike shop other than to buy complete bikes for my kids, which I have done maybe 10 or 12 times in the last 20 years.

When I was a kid in the 80's I used to spend a lot of time in the bike shop. I’d go ride with all my racing buddies then we would hang out at the shop like it was our clubhouse or something. I learned everything I knew about bikes and bought everything I had at the same shop. Later when I was in college, the first SPD pedals came out. They were $200 or something like that, which was a lot of money for a college kid. I went into a bike shop in Evanston that was running a price-match promotion, pulled a bike magazine off their shelf, and asked them to match the price in an ad at the back of the magazine on a pair of M737's. I don’t remember how much I saved but it must have been a lot because the owner seemed pretty pissed about it. Maybe that was the beginning of the end. Now the internet has changed everything, and the bike shop doesn’t’ have anything I can’t get easier, faster and cheaper online. Shimano’s failure to execute a cohesive global spare parts pricing strategy may be annoying, but it’s not the cause of the decline for local bike shops.
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Old 12-21-18, 04:28 PM
  #77  
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Originally Posted by CliffordK
I tried to start a small wheel building company.
You can still do it and I'll work for you btw...
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Old 12-21-18, 04:43 PM
  #78  
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Originally Posted by kingston
Your insights have been really interesting on this topic. It has always struck me as odd that as an outlier enthusiast who spends thousands of dollars a year on cycling, there's hardly any reason for me to ever go into a bike shop. I donít have anything against bike shops, and donít really mind paying higher prices. They just donít stock the things I buy (of which shimano spare parts are a tiny fraction). I used to ask them to order things for me, but many years ago, an owner told me that he doesnít make any money on my special orders, so it would be better for both of us if I just placed the order online myself. After that, I never really had any reason to go into a bike shop other than to buy complete bikes for my kids, which I have done maybe 10 or 12 times in the last 20 years.

When I was a kid in the 80's I used to spend a lot of time in the bike shop. Iíd go ride with all my racing buddies then we would hang out at the shop like it was our clubhouse or something. I learned everything I knew about bikes and bought everything I had at the same shop. Later when I was in college, the first SPD pedals came out. They were $200 or something like that, which was a lot of money for a college kid. I went into a bike shop in Evanston that was running a price-match promotion, pulled a bike magazine off their shelf, and asked them to match the price in an ad at the back of the magazine on a pair of M737's. I donít remember how much I saved but it must have been a lot because the owner seemed pretty pissed about it. Maybe that was the beginning of the end. Now the internet has changed everything, and the bike shop doesnítí have anything I canít get easier, faster and cheaper online. Shimanoís failure to execute a cohesive global spare parts pricing strategy may be annoying, but itís not the cause of the decline for local bike shops.
As you're local It'd be fun to see what shops you're referring to. Also - swing out sometime and grab a coffee. You'd dig the vibe in here.

Yeah - we are both in agreement on almost all of it. Sure a few shop owners are pointing fingers and screaming foul as the ship sinks but most of us who are actually left understand what's going on and are looking for other ideas.

I meant it earlier when i said I have been busy asking people "do you want to still have bike shops around?" I understand how people interpret that question as a form of guilt trip of some sort. I assure you it is not. I am simply asking it to see what people think.

Most of us are completely fine with no longer having a Sears store. Business has changed and they don't fit our needs anymore. Simple. Yet some people don't buy everything they want online. Why? Because there are still reasons to visit local businesses. I wouldn't order coffee from Amazon (as in a cup of prepared coffee). I phrased it to a friend, teammate, customer like this,

"Do you want there to be bike shops around?"
"uh...i don't know. I mean I don't really need them to be there."
"But you like them being there?"
"Yeah. I guess. I mean i like to be able to go to them."
"You visit like 4 or 5 a week. Why? You're not buying stuff from them most of the time."
"I don't know. I just like being there."
"What specifically about it do you like? Is it the conversation? Is it the atmosphere? Is it simply the culture or environment?"
"I mean I like seeing people and talking about bikes and rides and stuff."
"Enough to pay for it? To pay for somewhere to go and talk about bike and rides and stuff?"
"Maybe....I don't know. Actually probably not."
"Ok then the answer for you then is that your future is fine without bike shops. There's no wrong answer."
"Well I'd pay if I could go and buy coffee, get a beer, watch a race, do indoor training, food, massage, coaches, bike rides, etc"
"k...that's a lot. Now how much would you spend to do that?"

......etc.

People who aren't business owners - people who are just consumers - probably don't ever ask themselves these kind of questions. I only ask because I want to understand the need more. I myself feel like there should be SOME sort of bike shop around. A center that fills the need many have for the culture around the sport. Also service. I don't care how many YouTube videos we put out the general riding population will still be full of people who either can't figure it out or don't want to. There's nothing wrong with that IMHO.
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Old 12-21-18, 05:19 PM
  #79  
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Originally Posted by Psimet2001
As you're local It'd be fun to see what shops you're referring to. Also - swing out sometime and grab a coffee. You'd dig the vibe in here...
Next warm Saturday after the holidays. Cuba road to Algonquin is one of my regular routes so it would be easy to swing down to the shop for a visit. My mileage goes way down in the winter, but I try to get at least one long ride in a month when the weather breaks, and I do like coffee.
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Old 12-21-18, 05:28 PM
  #80  
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""Well I'd pay if I could go and buy coffee, get a beer, watch a race, do indoor training, food, massage, coaches, bike rides, etc""

Expressed differently: "Give me a reason other than buying parts and service to enter into a bike shop."

I see the future of the shops as Rapha has seen them. Cultural meeting places. Oh, by the way, while there you can have some service done or buy a new doohickey. The draw is not bicycle sales or service, it is beer, coffee, food, conversation. This is for the cycling enthusiast crowd as they really don't need a traditional bike shop. The rest of the population goes in to learn about bikes, get their bike serviced, or buy a "good" bike.

Rethink the model, indeed!
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Old 12-21-18, 05:33 PM
  #81  
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Originally Posted by kingston
I went into a bike shop in Evanston
I was born there. I got my first bike at the Pony Shop. I just checked and it is still there.
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Old 12-21-18, 06:02 PM
  #82  
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I typically would not go to a shop for most components. I'm not usually in a hurry for those items and they usually have to order it anyway. I will stop in for things like cables, brake pads, maybe a chain, bar tape. Smaller items or something I want right now to finish a project. I used to do tires too but mostly buy those on line now. I do use them for service I cannot do myself or special tools required, chase & face type stuff. I'd probably also use them if I got a PF BB depending on what it required for tool outlay. In my world they are a place to buy a bike or have certain service performed.
Part of that is my fleet is mostly C&V oriented although I am up to a couple 10s drive trains.I am fortunate to have a place like Ben's in town also as they have a pretty good online presence. I'm also not exactly an "enthusiast" who needs the shop for a social outlet either.
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Old 12-21-18, 07:56 PM
  #83  
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Thank you for sharing useful information
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Old 12-21-18, 08:54 PM
  #84  
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My family has bought new bikes from local shops, typically without haggling on price. But I'm self sufficient for maintenance, and my N+1 needs are satisfied by wrenching on old klunkers.

I don't think the world is ready to get rid of bike shops. For most people, the shop is an integral part of buying and maintaining a quality bike. Like the old Ford Model T as described by Deming, bikes are shipped out of factories without ever being fully assembled or tested. And they can harbor latent quality problems such as insufficient spoke tension, missing lubrication, and poorly aligned brakes. Most people don't know how to deal with these issues. There has to be a shop, either to bring the bike into proper operation before it's sold, or to take a return when the bike flames out on the runway. A network of good shops can also impose some discipline on the manufacturers, by favoring brands that they can receive and sell with minimal rework.

Given the lack of good information about the quality of mail-order bikes, the experiences that people report in these forums are exactly what you'd expect: Variable. Low quality doesn't necessarily mean that every bike is bad, but that every bike is different.
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Old 12-21-18, 09:22 PM
  #85  
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Most of the bike shops in my area are focused on multiple "niche" sports/hobbies like fishing, golf, model building, RC airplanes etc. on top of having bicycles and random junk for the marathon/triathlon crowd. The more fishing oriented ones seem to be doing pretty well.
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Old 12-21-18, 10:20 PM
  #86  
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Old 12-22-18, 06:09 AM
  #87  
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I've been thinking about this. We may have to blame all this on the Bostonians

That silly thing of dumping tea in the Boston Harbor.

Following that, there became a policy that sales taxes were designed to benefit the buyer's community, rather than the seller's community, and in particular, if a merchant simply transferred a product from country A (West Indies) to country B (America), then the product would not be subject to sales taxes by a third country C (UK).

The problem with the internet is that it is too hard for a vendor to capture a destination country's taxes. And, the overhead on the post office collecting $1 tax on $50 orders would be extreme, unpopular, and likely chew up most of the tax revenues. Plus, until recently, a large part of package shipping was personal instead of small business. So, separating say Christmas gifts from Small Business sales would be a hassle.

20% VAT? Wow, that is pretty extreme.

I can imagine that if a company chose to say sell an item for $100 in country A & country B, they would use the taxes in each country as part of the calculation.

So, say country A pays 20% VAT, then make the wholesale cost $83.

If country B pays 10% sales tax, then make the wholesale cost $91.

Skipping the taxes, and it becomes a huge incentive to bounce the product through the other country. In fact, it may be beneficial for customers to shop tax-free in the opposite country. So, UK customers benefit just as much shopping in the USA tax-free as the US customers benefit shopping in the UK tax-free.

Part of the equation, of course, also includes cheap, rapid, and reliable shipping.
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Old 12-22-18, 07:13 AM
  #88  
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Originally Posted by jonathangennick
the possibility is real. Higher costs do have their impact, and much of my enjoyment derives from a steady flow of parts and supplies at the price i am willing to pay.
fify
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Old 12-22-18, 07:18 AM
  #89  
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Originally Posted by CliffordK
I've been thinking about this. We may have to blame all this on the Bostonians

That silly thing of dumping tea in the Boston Harbor.

Following that, there became a policy that sales taxes were designed to benefit the buyer's community, rather than the seller's community, and in particular, if a merchant simply transferred a product from country A (West Indies) to country B (America), then the product would not be subject to sales taxes by a third country C (UK).

The problem with the internet is that it is too hard for a vendor to capture a destination country's taxes. And, the overhead on the post office collecting $1 tax on $50 orders would be extreme, unpopular, and likely chew up most of the tax revenues. Plus, until recently, a large part of package shipping was personal instead of small business. So, separating say Christmas gifts from Small Business sales would be a hassle.

20% VAT? Wow, that is pretty extreme.

I can imagine that if a company chose to say sell an item for $100 in country A & country B, they would use the taxes in each country as part of the calculation.

So, say country A pays 20% VAT, then make the wholesale cost $83.

If country B pays 10% sales tax, then make the wholesale cost $91.

Skipping the taxes, and it becomes a huge incentive to bounce the product through the other country. In fact, it may be beneficial for customers to shop tax-free in the opposite country. So, UK customers benefit just as much shopping in the USA tax-free as the US customers benefit shopping in the UK tax-free.

Part of the equation, of course, also includes cheap, rapid, and reliable shipping.
The wholesale price doesn't have to change because of sales tax. Consumer prices just will be higher in high VAT countries. Oil companies don't sell gasoline for less in europe just because there is a high fuel tax.

Also like to correct the statement by some that the cheaper european products are OEM products. Not true, All i ever bough from CRC or bike24 came in what i consider retail package with different levels of fanciness and end user manual etc. OEM products come in a very cheap box with only what the assembly line guy needs to install. In fact, i would love OEM products to save even more.

Ultimately everything between factory and consumer is potentially wasteful and doesn't add value. I get sick hearing about 20-40% markup at each stage of middlemen. Shimano should just sell their stuff wholesale to any ebay, amazon or other retailer and let everyone direct-sell. LBS could focus on service, repair etc. they could buy products directly as well and re-sell at whatever they want. I can buy electronics, food, and any other product in any way i want or would sell it in any way i want. but for bicycle products there is that archaic outdated model that cost us all a lot of $.
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Old 12-22-18, 07:20 AM
  #90  
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Originally Posted by Psimet2001
It's funny because with they types of enthusiasts that come to forums like this I can truly believe the answer to that is yes. Few other hobbies and industries are made up of so many highly educated and mid to upper class clientele that are as amazingly fixated on $20-$40. Don't bat an eye at tipping 20% or throwing $200 in a community fund raiser but feel robbed at a shop if they charge - god forbid - MSRP.

To the extent that they derive a weird sort of pleasure at seeing actual local neighbors that own businesses in their community go out of business. It's really messed up when you really think about it. It's like people just ignore stuff like what's happened in Detroit. All in the name of cheaper parts to have for the product most of society regards as a child's toy.
I am one of those and agree. I may buy a set of brake pads or tires on line once in a while, but otherwise use LBSs. And my last road bike was from Engin Cycles. Built 12 miles from my house by a guy who also owns a LBS. Rode it home from the store. Considering the number of hours he put into it, it was a good deal. I was happy to support someone who lives and works in the city (with his wife and child) and contributes to the local economy.
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Old 12-22-18, 07:34 AM
  #91  
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Originally Posted by indyfabz
I am one of those and agree. I may buy a set of brake pads or tires on line once in a while, but otherwise use LBSs. And my last road bike was from Engin Cycles. Built 12 miles from my house by a guy who also owns a LBS. Rode it home from the store. Considering the number of hours he put into it, it was a good deal. I was happy to support someone who lives and works in the city (with his wife and child) and contributes to the local economy.
For those of a mind that we should support local businesses, there may be a middle option. Purchase online, split the cost savings amount in half; bring that half in cash to the local business of preference and just hand it over. Win win.
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Old 12-22-18, 07:49 AM
  #92  
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Originally Posted by Sy Reene
For those of a mind that we should support local businesses, there may be a middle option. Purchase online, split the cost savings amount in half; bring that half in cash to the local business of preference and just hand it over. Win win.
Funny.
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Old 12-22-18, 08:29 AM
  #93  
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One of the other issues is very poor parts availability of subunit parts.
Cones, nipples, spokes, caged bearings, individual sprockets, etc.

I suppose some of the LBS stores may have some of the supplies, but if it is a special order for a LBS, then it should be provided with direct marketing.

This is one of the reasons that companies like Wheelmasters exists. Making the parts that Shimano doesn't readily distribute.

Yeah, shipping can be a pain for a say pair of cones. But, that is also a lack of the post office, not shipping say padded envelopes cheaply.

No sense in making multiple trips to a LBS just to get something like an obscure cone.

A better distribution network of these subunit parts would also likely improve Shimano sales, and potentially longevity of obsolete parts.
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Old 12-22-18, 08:29 AM
  #94  
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Originally Posted by wgscott
I was born there. I got my first bike at the Pony Shop. I just checked and it is still there.
Not only are they still there but it's currently owned by Lou Kuhn who is an anchor for the Chicago cyclocross cycling community. For an idea - XXX Racing still has the largest team in Illinois with like 86 licensed racers. My team PSIMET is second with something like 67 licensed racers. Pony Shop is third with 56 ish. The vast majority of their riders are from the junior team they have created and developed. Because of their work out junior 9-14 category for cross is often in the 60-70 rider size range. It's amazing and their impact on the sport can never be denied.

....of course that goes away people stop visiting shops. People on this forum (forums in general) are not really the people that care about that community of cycling though.

That said he IS in Evanston and is supported by a line of people with more money than time. He is fair and does great work and is compensated as much.
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Old 12-22-18, 08:40 AM
  #95  
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Originally Posted by TiHabanero
""Well I'd pay if I could go and buy coffee, get a beer, watch a race, do indoor training, food, massage, coaches, bike rides, etc""

Expressed differently: "Give me a reason other than buying parts and service to enter into a bike shop."

I see the future of the shops as Rapha has seen them. Cultural meeting places. Oh, by the way, while there you can have some service done or buy a new doohickey. The draw is not bicycle sales or service, it is beer, coffee, food, conversation. This is for the cycling enthusiast crowd as they really don't need a traditional bike shop. The rest of the population goes in to learn about bikes, get their bike serviced, or buy a "good" bike.

Rethink the model, indeed!
We've been this way for a while. Coffee up front with the service bay. Athlete lounge by the indoor training center in the back . You'd have to look through the pictures on google but here's some of the quick ones I could find....

It's a mess but I took these quickly yesterday for a dealer app...



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Old 12-22-18, 08:50 AM
  #96  
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Old 12-22-18, 09:28 AM
  #97  
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Originally Posted by Psimet2001
There is no "upcharge" at the LBS ... it's not an "upcharge" that the LBS is pulling. It's two completely different pricing and business platforms caused by the OEM. Not the result of bike shop pricing strategies.
I get what you're saying here, and I'm somewhat reminded of the situation independent booksellers must have been in when Amazon steamrolled into town.

Apple is a company that carefully controls pricing of its products. When I'm honest w/myself, I can't blame Shimano for choosing for their own reasons to do likewise.
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Old 12-22-18, 01:41 PM
  #98  
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Originally Posted by CliffordK
I've been thinking about this. We may have to blame all this on the Bostonians

That silly thing of dumping tea in the Boston Harbor.

Following that, there became a policy that sales taxes were designed to benefit the buyer's community, rather than the seller's community, and in particular, if a merchant simply transferred a product from country A (West Indies) to country B (America), then the product would not be subject to sales taxes by a third country C (UK).

The problem with the internet is that it is too hard for a vendor to capture a destination country's taxes. And, the overhead on the post office collecting $1 tax on $50 orders would be extreme, unpopular, and likely chew up most of the tax revenues. Plus, until recently, a large part of package shipping was personal instead of small business. So, separating say Christmas gifts from Small Business sales would be a hassle.

20% VAT? Wow, that is pretty extreme.

I can imagine that if a company chose to say sell an item for $100 in country A & country B, they would use the taxes in each country as part of the calculation.

So, say country A pays 20% VAT, then make the wholesale cost $83.

If country B pays 10% sales tax, then make the wholesale cost $91.

Skipping the taxes, and it becomes a huge incentive to bounce the product through the other country. In fact, it may be beneficial for customers to shop tax-free in the opposite country. So, UK customers benefit just as much shopping in the USA tax-free as the US customers benefit shopping in the UK tax-free.

Part of the equation, of course, also includes cheap, rapid, and reliable shipping.
Good description. There is also hte internet sales tax issue. In the past 3 months I have bought from 2 online merchants who are getting out of the business. In fairness, both are retiring or moving on, but both said that for them, the issue of an internet sales tax would break their back due to needing to take into account all the various state and local taxing authorities. They both said the easy solution would be to use a service and checkout cart system, but that the added cost would create more overhead.

It will be interesting.
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Old 12-22-18, 02:41 PM
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Originally Posted by Bill in VA
Good description. There is also hte internet sales tax issue. In the past 3 months I have bought from 2 online merchants who are getting out of the business. In fairness, both are retiring or moving on, but both said that for them, the issue of an internet sales tax would break their back due to needing to take into account all the various state and local taxing authorities. They both said the easy solution would be to use a service and checkout cart system, but that the added cost would create more overhead.

It will be interesting.
I think I mentioned that one could do a tax service. Perhaps that should be my next business proposal.

E-Bay, Amazon, & PayPal do enough volume that they could provide the tax services. Also Visa and Mastercard.

Amazon is putting fulfillment centers in most states. Do they get around the tax issue because they're technically selling on consignment? And, if fulfilled by Amazon, the sellers often don't know where their product actually is.

I haven't seen Amazon ads collecting taxes, but I wouldn't be surprised if Amazon prioritizes shipping so there is no taxes.

So, for example, Seattle and NY companies both sell product X. Both ship their products to their local Seattle/NY fulfillment centers.

Amazon sells Product from NY vendor to Seattle customer, and gives them the product from the Seattle vendor. They sell the product from the Seattle vendor to the NY customer and gives them the NY product. Everyone is happy except the states.

For Visa/Mastercard/PayPal, one would simply have to check a box, commercial sale or not, and origin/destination. PayPal may already be tracking most of that data.

Tariffs are more complicated as items are charged based on the origin of the item. Does it count if it was made from parts from multiple countries?

I'm watching a frame on Craigslist that clearly says Tubes from the USA, Lugs and Assembly, Italy.

Nobody wants to pay for such a service, but one might be able to convince the states, cities, and counties to toss some money back. So, say collect a 6% tax. Toss 1% back to the service, and the state gets 5% (which is a whole lot better than nothing).

Oh, also make it on the municipalities to inform the banking center of any changes in the laws.

Moving money is hugely profitable, I think. So, a 0.1% kickback of sale price, or 1% of tax value would likely more than pay for the service.

Last edited by CliffordK; 12-22-18 at 02:51 PM.
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Old 12-22-18, 02:50 PM
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Originally Posted by CliffordK
I think I mentioned that one could do a tax service. Perhaps that should be my next business proposal.

E-Bay, Amazon, & PayPal do enough volume that they could provide the tax services. Also Visa and Mastercard.

Amazon is putting fulfillment centers in most states. Do they get around the tax issue because they're technically selling on consignment? And, if fulfilled by Amazon, the sellers often don't know where their product actually is.

For Visa/Mastercard/PayPal, one would simply have to check a box, commercial sale or not, and origin/destination. PayPal may already be tracking most of that data.

Tariffs are more complicated as items are charged based on the origin of the item. Does it count if it was made from parts from multiple countries?

I'm watching a frame on Craigslist that clearly says Tubes from the USA, Lugs and Assembly, Italy.

Nobody wants to pay for such a service, but one might be able to convince the states, cities, and counties to toss some money back. So, say collect a 6% tax. Toss 1% back to the service, and the state gets 5% (which is a whole lot better than nothing).

Oh, also make it on the municipalities to inform the banking center of any changes in the laws.
It would be a great business. As far as I understand I should be ok as of now as I just don't sell enough volume into any other state other than my own and I collect sales tax in this state. I wish that service companies/credit card processors we use now owuld just charge the sales tax, hold it and then pay it anyway. Would make my life immensely easier.

I agree on the municipalities being the ones that need to inform the centers. Right now there is no standard. Even within the same zip code you could have many different tax rates depending on what it is and exactly where it is going. It is not just hard but simply impossible for a small business to navigate that. It is an un-reasonable burden. Keeping up with all of the different rates from municipality to municipality across all 50 states, and then make the appropriate payments to the appropriate taxing authorities for each little place at the correct filing date for each place using the payment system they require....its a joke. No one can do it unless it is their full time job and they sell the service or they are a huge company with the resources.

I have been hearing of services that do it and I am sure there will be a ton of them in the future.
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