Recently, the Internet tax bill made collecting taxes online more heavily enforced than the traditional
informal approach to tax collection (Povich, 2013). Previously, web sites failing to charge taxes over the
Internet could have obtained a price advantage relative to brick and mortar firms charging the sales tax.
The Internet tax bill not only means that the website must comply to the regulation and charge a tax for
online transactions, but it also means that it must focus on finding ways to reduce operating costs in the
future, as to obtain a cost leadership position as consumers will receive less utility on most websites
online. Smart Tech must focus on its ability to provide services with very low overhead with the drop-
shipping model and lean operations, to meet consumer expectations through user experience and more
substantial price discounts.
From the above figure, market growth of the industry can be easily seen. There is rapid growth in the
industry and the graph of this industry is constantly moving upward, it also shows positive trend and
growth from only $17.6 million in the first quarter of 2009 to $109 million by the end of 2011 and is still
moving in upward direction.
The Pew Research Center finds little differentiation between sex, race, age and geography for general
Internet users in the United States, including online shopping. However, the probability that a consumer
shops online increases relative to their education level and income level. A survey conducted by the Pew
Research Center indicates that 59% of those surveyed with less than a high school education use the
Internet, whereas 96% with a college education or higher use it (Pew Research Center, 2013). On average,
however, the World Bank, finds that 81% of the population in the United States uses the Internet (The