ETD: 686 Get the word out; Business in Bermuda; Slow Economy
Hits Promotional Product Sales; Is Internet Sales Taxes DOA (or DBA)?;
Art Market Growing
E-Tailer's Digest
etd_post@gapent.com
Thu, 15 May 2003 07:34:04 -0400
E-Tailer's Digest --- Everything for the Retailer
Issue #0686 May 15, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Get the word out
[3] Doing Business in Bermuda
----- ---- --- -- -> Important Offer <- -- --- ---- ---- --
[4] Slow Economy Hits Promotional Product Sales
[5] Is Internet Sales Taxes DOA (or DBA)?
[6] Art Market Growing
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[1] Greetings.
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Hi All:
This week I had an interesting experience with somebody checking us out
prior to a meeting. It got me to thinking that everybody should get the
word out about your business and company (see 2 below). What do you do?
We have some interesting comments from list members today, which should
spur some discussions. Is Internet sales tax dead on arrival (DOA) or dead
before arrival (DBA)? (see 5 below). Are there better ways to do business
offshore, such as intracompany transactions? (see 3 below). What do you
think?
Are you selling promotional products? Is the slow economy affecting your
sales? What about Art? That seems to be growing. What are you finding?
Any plans for generating business during the upcoming holidays and summer
season in the Northern hemisphere, or winter in the south?
Now, let's get to everything for the retailer.
Sincerely
Dr. George Matyjewicz
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] Get the word out
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Yesterday we did a presentation to the fifth largest company in it's
industry. As part of their due diligence, they checked us out thoroughly
and sprouted out a lot about us. What really shocked me personally was
when the team leader said he liked some my writings, and when I looked
somewhat confused, he said he did a Google search and found 1,700+ entries
when searching on George Matyjewicz!
That's the second time I encountered such diligent investigations. Most of
the writings are posts to discussion lists, and quite a number are articles
published. More importantly, the postings point to our sites where folks
can learn more about us.
Which got me to thinking "why doesn't everybody do that?" Why don't you
write and get your material published? It's quite easy to do so. Many
publications look for well-written articles. And you can find a
publication who needs material in arenas where you have knowledge. Many
list members are published often - Jacques Chevron, Phil Glowatz, Martha
Retallick, Patty Sachs, Jim Straw, Robin Basset, Jim Novo and others.
So what are you waiting for? As an example, the Australian Trade Community
- Magazine needs written material, news, stories, or even short pieces, AND
electronic images (i.e. JPGs and GIFs), for possible entry into the next
issue, May 2003. They have 4 main categories, Australian Trade News,
Export News, Import News and Trades & Services. I had an article
published there in November, 2002
http://www.gapent.com/media/inthenews/atc.htm
Or how about your local newspapers? They love to publish something from
locals.
Can't write? No big deal. That's what editors are for - to check your
work and make it fit for print. They are looking for good ideas, and
content that they can then turn into an article. Of course, you have a far
greater chance of getting published if the work doesn't need much
changes. But don't let that stop you.
Let me give you a classic example. In July 2002 I published "How Do I Sell
Large
Accounts"
http://etailersdigest.com/resources/Specials/Sell_Large_Accounts.htm
Quinn Halford, Editor In Chief of Gifts & Dec Magazine was very interested,
and Quinn (who is the best editor ever) edited it and published as "Going
For The Big Ones" in the November 2002 issue
http://www.gapent.com/media/inthenews/G&DA2002-10.htm
And, of course, we are always looking for content and special reports for
E-Tailer's Digest.
So, put some things together and get it to the media. You won't regret it.
My latest article "The Need For Corporate Governance" written together with
Dr Sarah Blackburn should be published in two major publications shortly.
Let's hear what you do.
George
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[3] Doing Business in Bermuda
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Richard Woolnough wrote...
>>However, due to the pressures from unions and some shareholders they
decided not to go ahead. They could have saved about $30 million by
reincorporating here. Unions believed that moving the incorporation of the
company to Bermuda would also involve all their jobs being given to
Bermudians. The average income in Bermuda is the 4th highest in the world
(more than USA), why would they want to make tools? Stanley might have
employed about half a dozen people here.<<
Stanley Tools may have found out that only when the possible tax savings
are large relative to the cost of shifting facilities abroad the investment
makes sense. There are more factors to consider other than tax savings when
planning to move to tax haven countries.
Another alternative Stanley could have considered is the shifting of income
there via transfer pricing. It could set up a sales subsidiary or
re-invoicing center there and another subsidiary in Europe. The process
involves shifting costs to high tax countries and shifting revenues to low
tax countries. For example, the company could export goods to its European
affiliate and arrange the documentation for the transaction so the goods
are first sold to the sales subsidiary in Bermuda (re-invoicing center).
The parent charges the subsidiary a low price thus shifting income from the
U.S. parent to the subsidiary in Bermuda. The subsidiary in Bermuda intern
charges a high price when it sells the goods to the European subsidiary
thereby shifting income from Europe to Bermuda. The goods could be coming
from the European subsidiary and title passes through the re-invoicing
center in Bermuda before it is resold to the U.S.
The goods never get to Bermuda, neither the documents nor money go there.
The thing is, both the U.S. and the European tax collectors know about tax
havens and they scan the prices used in transactions between the
subsidiaries and domestic offices of the company to forestall flagrant
attempts to avoid taxes. The thing is many intracompany transactions have
no readily available commercial counter parts and no up-to-date
ready-reference market prices. Tax havens are profitable despite the
watchful eyes of the tax collectors. Sales subsidiaries based in tax havens
are not established unless the probable savings in taxes more than
compensate for the legal fees charged by high-priced lawyers.
If any one has any counter argument to transfer pricing as an alternative I
would like to hear it.
Derrick W Robinson
DerrickWRobinson@compuserve.com
Fax: 208-979-0426
"The time is always right, to do right"
+++ [Moderator's Comments] +++
Keep in mind the US has one irritating law. Any money earned anywhere in
the US by any entity (company or individual) must pay US taxes.
US entities use of tax havens are profitable for one reason - they allow
you to hide money! Banks there don't reveal depositors unless a court
order is issued. Most fall under British laws, which means US lawyers
can't go on a fishing trip, i.e., I need to see all your records, as I
SUSPECT fraud. Rather, they must have a particular reason and prove there
is cause to look at records. A rather civilized way of doing business, eh?
Unfortunately, "offshore" has bad connotations. Everybody believes it
means fraud, and often it does. There is a "black list" of countries who
do not cooperate with other countries, and, as a result, they lose a lot of
business. The Bahamas were on that list until July 2001. While on that
list, many companies who were legitimately doing business there under
Caribbean Basin Trade Partnership Act of 2000 (CBTPA) lost valuable banking
relationships. Hence they moved out of the country. The CBTPA does offer
tax savings to US companies and a lot of apparel companies manufacture in
the Caribbean. See http://www.mac.doc.gov/CBI/webmain/intro.htm
George
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----- ---- --- -- -> Important Offer <- -- --- ---- ---- --
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[4] Slow Economy Hits Promotional Product Sales
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Trevose, PA - According to the Advertising Specialty Institute (ASI), North
American sales of advertising specialties and promotional products fell 5.5
percent in 2002, a decline of $909 million from the $16.5 billion in sales
posted in 2001. Of the 40 largest distributors in the promotional products
industry, nearly half reported lower sales in 2002, while another six
reported sales that were flat. "After more than two decades of mostly
double-digit growth, we're finally seeing some tapering off due to the
state of the economy," said Marvin Spike, vice chairman of ASI. "Until
recently, this industry has tended to be recession-proof. But as
promotional products become more mainstream, we're feeling some of the same
effects that other media are experiencing." Tom Savio, chief executive of
Caliendo-Savio Enterprises, added, "Company budgets are being cut right
behind ad dollars, and our items are being cut as discretionary. Instead of
giving out shirts and hats, they're giving out 10-cent pens." The next ASI
Show will take place May 21-22, at McCormick Place in Chicago.
Quinn Halford, Editor In Chief
Matthew Kalash, Editor
Gifts & Dec Direct Newsletter
http://www.giftsanddec.com
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[5] Is Internet Sales Taxes DOA (or DBA)?
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George misses one thing: Congress is not even close to permit the states to
levy taxes beyond their borders.
The telephone or mail-order company is not required to collect sales tax
for any jurisdiction in which it has no physical presence. Many of the
larger ones have been bullied into doing it, but the Supreme Court has
ruled that if a vendor has no physical presence in a state, it is not
required to collect sales tax. Period.
The vendor receives no services from that state where it has no presence.
New York State might as well try to get Ontario or Iceland to collect NYS
sales tax.
Large discount chains such as Walmart and Kmart already have a physical
presence in each state and know how to deal with all the sales taxes. They
can afford to staff their sales tax departments with many tax accountants.
If all Internet merchants were required to collect taxes they could use
this as a competitive advantage on top of the other benefits they have for
being so large.
Other states provide absolutely no services to out-of-state Internet
merchants. This is like free money. They take it in but do not need to
provide any benefits for it. The local B&M's get police, fire, roads,
schools, etc. in return for collecting sales taxes. When an Internet
merchant ships a product out of state, they pay UPS, FedEx, etc. who in
turn pay taxes in that state for use of the roads for delivery.
Local business people can vote their government leaders out if they do not
like their policies or tax rates. The Internet merchants cannot. This is
"taxation without representation" a founding principal in this country.
Internet merchants can only affect their home state/locale.
Internet merchants pay every other tax that the B&M merchants do such as
federal income tax, state income tax, county taxes, city taxes, and these
taxes are paid on all the money collected, not just the income received
from the local state/county/city. Internet merchants pay tax and a lot of it.
In fact, a bill sponsored by Chris Cox in the House and supported by 38
Senators already in the Senate would explicitly do just the opposite:
forbid states from levying taxes beyond their borders.
So while there is no chance that the Congress will allow states to tax
beyond their borders in this Congress, there is a 65% chance that Congress
will put into legislation what the already Supreme Court has ruled: that
states cannot tax outside their borders if there is no in-state physical
presence.
The internet sales tax is dead on arrival, folks. Too bad for the
tax-and-spend crowd.
CMA
+++ [Moderator's Comments] +++
The Internet has done more for business than any other venue. Which also
means that never before has so many governments lost so much in tax
revenue. So, something will have to be done. Sales tax the way it exists
now will never work for Internet businesses. Not many have the resources
to track 7,600 tax jurisdictions. However, when the ten states (as a
start) agree to the uniform sales tax, there will be taxation on the
Internet. Guaranteed.
George
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[6] Art Market Growing
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Art Market Growing, Diverging as Consumer Motivations Creates
Opportunities, finds Unity Marketing Study
As retail sales reached $29 billion, the art market is becoming big
business, with sales up 14% over 2000's $25.5 billion, according to a new
market research study Art and Wall Decor Report, 2003: The Market, The
Competitors, The Future Trends, from Unity Marketing
(www.unitymarketingonline.com).
Buying art is more than decorating.
With 42% of all American households buying art in 2002, the art market is
increasingly diverse as distinct market segments buy for different reasons.
"Art marketers and retailers are making a big mistake if they view art
consumers as a 'one-size-fits-all' market of passionate home decorators,"
explains luxury marketing expert Pam Danziger, president of Unity Marketing
and author of the book, Why People Buy Things They Don't Need.
"While home decorating will always play a role in why people buy art, today
the majority of art consumers view the process as a more important decision
than simply matching one's home decor or color scheme," Danziger said.
"Art buyers today connect emotionally with the art they buy through the
theme. That personal connection with the art takes precedence over whether
it fits a particular space on the wall," Danziger says.
In a new art consumer survey, sponsored in part by the Art Publishers
Association, a majority of art buyers agreed or strongly agreed with these
statements:
• I am more interested in buying art today than I used to be — 55%
• The art I buy and display is an important outlet for my creative
expression — 54%
• When choosing art for my home, the way the piece makes me feel is more
important than whether it matches the decor in my home — 53%
Market segmentation points to market opportunities
Unity's Art and Wall Decor Report, which analyzes consumers of unframed
art, already-framed art, original art, custom-framed art and other items,
provides a road map for art marketers, gallery and framing shop owners and
art retailers to future market success.
"In reviewing past purchase behavior and art consumers' expected spending
through 2003 and beyond, two key market segments emerge which offer art
marketers their best sales opportunities," Danziger explains.
"At the luxury end, art connoisseurs, representing over one-fourth of the
total art market, are projected to be the most active buyers. Their
appetite for art is undiminished by world events, as they have been the
most active segment buying art in the first quarter of 2003. This segment
is comprised mainly of affluent and highly-educated baby boomers who view
themselves as collectors, who shop primarily in art galleries and framing
shops and for whom decorating takes a back seat.
"The other segment holding the most promise are home decorators, 28% of the
market. This segment is largely budget-minded young marrieds who have a
need to buy art to fill empty walls in new homes. Many home decorators
expect to buy more art in the coming year and are likely to continue
frequenting mass merchants and home furnishings and furniture stores for
the already-framed prints they favor."
The new market research report, Art and Wall Decor Report, 2003: The
Market, The Competitors, The Future Trends, is a business planning tool
that provides marketers and retailers with the facts and figures they need
to build a vibrant business now and into the future. Written by Unity
Marketing's research experts, it details industry sales by product form and
distribution channel, profiles leading national art and framing retailers
and art publishers, and provides insight from surveys of art companies, art
publishers, wholesalers/distributors, OEM framers and framing suppliers,
art galleries, framing shops and art and wall decor consumers. This
in-depth report is available from Unity Marketing for $2,250. For more
information, visit www.unitymarketingonline.com.
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