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Survey: Online retailers divided on impact of Marketplace Fairness Act

Chicago – Online retailers are divided about the impact of the proposed Marketplace Fairness Act (MFA) legislation, largely based on company size. According to a new McGladley LLP survey of decision-makers at small and mid-sized online retailers, 38% of small and mid-sized online retailers with revenues between $10 million and $1 billion project that the MFA would have a negative impact on their profitability.

However, while 50% of executives at companies with annual revenues between $10 million and $50 million project negative impacts on profit, the number drops to 22% for executives at companies in the $150 million to $1 billion range. Smaller retailers said they fear the MFA's passage would impact their profitability, while larger retailers indicate they are not as troubled.

There is widespread awareness of the legislation among decision-makers in the small and mid-sized segments; overall, 96% of those surveyed reported being familiar with the MFA. However, 70% of respondents who reported being part of internal discussions about the legislation at their companies were in the lower revenue range.

The survey suggests that less than 40% of small and mid-sized online retailers expect to be hurt significantly by the law, but 43% of all respondents said they were either somewhat or very likely to consider terminating some online sales in response to the MFA, and nearly all (98%) said they would pass along increased compliance costs to the consumer.

"These results make clear that the potential impacts of this legislation are wide-ranging and highly complex," said Dustin Petersen, a partner with McGladrey. "While small and mid-sized companies are understandably concerned about losing a competitive advantage and incurring higher compliance costs, those on the higher end of the revenue range appear to see this as somewhat of an equalizer, as they feel that they have been disadvantaged by charging state sales tax and burdened by the disorganized array of systems through which they have had to do so."

© 2014