Sharing economy businesses like Airbnb, RelayRides, and FlightCar have come under fire recently, with participants accused of failure to comply with insurance regulations, building codes, and other rules. In addition to those complications, which I wrote about in the recent issue of TIME magazine, there’s the problem of taxes. Namely, it seems as if almost no one involved in the sharing economy knows exactly what taxes they’re supposed to pay, nor when or how to pay them. And for several reasons — the rules are unclear, enforcement is almost nonexistent, and many feel that “sharing” shouldn’t be taxed at all – very few people pay them. One part of the equation is fairly straightforward: Money earned from renting out a room in your apartment, loaning your car to a stranger, or from any other sharing economy business is considered income, and participants therefore may have to pay income taxes on those earnings. Airbnb, in fact, sends 1099-Misc forms to all hosts who are supposed to pay taxes on their rental income. The site also mentions that a state or locality may require that other short-term rental fees or taxes be paid, and this is where things get really, really messy. According to Airbnb, it’s entirely up to the host to include the proper taxes in their rental listing rates, and then it’s up to the host to pay them. “You are responsible for managing your tax and other regulatory obligations,” Airbnb’s Taxes FAQ section says. “Please contact a tax professional or city compliance department for advice about your tax status and compliance.” How many Airbnb hosts actually hand over hotel taxes to the local tax collector? No one really knows, but it’s likely that the percentage is tiny—perhaps even zero. Most cities haven’t even clarified if short-term hosts should be paying hotel taxes on their rental income, because such a stipulation would implicitly tell residents that short-term rentals are legal — which is itself unclear in many cases. In the spring of 2012, San Francisco made it clear that short-term rentals
Tag Archives: e-commerce
Amazon’s New Grocery Service: For $299, You Never Have to Leave the House Again
Would you pay $299 annually if it meant never having to go to the supermarket? Amazon.com is testing a service with that idea in mind. And that’s on top of Amazon’s other services that already eliminate the need to go to the mall. Amazon Prime, the $79-per-year membership program that includes free two-day shipping on most Amazon purchases, has been enormously successful. The number of subscribers easily doubled over the past two years, and analysts expect Prime membership to triple over the next five years. One of the most interesting effects of having a Prime membership is that the subscriber tends to make more and more purchases at Amazon. Members assume—with good reason—that Amazon’s prices are competitive on just about anything they might purchase, and shipping is free thanks to the $79 they’ve paid for Prime, so subscribers increasingly turn to Amazon in kneejerk fashion, often without bothering to shop around. And because there’s no minimum purchase requirement, subscribers have found themselves using Amazon as a substitute for all sorts of small everyday shopping errands, so long as the items aren’t needed right away. Batteries, coffee beans, extension cords: These and many other goods are a quick one-click purchase away at Amazon, saving you the trip to the drugstore, supermarket, home improvement store, Walmart, or wherever. (MORE: Amazon Prime: Bigger, More Powerful, More Profitable Than Anyone Imagined) While there has been plenty of skepticism as to whether online grocery shopping can be a viable business, Amazon has been experimenting with its service, called AmazonFresh, in the Seattle area for years. As Reuters reported, Amazon is now pushing Fresh into the Los Angeles area, with a special twist: A “Prime Fresh” membership is being offered to existing Prime members, who will get free same-day or overnight delivery of grocery orders over $35. Prime members in L.A. get a free 90-day trial of the service. After that, they’re on the hook for $299 per year for Prime Fresh, unless they choose to cancel the service. The original Prime helped subscribers eliminate many
Gimme a Price Already! Edmunds Tries to End the Most Aggravating Part of Car Shopping
“How much?” In almost every retail environment, this wouldn’t be a difficult question to answer. But at the car dealership, the process of getting a concrete final price can take hours. The folks at Edmunds.com now have a tool that promises to make retrieving car prices as quick and easy as shopping at Amazon. Car shopping has a reputation as a notoriously, inexplicably frustrating experience, and the perception only seems to be getting worse as consumers have increasingly come to expect speedy browsing and one-click purchasing online. In one recent survey, young consumers said they’d prefer to visit the dentist than haggle at a car dealership. The pushy atmosphere, relentless upselling, confusing terminology and numbers, lack of transparency, and the stressful, time-consuming back-and-forth jousting surely all bother car shoppers. But mostly, the thing that drives consumers craziest comes back to how dealerships are incapable or unwilling to answer what seems like an extraordinarily simple question: How much? “The average American person cannot understand how it is that as an industry that we cannot deliver an actual car price to them,” Seth Berkowitz, president and COO of Edmunds, said on Wednesday in Detroit. “It is just totally mystifying to people.” Berkowitz was in Detroit to introduce the press to Edmunds Price Promise, a new tool that the car research company says will eliminate the confusing, hassle-laden time suck that is car shopping today. After entering a vehicle make and model, as well as a name, phone number, and e-mail address, a shopper at Edmunds.com instantly receives an actual price for an actual car. Print out the quote and bring it into the dealership and, amazingly, the dealership is required to honor the price. Incredible! (MORE: Revealed! The One Big Secret to Successful Haggling) The idea sounds so simple and obvious, it’s a wonder no one’s done it before. In fact, there are somewhat similar services out there right now. TrueCar promises that “haggling is history” with a system that gives online shoppers price quote certificates to bring in to participating dealerships.
EasyPost, A “Stripe For Shipping,” Raises $850K Seed Round, Sees Transactions Doubling Every Month
With more commerce moving online every day, the shipping industry is in need of innovation. And one of the bigger pain points developers face when trying to integrate postage and shipping into their applications involves the antiquated technology major carriers like FedEx, UPS and USPS provide – complex SOAP or XML APIs that most developers would say are a nightmare to work with. San Francisco-based EasyPost is trying to solve that problem by offering a simpler, RESTful JSON API instead. Today, the company is announcing $850,000 in seed funding to help with those efforts.
Investors in the new round, which just now closed, include Y Combinator, SV Angel, Start Fund, CrunchFund*, Mesa+, Andreas Resch, Kevin Barenblat, Lars Kamp, Ullas Naik, Shawn Bercuson, and Rahul Vohra. (* Disclosure: CrunchFund founder Michael Arrington also founded TechCrunch.)
EasyPost co-founder Jarrett Streebin says he came up with the idea for the service based on his own experiences with having to integrate shipping into some of the websites he had worked on in the past. These were generally just weekend projects he played with on the side while analyzing venture deals for a private investment fund at his day job.
But he also spoke to other startup founders through his work, and found that they, too, had the same struggles with shipping. He would ask them about it, and routinely, the answer would be one of frustration. “Oh my god, it’s a nightmare,” they would tell him.
Explains Streebin, “if you go to Twilio, you can get an API key immediately. But if you go to Endicia or some of their competitors, you have to email them and they send you 400-page documentation, and then you have to sign a legal doc…It’s really a big mess,” he says.
“We need a Stripe for this,” Streebin realized.
Founded alongside ex-Googler Jon Calhoun, EasyPost first launched into beta this September and immediately saw around 500 sign-ups, indicating the need for the service it provides. Today, the company has double that in terms of users, and after its public debut in January, it has been seeing numbers double every single month in terms of revenue and number of packages, Streebin says.
To use the service, developers come to the site, enter in their account information for UPS, FedEx, or USPS, and then get an API key they can use to access all the functions provided. E-commerce sites can then call the API to verify addresses during checkout, let customers choose from all the different possible shipping options, and even purchase that shipping label as part of the fulfillment process.
Because of the complexity of the carriers’ own APIs, most e-commerce sites don’t allow for this kind of thing today – instead, they often pick a flat rate that seems reasonable. This is not only a problem for them, as sometimes shipping charges are higher than that flat rate, but it can also be a problem for the consumer who misses out on savings when rates should be lower.
This same problem has led to a number of new developments in the shipping and logistics industry, including the launch of EasyPost’s direct competitor Postmaster (with $600,000 in seed funding), as well as consumer-facing TechCrunch Disrupt NY 2013 audience choice winner ShipHawk, and more broadly, moves from big-name brands like Amazon, eBay, Walmart and Google, all of whom who are now trying to figure out how to make same-day shipping sustainable.
Where EasyPost wants to differentiate itself from other developer-facing tools is with its level of support. “My belief from the start is that if you’re selling SaaS, PaaS, infrastructure-as-a-service – any of those – the support is the product. Our support times are 10 minutes or less,” Streebin claims.
Currently EasyPost charges 5 cents per shipment, but offers discounted rates for larger shippers. It plans to add more long tail U.S. carriers as well as Canada Post within the next few months, then work on Europe afterwards.
Interested developers can sign up here.
‘Big Gas Savings’: Kmart’s Funny Followup to the Viral ‘Ship My Pants’ Ad
Kmart surprised consumers everywhere recently with the “Ship My Pants” ad, a viral juvenile-humor hit viewed more than 17 million times on YouTube since being released in April. Now, the all-purpose discount retailer appears to have struck goofy gold yet again, with an online ad promoting Kmart’s “big gas savings.” Say either phrase quickly — “ship my pants,” “big gas savings” — and you get the joke. Each of these phrases is repeated and tweaked over and over in their respective ads. “Whoah, I just might ship my pants,” a woman says, upon hearing word from a Kmart sales staffer describing the retailer’s service that ships goods for free to customers who can’t find items them want in stores. “I just shipped my pants and it’s very convenient,” an older woman chimes in. As the variations on shipping one’s pants (and drawers and nighties and beds) continues on, as does the “Beavis and Butthead”-type giggling of viewers, presumably. (MORE: Does Kmart’s Hilarious New Ad Acknowledge That Kmart Stores Are Hopeless?) The “Ship My Pants” extended poop joke was such a hit—it quickly became one of the most-shared ads ever—it was probably inevitably that Kmart would follow up with another attempt at silly tongue-in-cheek humor. On Wednesday, Kmart did just that, releasing a “Big Gas Savings” ad on YouTube. This time, the ad promotes a 30¢ off per gallon gas deal at participating gas stations for customers who spend at least $50 at Kmart. The deal almost seems besides the point, however. The main point of the ad is to make people laugh … and think about Kmart more. “Sounds like you could use some big gas savings,” one woman says to another—who happens to be the mom featured in “Ship My Pants”—as they’re filling up at a gas station. “Thirty cents a gallon, that’s a big gas discount,” a bearded man says. “Dad, look at that big gas truck,” a boy (also from “Ship My Pants”) says, pointing to a gas tanker. And on and on. All along, of course,
The Consumer Psychology Behind Warby Parker’s $95 Pricing for Eyeglasses
The Hot New Online Retail Strategy: Pushing More In-Store Purchases
You’d think that when retailers enhance their online shopping options, the goal would be increased online sales. Not so with Target, Gap and Rite Aid — which are adding new online tools with the hopes of boosting in-store sales. During the recent winter-holiday shopping season, retailers like Kohl’s, JCPenney and Sears were actively blurring the lines of online/off-line shopping with a mix of promotions — some meant to entice in-store shoppers to visit the store website, others intended to attract Web shoppers into physical stores. The offers represent the latest example of how we are living in an omnichannel “bricks and clicks” retail world, where shoppers are comfortable hunting for deals and making purchases in virtually every manner possible — and where retailers are therefore trying to reach shoppers everywhere they’re willing to spend. Even so, while retailers aren’t going to turn away online sales, it’s clear that they prefer shoppers to be walking among the aisles of tempting merchandise inside physical stores. Why? It’s assumed that consumers who make the effort to visit real-life stores are more serious about their intent to spend. The online experience is perfectly suited for quick, easy browsing. But all too often, the browsing doesn’t translate into actual purchases — hence the better-than-average chance of so-called shopping-cart abandonment. There are plenty of looky-loos in real-world stores as well, but the need for immediate gratification, and the way that holding an item, seeing it in person, or trying it on can push a shopper over the edge with desire, means that the in-store shopper is generally quicker to pull the trigger on purchases than his online counterpart. (MORE: Is Retail Therapy for Real? 5 Ways Shopping Is Actually Good for You) There’s also the impulse-purchase factor: consumers are more likely to make unplanned purchases in actual stores. According to a survey conducted last year by Dimensional Research and Wanderful Media, 65% of consumers who use their mobile devices to shop had made an impulse purchase online during the previous month, compared with 74% who had made
Video: Sorry eBay — Turns Out Some Small Businesses Support the Marketplace Fairness Act
Online giant eBay is leading the charge against legislation that would require sales tax to be collected on Internet sales. The mandate would be an unfair burden on small businesses, eBay says. And yet who are among the bill’s strongest supporters? Yep, small businesses. For years, online sellers have benefitted from what brick-and-mortar retailers call the “internet sales tax loophole.” For the most part, e-retailers are only required to charge customers sales tax if the vendor has a physical presence in the state where the purchase is being made. Consumers are supposed to pay the appropriate sales tax when they file their annual federal and state income taxes, but almost no one does. The situation gives e-commerce businesses an obvious pricing advantage over brick-and-mortar stores and online retailers with a physical presence in the state, which must always tack on sales tax. The Marketplace Fairness Act, which passed in the U.S. Senate and is now being considered in the House, would close this loophole. The legislation would allow states to require out-of-state vendors to collect all the same sales taxes that are currently assessed in physical stores at the customer’s location. (MORE: 5 Ways to Save Money Shopping Online, Regardless of New Internet Sales Tax Legislation) Amazon, the world’s largest e-retailer, has voiced support for online sales tax collection initiatives in recent years. The only big company that’s actively fighting the legislation today is eBay. Company CEO John Donahoe was quoted on NPR this week arguing that the law would hurt small businesses: If it’s allowed to play out things will still sell in eBay marketplace, but it will be larger and larger sellers that are doing the selling and the small guy will, over time, slowly be squeezed out. Currently, the Marketplace Fairness Act would exempt retailers with less than $1 million in annual revenues. Instead, eBay wants the exemption pushed to the $10 million revenue mark, which Donahoe pointed to as one of the criteria used in Obamacare to define a small business. “All we’re saying is an