Poll: Internet Retailer List Misses 90+% of Emainstreet Eligible Members

In response to the ridiculous SBA advocacy office report “An Analysis of Internet Sales Taxation and the Smaller Seller Exemption (SSE)” that grossly understates the number of online retailers that would be affected by the Marketplace Fairness Act, I decided to poll the membership of Emainstreet.org’s members.

This poll shows that just with regard to traditional websites, this SBA report probably underestimates the number of remote sellers by an order of magnitude, and this doesn’t include Amazon sellers, Ebay sellers or other remote sellers under the MFA.

Unlike pro-MFA “polls” (and I use the word loosely) with unknown and never-shared questions or methodology, I’m going to share.  The goal of the poll was to get anonymous, real answers without fear of sharing critical business sales data.  So I made the poll anonymous, only 2 questions, and password protected on a hidden link that was emailed to the member list.  The Emainstreet list was emailed this very simple poll.  We received 116 responses.  Here’s the poll:

Question 1: What were your 2012 gross sales?

  • Less than $100,000
  • Between $100k and $500k
  • Between $500k and $750k
  • Between $750k and $1 million
  • Between $1 million and $2 million
  • Between $2 million and $3 million
  • Between $4 million and $5 million
  • Between $5 million and $10 million
  • Between $10 million and $20 million
  • Greater than $20 million

Question 2: Were you listed in the Internet Retailer top 500 or top 1000 list for 2012?

  • Yes
  • No
  • Not sure

I put “not sure” into the poll, just to make sure there was an answer, but it’s probably not a relevant choice for the purpose.  A number who answered not sure are below the list’s requirements anyway.  And those who were large enough to be on the IR 1000 list, probably aren’t on the list based on the responses we saw.  Also, if you’re on the list, you would probably know.  You will be hearing from sales calls about it and perhaps even patent trolls.  Realistically, the “not sure” votes are probably all not on the list.  (There were 9 “not sure”).

Results:

78 had sales of $500,000 or higher, enough to qualify for the bottom of the Internet Retailer 1000 list.

Only 7 actually were on the list.  Seven.  Out of 78.

In other words, according to our poll, only about 9% of our Emainstreet members who could be on the list, are on the list. ($500k+).  Or another way of looking at it, just in our poll results alone, 71 companies aren’t being counted.

 Why does it matter?  Because an economist writing a paper for the SBA advocacy office on the impact of small business exemption levels in the MFA used the IR 1000 list as the PRIMARY data source for who might be affected.

The methodology is utterly and completely flawed and this ridiculously flawed paper is being used by pro-MFA forces and to shape public policy based on false data that understates the actual number of businesses affected by probably a factor of 30 or more.  That’s why it matters.  I’d suggest the SBA get their $80,000 back, but the goal of the SBA appeared to be to support the Marketplace Fairness Act, not actually honestly measure the impact on tens of thousands of remote sellers.

Why is the Internet Retailer such a terrible data source?  (And why would I fail an economics student who used it as their main data source for a school report?)  Because it’s mostly self-reported with a healthy dose of IR estimates for larger companies – AKA guesses.

  • Online retailers generally don’t want to share their sales numbers and other key metrics.  It shares those key figures to the world, to your competitors, future competitors and patent trolls.  The top retailers in the list are all public companies who have no choice but to share their sales figures publicly.  Lower down the list, they generally are not public companies.
  • Amazon sellers are NOT included or eligible for the list.  There are many Amazon sellers that sell more than $500k per year, I probably know a few dozen in my industry off-hand.
  • Ebay sellers are NOT included or eligible for the list.

116 respondents is certainly an acceptable sample size to extrapolate out the percentage of other online websites not being on the IR 1000 list.  This poll shows that just with regard to traditional websites, this paper probably underestimates the number of remote sellers by an order of magnitude.

I’ll continue our analysis of the flawed SBA paper shortly, now that our Q4 retail season has passed.

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